A Snowball Starting in Norway
Edited by Silke Machold, Morten Huse, Katrin Hansen and Marina Brogi
Chapter 26: Professionalization on the supervisory board, diversity and women
The extension of the candidate pool of potential members of the supervisory board of stock market-listed companies, and the concomitant increase of the representation of women in the economy and especially in supervisory boards, is a major socio-political challenge, and one that particularly includes legal aspects. The top priority for both the management and supervisory boards has to be to act in the company’s best interest and to pursue value creation. In accordance with the 2005 recommendation of the European Union (EU) Commission which deals with the independence of supervisory board members of listed companies, the German Corporate Governance Code states that there should be members on a supervisory board who have the essential knowledge, abilities and technical experience to execute their tasks effectively. This means that not every single member of the supervisory board has to have all necessary competences, but that the members of the supervisory board as a team should have the essential diversity of knowledge, faculty of judgment and experience to perform their tasks properly. Additionally, related to the composition of the supervisory board, the Code recommends paying attention to the inter- national activities of the company, avoiding potential conflicts of interest, to determine an age limit for board members, and to bear in mind gender diversity. The call for a more heterogeneous composition of the supervisory board and the associated mix of different skills and competences will necessarily lead to an increased demand for diversity on German supervisory boards, always bearing in mind the goal of furthering the company’s interest.
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