On schedule for the female quota

Transcription

1 EY Governance Matters On schedule for the female quota Your timetable for implementing the new gender legislation Page 1

2 After years of voluntary self-regulation, with the German Act to Promote Equal Participation of Women and Men in Management Positions in the Private and Public Sector *, legislative authorities are now prescribing a fixed quota for the first time. The gender legislation entered into force on 1 May 2015, meaning that prompt action will be required by many companies in the private sector: : As of 30 September 2015, around 3,500 publicly listed and co-determined companies will for the first time be required by law to specify the percentage of women on their supervisory and management boards and in the two highest management levels. There is no minimum target, but rather a ban on a decline in the figure if it is currently below 30%. Gender equality between men and women even and especially in management and top-level management bodies is a central socio-political issue of our time. Statutory gender quota: Furthermore, the statutory gender quota in supervisory boards will apply to around 100 publicly listed and parity co-determined companies as of 1 January This stipulates that a supervisory board must comprise at least 30% women or 30% men. A status quo clause is in place that allows positions on the supervisory board already filled prior to 1 January 2016 to be continued to the end of their regular term. * Gesetz für die gleichberechtigte Teilhabe von Frauen und Männern an Führungspositionen in der Privatwirtschaft und im öffentlichen Dienst (FührposGleichberG). Page 2 Page 3

3 Your implementation timetable Monitoring Relevance Pages 6/7 Responsibilities Pages 8/9 Composition Pages 10/ Reporting Pages 12/13 Statutory gender quota Regular analysis of relevance criteria: Public listing Co-determination (headcount) Determination of responsibilities of the supervisory board (shareholder meeting, where necessary) and the management board as well as inclusion in the meeting schedule Distribution of tasks to the specialist departments, board offices, etc. Actual state analysis and target definition Preparation of composition matrices Targeted and long-term succession planning 30 Sep First-time determination of targets and deadlines 1 Oct Disclosure requirements first come into effect Definition of information sources and their integration into the reporting process Adjustment and preparation of reporting elements (corporate governance declaration) 30 Jun Final deadline for first implementation Jan Gender quota enters into force, disclosure requirements first come into effect Page 4 Page 5

4 1Relevance What rules apply to my company? On 1 May 2015, the German Act to Promote Equal Participation of Women and Men in Management Positions in the Private and Public Sector entered into force. As a result, gender diversity is required in supervisory boards, management boards and the two highest management levels either on the basis of the statutory gender quota or self-determined targets. Public listing Publicly listed company Publicly listed/non-listed company Legal forms affected AG/KGaA/SE* AG/KGaA/SE/GmbH/eG/VVaG Co-determination (headcount) Parity co-determined company (> 2,000**) Co-determined company (> 500***) Regulation Statutory gender quota Effects Composition Reporting * For companies with the legal form of a European company (Societas Europaea SE) with a dual-board structure and parity representation in the supervisory board or administrative body. ** Typically companies with more than 2,000 employees are parity co-determined companies (MitbestG [ Mitbestimmungsgesetz : German Co-Determination Act]), although certain companies with more than 1,000 employees are as well and MontanMitbestErgG [ Montan-Mitbestimmungsergänzungsgesetz : German Coal, Iron and Steel Industry Co-Determination Amendment Act]). *** Generally companies with more than 500 employees are one-third co-determined (DrittelbG [ Drittelbeteiligungsgesetz : German Act for One-Third Participation of Employees on Supervisory Boards]), as are stock corporations (Montan-MitbestG [ Montan-Mitbestimmungsgesetz : German Coal, Iron and Steel Industry Co-Determination Act] with fewer than 500 employees and that are not family companies and were established prior to 10 August Page 6 Page 7

5 2Responsibilities Who is affected? : The supervisory board defines targets for itself (if they are not subject to the statutory gender quota) and for the management board. At a GmbH (limited liability company), the shareholder meeting can be responsible for this. The management board (or the management at a GmbH) sets out the targets for the percentage of women in the two management levels below the management board. Regulation for Supervisory board Publicly listed and parity co-determined companies Statutory gender quota (determined by the supervisory board*) Publicly listed or codetermined companies Self-determined targets (determined by the supervisory board*) Statutory gender quota: The supervisory board must take the 30% gender quota into consideration in its election proposals to the annual general meeting/shareholder meeting. Depending on the percentage of women at the time, the supervisory board may propose only female candidates in certain circumstances. Management board/ management (determined by the supervisory board*) Key questions for the supervisory board: Is my company subject to co-determination legislation? What is the current percentage of women on the supervisory board and the management board or management? When do the existing contracts and board positions expire? What percentage of women is ambitious but realistic? Two highest management levels below the management board/management (determined by the management board/ management*) * GmbH: By the shareholder meeting, where necessary Page 8 Page 9

