Female Quota on Supervisory Boards Russel Reynolds 2016The law adopted by the German Bundestag on the 01 January 2016 setting mandatory quota levels for female supervisory board representation within both DAX registered companies and large co-managed companies appears to start having a real impact. In a recent report (annual “DAX 30 Supervisory Board Study, 2018) consultancy company Russel Reynolds Associates indicated that for the first time the 30% female minimum threshold has been reached globally across the DAX registered companies. In the company that was the last to meet the quota requirements, the SAP’s, the supervisory board now actually stands at 56% versus 22% a year ago. Only five DAX companies are falling short, namely Adidas, Henkel, Infineon, Merck, and Continental and must urgently appoint female representatives.

With regard to company executive boards, which does not come under this law, female participation continues to be much lower. According to the AllBright Foundation, female board representation across the DAX companies stands at roughly 12% as compared with 14.5% in France, 24.1% in Sweden, and 24.8% in the United States.

Further information can be found, among others, here (in German).

Background/context:

On 06/03/2015 a new act was passed by the German Bundestag intorducing a quota for female representatives sitting on supervisory boards of German enterprises (both private and public) quoted on the DAX stock exchange as well as some other large companies with systems of co-determination in place. The quota was set to 30% and is projected to affect 108 out of 3600 companies elligible in total. The 108 biggest companies affected were to respect the quoata from 01/01/2016. The penalty for not respecting the quota will be that the seats designated for female representatives will have to remain empty. For 3,600 other smaller companies, be they quoted on the stock exchange or co-determined, the gender representation rules were set more flexibly (the deadline was September 2016)

The voting was preceded by years of public debate and was nevertheless controversial: some found the quota too low, while others, found the '[f]emale quotas represent an important notch on the belt of property rights' (The Head of the Rhineland regional federation office, Mr. Thomas Rick who did not exclude filing a complaint with the Constitutional Federal Tribunal on behalf of some the Federation’s members).

The vote on the act was nevertheless denoted 'a historic step' by the Minister for Families, the Elderly, and Women, Manuela Schwesig in her opening speech of the parliamentary debate. She also added that 'After gaining access to political power, women have finally gained access to their fair share of economic power (...)'.The Minister was not alone in her enthusiasm and was backed by a similar voice from the Social Democrat Minister for Justice, Heiko Maas who declared the act to be the most important in terms of gender equality since the 1918 female suffrage law.

At the same time the Ministry is also reported to be working on another law addressing existing gender related salary gaps (that are currently reported to be 22% under the male equivalents).