Essay by Thomas J. Andre, Jr.
The German system of corporate governance is often described as an alternative model to that which is customary in the Anglo-Saxon world. At the heart of the German model is a two-tier board of directors. One board actively manages the business and affairs of the company, while the other board, elected in part by shareholders and in part by labor, is responsible for the supervision of the management board. The effectiveness of the model has recently been called into question as the result of the failures or near-failures of several important German companies. One of the more frequent criticisms of the German model is that the shareholder representative component of the supervisory boards of these companies and most other major German companies tend to be dominated by representatives of a few large German banks as well by a small number of other individuals, many of whom also have close business or professional relationships to the company on whose board they sit. The implicit suggestion in the criticism is that the interrelationships among these individuals may sometimes be too close to allow effective monitoring of corporate managements. This Essay explores principally the composition of the shareholder side of the supervisory boards of the largest German companies, and attempts to document the frequency and the extent of the supervisory board relationships among those companies. The Essay concludes that a relatively small number of the same individuals serve on the supervisory boards of the largest German companies, and that the number of supervisory board relationships among these companies is in fact significant.
About the Author
Thomas J. Andre, Jr. W.R. Irby Professor of Law, Tulane University. B.A., Cornell University; LL.B., Tulane University; LL.M., Columbia University.
Citation
70 Tul. L. Rev. 1819 (1996)