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No Stock Options for Supervisory Board Members of a German Stock Corporation: A Comment on In re Mobilcom AG, BGH II ZR 316/02 of 16 February 2004

Published online by Cambridge University Press:  06 March 2019

Dirk Reidenbach

Extract

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On February 16th, 2004 the German Federal Court of Justice (Bundesgerichtshof, BGH) delivered a judgment concerning stock options for members of the supervisory board of Mobilcom AG, a major German telecommunications company organized as a stock corporation. As is well known, German stock corporations have a two-tier board, consisting of the management board and the supervisory board. This decision by the BGH sheds again a new light on the much discussed and much disputed management structure of German stock corporations. After this decision, there are now only limited ways in which members of the supervisory board may be compensated with stock options, if at all. In the near future, even these possibilities might be foreclosed by new regulation. The following comment will give a brief overview of the case, the reasoning of the Court, the law as it stands, and finally the law as it might become.

Type
Private Law
Information
German Law Journal , Volume 5 , Issue 4 , 01 March 2004 , pp. 347 - 354
Copyright
Copyright © 2004 by German Law Journal GbR 

References

1 Reported in DB 2004, 696; ZIP 2004, 613, WM 2004, 629.Google Scholar

2 See only Hopt, The German Two-Tier Board: Experience, Theory, Reforms, in: Hopt/Kanda/Prigge/Roe/Wymeersch (eds.), Comparative Corporate Governance – The State of the Art and Emerging Research, Oxford University Press: Oxford/New York 1998, 227.Google Scholar

3 See hereto e.g. Baums, Interview: Reforming German Corporate Governance: Inside a Law Making Process of a very new nature, 2 German Law Journal No. 12 (16 July 2001), available at: www.germanlawjournal.com (search author: Baums).Google Scholar

4 A translation of the German Stock Corporation Act can be found in Zschocke, The German Stock Corporation Act, 3rd ed. 2001. This edition does not, however, include the most recent reforms.Google Scholar

5 Published in NZG 2003, 176.Google Scholar

6 See Weiß, , Aktienoptionspläne für Führungskräfte, 1999, pp. 194–97.Google Scholar

7 Hüffer, , Aktiengesetz, 5th ed. 2002, § 192 annotation 21.Google Scholar

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11 Hereto, , see the critique by Fischer, ZIP 2003, 282, 283.Google Scholar

12 BGBl I (1998), p. 786.Google Scholar

13 A reprint can be found in ZIP 1996, 2129, 2137.Google Scholar

14 In the case of § 71 (1) No. 2 not even this resolution would have been necessary.Google Scholar

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16 OLG Schleswig NZG 2003, 176, 179. The Court even went as far as to utilize the German Corporate Governance Code to interpret sections of the Stock Corporation Act. As this code is not binding, this approach might at best be called surprising. Besides, the code does not mention stock options for supervisory board members as opposed to members of the management board, see No. 4.2.3 and 5.4.5 of the code. The German Corporate Governance Code is accessible online: http://www.corporate-governance-code.de/eng/download/DCG_K_E200305.pdf.Google Scholar

17 Another more general effect of the Court's judgment is that it strengthens the independent supervisory role of the supervisory board that is a prominent characteristic of the German corporate governance system. For a recent discussion of the convergence/divergence debates of different corporate governance regimes, see Zumbansen, Innovation und Pfadabhängigkeit. Das Recht der Unternehmensverfassung in der Wissensgesellschaft, Frankfurt 2004, forthcoming.Google Scholar

18 This uncertainty is criticized by Wiechers, DB 2004, 698.Google Scholar

19 BGH stellt Aktienoptionen für Aufsichtsräte generell in Frage, Börsen Zeitung, March 16th, 2004, p. 6. Daimler Chrysler AG had plans to put such phantom stocks for its supervisory board members to a vote at the upcoming shareholders’ meeting (April 7th 2004). Due to these uncertainties, Daimler Chrysler AG will now abstain from the introduction, see Daimler verzichtet auf Phantomaktien – Aktionärsschützer pochen auf Transparenz, Börsen Zeitung, March 24th, 2004, pp.1. 11.Google Scholar

20 Professor Seibert, Ulrich, head of the company law section at the German Federal Ministry of Justice, as cited in: Berlin schließt Tür für Optionen an Aufsichtsräte, Börsen Zeitung, March 12th, 2004, p. 6.Google Scholar

21 Baums, (ed.), Bericht der Regierungskommission Corporate Governance, 2001, p. 104.Google Scholar

22 Baums, See (ed.), Bericht der Regierungskommission Corporate Governance, 2001, p. 239–40.Google Scholar