germany extend gender quotas to executive teams
German listed companies will have to have at least one woman in their senior management teams
A new requirement will be brought into law by the German coalition government to require companies listed in the DAX Index, with at least three management board members, to include one woman director.
Germany has a governance system consisting of supervisory boards and management boards. Quotas are already in place in German for the top supervisory board in Germany's two-tier corporate govnernance system. The existing requirement for 40% female appointments to the supervisory board (whose function is similar to the non-executive role in the UK) did not affect management (executive) boards in Germany.
Fiona Hathorn, our CEO, commented, "Whilst I don't like quotas, I like what they achieve. I sympathise with the German government's frustration at the lack of progress their voluntary scheme has yielded. I hope progress in the UK gathers pace so a similar approach is not needed here."
Women make up 12.8% of management boards in German listed firms. The UK has a combined system where NEDs and executives sit on one board together. It is therefore more meaningful to compare the German management board to the C-Suite composition in the UK. The FTSE 100 performs markedly better with 28% women in senior management, though this drops to 17% in the FTSE 250 according to Cranfield's June 2020 report. If we consider the FTSE All Share*, our best estimate is that the C-Suite composition is around 15%.
Only very slightly better than the German example which has prompted the introduction of quotas.
*Numbers for the ALL Share is a guestimate based on a Company Matters January 2020 report, which showed that the number of female executive directors for the the FTSE SMC 100 and AIM 50 was 6% and 7% respectively.
For more information on Women on Boards UK's views on quotas read this article which included information about what is happening in the US (Link).