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Differences in Corporate Governance between the US and Germany
The following overview of differences in corporate governance between Germany and the US relates to publicly traded companies or companies set up according to similar rules than publicly traded ones. I found it in a German article "Stock Options und Shareholder Value" by Wolfgang Bernhardt and Peter Witt in Zeitschrift für Betriebswirtschaft, 1997, pp. 85-101, but I changed one thing re. the role of the CEO in the fourth row which I did not consider to be completely correct in the article.
| USA | Germany |
|---|---|
| Monistic representation of interests, i.e. the corporation only serves one target group, the shareholders. | Pluralism of relevant interests, i.e. the corporation serves the goals of several stakeholders (shareholders, employees, creditors etc.) |
| One layer of governance and management integrated into one gremium, the board. | Two layers of governance and management, which manifests itself in two separated institutions, the supervisory board and the management board. |
| Directorial principle of forming a will, i.e. the CEO has strong executive powers relating to the other top management members. | Collegial principle of forming a will, i.e. the CEO does only have a limited powers relating to the other top management members and usually needs consensus or majority. |
My personal and abbreviated opinion, also bearing from my own experience as a member of the management board of a German corporation: I think the best system would be a combination of the two systems, which would take from the US the monistic representation of interests and the directorial will-forming principle, and from Germany the complete separation of governance and management.