Supervisory boards in the media spotlight
Changed job profile leads to increased monitoring.
The Handelsblatt newspaper has named them the bosses of bosses with its own ranking – the supervisory board members. The most powerful man in the German economy is not the CEO of a large DAX company, but multi-supervisory board member Henning Kagermann. The reputation, network and status of a supervisory board member are evaluated. It is specifically pointed out that the external impact of a mandate is a decisive factor in the evaluation. The reputation, network and status of a supervisory board member are evaluated. It is specifically pointed out that the external impact of a mandate plays a decisive role in the evaluation. And the industry magazine PR-Magazin recently asked: "From supervisory board member to media star?" From the perspective of the trade magazine for the communications industry, the days of discreet string-pulling are over. Supervisory board members themselves are the subject of corporate decisions and are becoming increasingly interesting for the media agenda.
The standards
Sections 76, 111, 116
Reason for reporting. Names such as Piëch, Reitzle, Wenning and Cromme are now sometimes better known to the public than those of CEOs. The Swiss company Medientenor regularly examines the media presence of supervisory board members. For many years, this effort was limited to CEOs.
One driver of this development is the trend towards personalisation in the media. It is no longer the company that is successful or loses out, but the person who runs it. Stories are tied to people.
This trend has long been familiar in politics and show business, and with the increasing popularity of magazine-style reporting, it is now a stylistic device that also shapes business reporting.
I. Interest in corporate governance issues is growing
A second important reason is the growing interest in corporate governance issues, which goes hand in hand with the economic crises that are simultaneously driving increasing regulation. On the occasion of the tenth anniversary of the German Corporate Gover nance Code in 2012, Prime Research examined reporting on corporate governance in the German media. According to the study, reporting on corporate governance issues more than doubled in the first ten years of the Code. Reports on "good corporate governance" accounted for 12% 1 of daily business reporting in the leading German and selected European media. " The figures clearly showed that the topic of 'good corporate governance' had gained relevance for the media, " said Dr Gero Kalt, then CEO of PRIME Research International AG & Co. KG, with conviction.
Overall, Prime Research had identified a trend towards a more positive perception of corporate governance in German companies, although this was repeatedly weakened by negative corporate news. " The issue of executive board remuneration in particular regularly gives rise to critical reporting, " the study stated. Nothing has changed in this regard to date. And indeed, not a day goes by without at least one report in the German media dealing with issues relating to good corporate governance.
However, the main reason for the increased attention is certainly the change in the role profile. The traditional German supervisory board is effectively evolving more and more into an administrative board, as is known in Switzerland. This is due, on the o ne hand, to the legislature, which has steadily assigned new tasks to the supervisory board in recent years, making it increasingly operational. This applies above all to the supervisory boards of banks and insurance companies. The Corporate Governance Cod e has had a similar effect, steadily strengthening the role of the supervisory board over the years, for example through the changes to executive board remuneration in 2013. With increased responsibility comes increased public attention and scrutiny. Today, the supervisory board is no longer an aloof body with a special role that is essentially invisible and only makes headlines once a year when it distributes profits and chairs the annual general meeting. Today , it is an integral part of the company and is also held accountable, as demonstrated not least by the increase in liability lawsuits and investigations against supervisory board members.
