The Board of Management
Liability und Damages
LiabilityThe members of the Board of Management manage the enterprise in a conscientious and cautious manner. Should they fail to honor their obligations, they are jointly and individually liable to the company for damages. The severity of the liability is clarified by the reversal of the burden of proof according to which a breach of duty is assumed if the member of the Board of Management cannon demonstrate that he has acted in a conscientious and cautious manner.
There is no liability for damages if the member of the Board of Management acts upon a lawful resolution of the General Meeting. Nevertheless, a breach of duty to the enterprise is also possible in the case of actions taken with the approval of the Supervisory Board. The German Stock Corporation Act stipulates that the company cannot limit or annul the personal liability of the members of the Board of Management for breaches of duty in the performance of their official tasks in advance. The enterprise can, however, waive its claim for damages for a breach of duty, or it can propose an agreement on such claims if more than three years have passed since the date on which the claim arose. This, however, requires the approval of the General Meeting, whereby such a waiver of claim does not come about if an objection is raised by shareholders holding shares of over ten percent.In general, the company cannot pay damages for members of its Board of Management. It can, however, conclude appropriate insurance policies for the members.
The D & O policy for the Board of Management and Supervisory Board of the company does not provide any insurance cover for intentional acts and omissions or for breaches of duty knowingly committed. Insurance cover is provided only for negligent breaches of duty by members of the Board of Management and Supervisory Board, so that this is the only context in which the question of the agreement of a deductible arises.
The company`s D & O policy does provide for a deductible for the area of ordinary or gross negligence on the part of members of the Board of Management. Moreover, in cases of grossly negligent breaches of duty by members of the Board of Management the Presidential Committee of the Supervisory Board with responsibility for personnel matters may agree to make a percental deduction from the variable portion of the remuneration of the member of the Board of Management concerned. In terms of its overall financial result, this would be the same as a deductible. In the view of the company, this rule enables individual cases to be judged more fairly on their merits than the blanket approach of the German Corporate Governance Code.
