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The days of the "old boy networks" in German supervisory boards are long gone. Not only policymakers demand a professionalism of supervisory board activities; the recent scandals and crises have also shown a need for responsibility and accountability of supervisory boards in the general public. Today more than ever, supervisory boards require extensive knowledge and skills, not least in financial communication, to be able to fulfill their core tasks – which are to supervise and provide advice.
This is particularly important in dealing with shareholders who elect the supervisory board to represent them. If, in the past, the dialog with investors was reserved for the management board, a fundamental change has emerged in recent years in the behavior pattern of capital markets. In prominent cases, for instance, hedge funds and large international investors have ended talks with the management board to communicate directly with the supervisory board. Examples abound in which, conversely, supervisory boards have actively sought the dialog with big investors in issues such as management board appointments.
In the meantime, practically all professionally operating institutional investors have established guidelines for communicating with publicly listed companies, whereby a large majority of them aims in the future to engage more actively in the dialog, for example, at shareholders' meetings. According to surveys, disputes are expected in the current annual shareholders' season or, if administrators have their way, a deviating voting behavior of institutional investors, especially regarding issues such as management board compensations, new elections and capital increases.
But not only the preparation and implementation of a successful annual shareholders' meeting requires the proper handling of the supervisory board with the shareholders; there is also a growing need for direct contact with the capital market. A topclass panel of multi-supervisory boards, ex-IROs, ex-management boards and investor representatives will discuss the new role of the supervisory board as investor relations activist and the associated legal challenges and pitfalls.
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