The German Corporate Governance Code Commission opposes federal legislation mandating a binding annual shareholder vote on executive remuneration. In a statement, Commission Chairman Klaus-Peter Müller expressed doubt whether a decision made by the shareholders at the annual general meeting will prevent excessively high management board remuneration. The German Corporate Governance Code instead places emphasis on greater transparency and an improved basis for decisions by supervisory boards as a means of putting a stop to excesses in management board remuneration.
While further regulatory and legislative intervention in setting management remuneration may satisfy certain expectations in some quarters of society, noted the Chairman, it would place fetters on global companies. More broadly, Chairman Müller appealed to policy-makers to trust in the self-regulating force of the German Corporate Governance Code, adding that it is neither necessary nor desirable for every aspect of business life to be governed by binding legislation.
First, I completely agree with the particular decision. Mandatory say on pay would be a horrible idea.
Second, wouldn't it be great if our regulators took Chairman Müller's appeal to heart?