Discussion Paper of the Institute for Organisational Economics 4/2019

Zur Empfehlung von Abfindungsobergrenzen für Vorstandsmitglieder
Ute Schottmüller-Einwag/Alexander Dilger
April 2019



On the Recommendation of Limits of Severance Payments for Members of the Management Board

This study examines whether the severance payments for members of the management board are restricted by the recommendation 4.2.3 para 4 sentence 1 of the German Corporate Governance Code. The analysis of extensive data regarding the declarations of conformity of all companies listed in the C-DAX as well as the actual severance payments paid to members of the management board of companies listed in the DAX between 2010 and 2014 shows that in most cases the recommended cap was exceeded despite the declarations of conformity. Institutional economics, law and sociology help to explain the failure of the comply-or-explainprinciple of § 161 AktG, underlying the concept of the German Corporate Governance Code. On this basis a proposal is deduced how to redesign the recommendation with a much stronger impact. Im