Board and CEO Advisory Partners

DAX 30 — RRA Management Board Study 2020

 



Key insights

May 2020

SUMMARY

Over the past ten years, Russell Reynolds Associates has conducted an annual board survey, which examines the supervisory boards of the constituent companies of the DAX 30 index. This year we additionally focus on an analysis of the management boards of DAX 30 companies, examining trends in diversity, tenure and experience.

Unlike supervisory boards, which are held to a mandatory quota of 30 percent female representation by the German Corporate Governance Code (2020), the target percentage of female management board members is defined by the supervisory board. Despite an increase in female representation on supervisory boards, the share of female representation on executive committees has remained relatively flat over the past three years. In 2019, top management positions in German companies comprise, on average, only 14 percent female executives. There are, however, several significant outliers contributing to the lower average percentage; seven DAX 30 companies have no female representation in top management positions whatsoever. In contrast to other European countries, Germany still lags behind its peers. Norway leads the pack with 27 percent female representation in top management positions, followed closely by Sweden and the UK.

Share of women in top management positions by index in 2019 (USA Fortune 500: 2017):
INDEX SHARE
Norway OBX 27.1%
Sweden OMX 30 23.7%
UK FTSE 100 22.5%
USA Fortune 500 Boards 22.2%
Finland OMX 25 20.9%
France CAC 40 19.6%
Denmark OMX 25 17.1%
Spain IBEX 35 16.2%
Netherlands AEX 14.5%
Germany DAX 30 14.2%
Italy FSTE MIB 11.8%
Switzerland SMI 11.4%
  • Source: European Institute for Gender Equality, Pew Social Trends, and Russell Reynolds Associates analysis, 2020

There is a significant variance in the numbers of female executives in DAX companies; from a high of 25 percent to a low of zero. Seven companies of the DAX 30 have no women on their management board.

The internationalisation of newly appointed management board members has increased significantly over the past five years. Among division heads and executives with central functions, some 35 percent are non-German.

A majority (66 percent) of management board members were groomed into their roles from within the company. However, it is interesting to note that CFOs have a better chance of a lateral appointment, with 50 percent being externally appointed.

DAX 30 management board members are compensated at an average of 3.8 million euros per annum.1 Compensation does vary; at the most expensive end of the spectrum Linde pays its management board members an average of 8.9 million euros per annum, roughly five times what MTU pays. On average DAX 30 management board members were granted 60 percent of their maximum possible compensation in 2019.

SHARE OF WOMEN BOARD MEMBERS STAGNATING AT 14 PERCENT FOR THE PAST THREE YEARS

Germany is not making headway in filling top positions with women in its 30 DAX companies: the number of women on DAX boards has stagnated at 14 percent for three years. Previously, it had doubled within four years, from 7 percent in 2014 to just under 14 percent in 2018. Of the 190 board members of DAX companies, 27 are currently women. Five are CFOs, and six are chief human resources officers (CHROs), but none are CEOs.

14% of DAX 30 Top executives are women
Men 163
Women 27
  • Source: Russell Reynolds Associates analysis, 2020
No woman as CEO in DAX 30
CEO CFO Central functions Division / Region
Men 30 23 50 60
Women 0 5 14* 8
  • * 6 of which HR
  • Source: Russell Reynolds Associates analysis, 2020

The debate triggered five years ago by the law on equal rights in management positions did accelerate the appointment of female management board members for a while. But this momentum has stalled during the past three years, and the same seems to be true for DAX supervisory boards. Once the legally required 30 percent had been achieved, the quota of women has been stagnating at a third.

SIX DAX BOARDS HAVE 25 PERCENT FEMALE MEMBERS, SEVEN HAVE NONE

Among the DAX companies there are great differences regarding the number of women management board members. Six companies have a female share of 25 percent on their boards of directors (Covestro, Daimler, Deutsche Telekom, Fresenius Medical Care, Vonovia, Wirecard), two have 20 percent (Allianz, Merck), and seven DAX companies don’t have a woman on their management boards (Bayer, E.ON, HeidelbergCement, Infineon, MTU Aero Engines, RWE, Siemens).

COMPANY MEN WOMEN TOTAL SHARE OF WOMEN
Covestro 3 1 4 25%
Daimler 6 2 8 25%
Deutsche Telekom 6 2 8 25%
Fresenius Medical Care 6 2 8 25%
Vonovia 3 1 4 25%
Wirecard 3 1 4 25%
Allianz 8 2 10 20%
Merck 4 1 5 20%
Adidas 5 1 6 17%
BASF 5 1 6 17%
Deutsche Boerse 5 1 6 17%
Deutsche Lufthansa 5 1 6 17%
Henkel 5 1 6 17%
SAP 5 1 6 17%
Beiersdorf 6 1 7 14%
BMW 6 1 7 14%
Fresenius SE 6 1 7 14%
Linde 6 1 7 14%
Continental 7 1 8 13%
Deutsche Post 7 1 8 13%
Volkswagen 7 1 8 13%
Deutsche Bank 8 1 9 11%
Munich Re 8 1 9 11%
Bayer 5 0 5 0%
E.ON 5 0 5 0%
Heidelberg Cement 7 0 7 0%
Infineon 4 0 4 0%
MTU Aero Engines 4 0 4 0%
RWE 2 0 2 0%
Siemens 6 0 6 0%
  • Source: Russell Reynolds Associates analysis, 2020

83 PERCENT OF DAX CEOs ARE GERMANS

More female DAX board members have an international background than their male peers: 44 percent are from abroad; among men the number is around 30 percent.