6 What has to be done? The handling of targets whether in the supervisory board, management board or management and/or subject to the gender quota requires a transparent composition process: Definition of a target criteria catalog (composition matrix*) Preparation of candidate requirement profiles Candidate selection based on profile with the help of a personnel consultant, if necessary Ongoing target vs. actual comparison and target definition based on the composition matrix Components of the target criteria catalog: Qualifications International orientation Time and commitment Industry know-how Independence Gender 2015 Maximum period until first-time implementation of targets First-time determination of targets and deadlines Obligation to implement statutory gender quota Gender quota enters into force 1. Actual state analysis Definition of the two highest management levels Calculation of the respective percentage of women Determination of scheduled vacancies 2. Target definition... Adequate and realistic targets Deadlines for achieving targets Minimum number of the underrepresented gender in absolute terms** Update of targets and deadlines (max. five years) Handling of targets by the supervisory board (the shareholder meeting, where necessary) and the management board 3. Implementation Definition of a pool of potential (internal/ external) candidates Long-term succession planning and targeted career development for internal talent Adjustment of the checklists for the supervisory board s election processes No penalties are incurred for failing to meet the defined targets. Elections or assignments in breach of the quota are null and void; the result is empty seats. ** In this context, both the overall and the separate fulfillment of the quota as well as a mathematically correct rounding to next whole number of persons must be taken into consideration. For Societas Europaea (SE) companies, * Please do not hesitate to contact us for further information on the composition matrix. only overall fulfillment is required; moreover, the rounding provision does not apply. Page 10 Page Sep 1 Jan 30 Jun successively Final deadline for first implementation periodically successively Quick check Sanctions 3Composition

7 4Reporting What must be disclosed? The composition targets (target criteria catalog) and composition monitoring (ongoing target/actual comparison) provide the basis for the detailed reporting on self-determined targets, periods selected and (where applicable) compliance with the gender quota Sep 31 Dez Disclosure of targets and deadlines and, where relevant, reasons for non-compliance annually for subsequent balance sheet dates Disclosure of compliance with the statutory gender quota and, where relevant, reasons for non-compliance annually for subsequent balance sheet dates 1. Nature of disclosure Information on the targets is to be disclosed in the corporate governance declaration pursuant to Sec. 289a (2) No. 4 and (3) HGB [ Handelsgesetzbuch : German Commercial Code]. Information on the gender quota is to be disclosed in the corporate governance declaration pursuant to Sec. 289a (2) No. 5 HGB. If the company is not required to prepare a management report, this declaration must be prepared voluntarily or made available on the company s website. 2. Report on targets and deadlines Information on defined targets and deadlines and, where relevant, the reasons for non-compliance Should the company fail to meet the quota, information on reasons and countermeasures taken Where necessary, specific information on the number of supervisory board members of each gender (shareholder and employee representatives) 3. Process-relevant changes Determination of the sources of information and the departments responsible (e.g., investor relations, corporate communication, etc.) Adjustment of templates for report elements Where necessary, draft of a separate declaration and incorporation on the website Quick check In addition to the composition-relevant requirements, legislative authorities also define new reporting requirements for companies, aimed at creating transparency with respect to achieving (their own) diversity goals. Companies that do not disclose targets and/or the gender quota in the corporate governance declaration (pursuant to Sec. 289a HGB) may face legal penalties pursuant to Sec. 334 et seq. HGB, which may entail fines or claims for damages of up to EUR 50k. Sanctions Page 12 Page 13

8 Your contacts Daniela Mattheus Head of Corporate Governance Board Services Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Friedrichstraße Berlin Phone Mobile Fax Mathieu Meyer Managing Partner Audit Germany Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Mittlerer Pfad Stuttgart Phone Mobile Fax Please do not hesitate to contact us for further information and support. Page 14 Page 15

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