Corporate Governance Reporting: Compliance with Upper Limits for Severance Payments to Members of Executive Boards in Germany

Dilger Alexander, Schottmüller-Einwag Ute


Zusammenfassung
This paper examines how corporate governance reporting corresponds to actual conduct regarding severance payment caps for prematurely departing members of companies' executive boards in Germany. For this purpose, we first evaluate the declarations of conformity for all companies listed in the CDAX between 2010 and 2014, which we use to determine conformity and deviation rates, and analyse reasons for deviation. In a further full survey, we assess the compensation amounts of all severance payments made and published by DAX companies to their executive board members who were prematurely terminated, which allows us to compare the respective severance ratio with the cap recommended by the German Corporate Governance Codex (GCGC). We find that more than 20% of companies listed in the CDAX declared deviation in the declaration of conformity, and one-third of all deviations were justified by a rejection of the normative decision of the recommendation. Moreover, in 57% of actual severance cases where DAX companies had previously declared their compliance, the cap was exceeded; yet, none of the companies that had exceeded the cap in a severance case disclosed this in the following declaration of conformity. In the years under review, for the majority of severance cases in companies listed in the DAX, the GCGC's cap did not have any factual binding effect. Finally, in most cases the corporate reports deviated from reality and therefore could not serve as a suitable basis for decisions by the capital market.



Publikationstyp
Sonstige wissenschaftliche Veröffentlichung

Publikationsstatus
Veröffentlicht

Jahr
2019

Band
7/2019

Reihe
Diskussionspapier des Instituts für Organisationsökonomik

Verlag
Institut für Organisationsökonomik

Ort
Münster

Sprache
Englisch

ISSN
2191-2475

Gesamter Text