Germany Other Europe Americas Asia Pacific Middle East & Africa
Women 15 10 1 0 1
Men 113 29 12 8 1
  • Source: Russell Reynolds Associates analysis, 2020

Overall, two-thirds of all board members hail from Germany, one third from abroad, of which some 20 percent from elsewhere in Europe. 83 percent of all CEOs are Germans. Even though the proportion of locals manning the upper board echelons has been stubbornly high, the internationalisation of DAX boards has recently increased considerably. In the past two years, almost as many foreigners as Germans were appointed to DAX boards.

Top executives by region
Germany Other Europe Americas APAC
67% 21% 7% 4%
  • Source: Russell Reynolds Associates analysis, 2020
Share of top executives with German citizenship by function
CEO CFO Central functions Division Region
Men 17% 18% 34% 35% 43%
Women 83% 82% 66% 65% 57%
  • Source: Russell Reynolds Associates analysis, 2020

CFOs HAVE A BETTER CHANCE OF A LATERAL APPOINTMENT

Around 17 percent of all current CEOs were appointed from outside, while 83 percent were developed internally to become CEOs. Only half the current CFOs were found inside the company, while the other half were recruited outside.

17% of all current CEOs were appointed from outside
Total – internal vs. external
Appointed from outside the company Promoted from within the company
34% 66%
By function
CEO CFO Central functions Division Region
Appointed from outside the company 17% 18% 34% 35% 43%
Appointed from outside the company into the management board, and then promoted as CEO 83% 82% 66% 65% 57%
Promoted from within the company 83% 82% 66% 65% 57%
  • * 17% appointed directly as CEO; 20% indirectly out of management board role
  • Source: Russell Reynolds Associates analysis, 2020

BOARD MEMBER FOR 18 YEARS

Analyzing tenure in a company vs. the age at the time of board appointment, produces a mixed bag. Seven board members have been with the firm for 35 years, nine have been board members for at least 15 years, and another seven were aged between 30 and 40 when they were appointed. Joe Kaeser at Siemens has been with his employer the longest, logging 40 years of service. Frank Appel of Deutsche Post has been CEO longer than anyone, running the company for the last 18 years.

DIFFERENCES IN BOARD NUMERATION – LINDE PAYS FIVE AND A HALF TIMES MORE THAN MTU

Remuneration also is all over the scale. In 2019, board members at Linde (EUR 8.9 million), Deutsche Bank (EUR 6.6 million), and SAP (EUR 6.3 million) were the highest earners. MTU (EUR 1.6 million) and Infineon (EUR 1.8 million) had the lowest average pay-out. 2

Although there remains a lot of work to be done regarding the women quota, it is nonetheless true that additions to the board of management tend to become more diverse. One can work one’s way up in a company and stay with the same firm for a lifetime, or one can join from outside as a board member, and one can increasingly do so from abroad. One can become a DAX management board member at age 30 or even be CEO for 18 years. The trend towards greater diversity continues.

AUTHORS

  • JENS-THOMAS PIETRALLA leads Russell Reynolds Associates’ Board & CEO Advisory Partners in Europe and serves as Global Head of the firm’s Industrial & Natural Resources sector. He is based in Munich.
  • DR. THOMAS TOMKOS leads Russell Reynolds Associates’ Board & CEO Advisory Partners in Germany and the European CFO Practice. He is based in Hamburg.
  1. In this study, the average compensation per management board member (including CEOs) is based on the total compensation granted at target value to the Management Board in 2019 and the full-time equivalent of all board members in 2019. It includes fixed and variable compensation components but excludes items such as service costs and pension provisions.
  2. In this study, the average compensation per management board member (including CEOs) is based on the total compensation granted at target value to the Management Board in 2019 and the full-time equivalent of all board members in 2019. It includes fixed and variable compensation components but excludes items such as service costs and pension provisions.
Discover more about our expertise in

Board & CEO Advisory Partners


We help create strong and stable leadership with the only integrated CEO/Board Advisory Services for corporations and nonprofit institutions.
Learn More

Additional Expertise


Sign up for our newsletter


Get the newsletter that prepares you for what's next with valuable insights across industries and geographies.












Discover more about our expertise in

Board & CEO Advisory Partners


We help create strong and stable leadership with the only integrated CEO/Board Advisory Services for corporations and nonprofit institutions.
Learn More

Featured Insight


Additional Expertise


Related Insights


Sign up for our newsletter

Get the newsletter that prepares you for what's next with valuable insights across industries and geographies.
DAX 30 — RRA Management Board Study 2020