II. New understanding of roles
The new understanding of roles was recently reiterated by the Group of 30. The renowned group of financial experts and academics, chaired by former ECB President Jean-Claude Trichet, called for cultural change in the financial sector in a report and also a ssigned a role to supervisory boards. According to German member Gerd Häusler, supervisory boards must ensure that the values they set for themselves are actually implemented. "Otherwise, managers should face serious consequences if they violate their company's values, including financial and labour law consequences," Gerd Häusler told Handelsblatt in July 2015. Deutsche Bank implemented this idea years ago and formed an integrity committee within its supervisory board. The chairman of the supervisory board addressed employees directly and promoted cultural change. This type of communication would not have been po ssible five or ten years ago. The German Stock Corporation Act clearly defines the roles of each party. Section 76 of the AktG states: "The board of directors is responsible for managing the company." And Section 111 of the German Stock Corporation Act (AktG) goes on to state: "The supervisory board is responsible for supervising the management." The code also states: "The Supervisory Board's task is to regularly advise and monitor the Executive Board in the management of the company. It must be involved in decisions of fundamental importance to the company." Communication about the company should primarily come from the management board. According to the code, it is obliged to inform the supervisory board – usually in writing. Furthermore, the principle of confidentiality applies. Neither the legislator nor the code stipulates that the supervisory board should actively communicate about the company internally or externally. Even today, it is generally the executive board that speaks on behalf of the company – unless the message to be communicated relates to the supervisory board's area of responsibility. This includes, among other things, the appointment and dismissal of management board members, the allocation of responsibilities, proposals for the appropriation of profits, matters concerning the supervisory board and, of cours e, the annual general meeting. In addition, there are special situations, triggered for example by a strategic decision or a crisis, which always justify internal and external communication by the supervisory board.
III. Chairman of the Supervisory Board may draw on corporate communications
When the supervisory board communicates, it always does so through the chairman of the supervisory board. In doing so, the chairman generally makes use of internal facilities. The Börsen-Zeitung newspaper recently asked provocatively: "On whose behalf do a company's head of communications and/or press spokesperson speak to the media? On behalf of the executive board, of course. But also, on behalf of the supervisory board?" The Börsen-Zeitung concludes that conflicts of interest between the executive board responsible for corporate management and the supervisory board responsible for oversight are anything but unusual, particularly when it comes to executive board appointment s or remuneration issues. These spheres must therefore be clearly and transparently separated at the communication level as well. There are indeed examples where such potential conflicts have been identified, and the supervisory board has sought external communication support. Two well-known examples are Infineon and RWE. However, these are special situations. In terms of good corporate governance, it is normal for the executive board and supervisory board to work closely together 5 for the benefit of the company, and for the communications department to act in the interests of the company rather than for particular interests. Assuming this is the case, there is nothing to prevent the supervisory board from making use of internal com munications resources in the interests of good governance.
IV. Modern supervisory board chairpersons support perception through their own company-related topics
If the supervisory board is now focusing more on the company's reputation, then it is important to provide it with appropriate communication support. This starts with a flow of information that should be just as comprehensive and rapid as that provided to the executive board. The chair of the supervisory board should also be prepared for situations that require communication beyond the traditional press release through appropriate external or internal training. Today, special (stress) training sessions prior to the Annual General Meeting and detailed briefings and training sessions prior to investor meetings are standard practice (in a number of companies). In addition, companies are increasingly actively using the Chairman of the Supervisory Board to shape the company's image. The topics are divided according to the different roles and tasks. The executive board talks about the company, while the supervisory board chairperson usually addresses topics related to the company. One of the first to do this in the 1990s was F. Wilhelm Christians, the former chairman of the supervisory board of Deutsche Bank. To the benefit of the bank's image, he regularly commented on topics such as the relationship between politics and business or developments in Russia, based on a communication strategy developed for him.
V. Supervisory Board's duty to provide information
Regardless of whether a supervisory board wishes to take on such an active role or not, it is important from a reputation management perspective that it forms its own picture of how processes are organised and how the company is viewed by various stakehold ers. It is essential to ensure that the right structures are in place for modern reputation management. Particular attention should be paid to crisis communication. This in turn requires the supervisory board to understand how communication works and what constitutes best practice today. An external perspective, with insight into other companies, regions and industries, can also be useful here as a sparring partner for the supervisory board. Beyond the organisational struct ure, the supervisory board, and not just the chair, should regularly be informed about the communication strategy, the goals and the perception of the company by the various stakeholder groups. Many companies already follow this practice today, but unfortu nately too many still do not.
VI. Conclusion
Considering the changing demands placed on supervisory boards, communication issues are becoming increasingly important, particularly for supervisory board chairpersons. On the one hand, this involves ensuring that the structure and working methods function effectively as part of their supervisory role. On the other hand, they must be professionally prepared for their original communication tasks due to the greater visibility they now enjoy. Modern chairpersons of supervisory boards contribute to the company's image w ith their own corporate communication topics.
Contact
