(Bloomberg) — Time is running out for Ulrich Lehner, the supervisory board chairman of German steelmaker ThyssenKrupp AG, as lawmakers prepare to enforce female quotas in corporate boardrooms.
The number of women on the board that oversees ThyssenKrupp’s executives is set to rise to four of a total 20 after a shareholder meeting today, short of the 30 percent minimum that will be required. Starting in 2016, more than 100 of the country’s biggest listed companies will be forced to choose women when filling vacant supervisory board seats to reach the threshold. This year, smaller firms must set their own targets and publicize plans to achieve these.
“Good women are a rare commodity” for supervisory boards, Lehner told journalists in Dusseldorf on Jan. 27. “Where will these women come from who are suitable to take up supervisory board positions? They come from the same places as suitable men come from, from occupations that qualify them to supervise companies.”
German managers are railing against the legislation that will be introduced to lawmakers in a first reading in the federal parliament today. Firms’ sluggishness in advancing boardroom diversity prompted Chancellor Angela Merkel’s government in November to resort to quotas to enforce change.
The new rules are making it more difficult to fill board seats, said Lehner. “I’m an opponent of the female quota in the corporate governance codex. I’m a friend of women. I love women on supervisory boards. The more, the better. The better these women, the better.”
While women hold several key posts in Merkel’s cabinet, including the Defense Minister, just 6 percent of management board positions and 22 percent of supervisory board seats are held by women at companies in the benchmark DAX Index, according to the Economy Ministry’s website.
Germany lags European neighbors including Belgium, Denmark and The Netherlands, according to data compiled by Bloomberg Intelligence of Stoxx Europe 600 Index companies in 2013. Norway has the highest proportion in Europe after introducing a 40 percent quota in 2003, followed by Finland and France, which also have legislation in place.
The larger German companies affected by the rules will need to add about 170 women to reach the 30 percent target, Manuela Schwesig, Germany’s family minister, said in an e-mailed response to questions.
“I’m sure that among 40 million German women there are 170 who are very capable of doing the job,” she said. “I can’t follow the frequently used argument that there aren’t enough women around for supervisory board positions in certain industries.”
Lehner represents a generation of managers whose network of supervisory board posts gives them the balance of power in corporate Germany. In addition to opposing female quotas, he also rejects steps to limit the number of board seats one person can occupy, describing the rules as “patronizing.”
The ThyssenKrupp chairman, who started out 40 years ago as a tax auditor at KPMG before becoming chief executive officer at consumer chemical company Henkel AG in 2000, is also chairman of Deutsche Telekom AG and holds board seats at Porsche SE, EON SE and Novartis AG.
His peers include Gerhard Cromme, the chairman of Siemens AG; Werner Wenning, the chairman of EON SE and Bayer AG and Cromme’s deputy at Siemens; Manfred Schneider, the chairman of RWE AG and Linde AG; and Wulf Bernotat, deputy chairman of insurer Allianz SE and a board member at retailer Metro AG, Bayer and Deutsche Telekom.
German supervisory boards, composed of shareholder and employee representatives, are responsible for hiring top management and sign off on strategic decisions.
“The strong reaction to the bill has shown that legislation is necessary,” said Anke Hassel, a professor of public policy at the Hertie School of Governance in Berlin. “Companies for a long time have used the old excuse that there aren’t enough qualified women around, while they haven’t done much to change this.”
Lehner “represents a widespread view,” she said. “German corporate culture is very conservative, because German culture is conservative. The traditional role of the family is kept alive by Germany tax law and other regulations. Corporate Germany reflects German society.”
Women are beginning to enter the fold. Simone Bagel-Trah became the only female supervisory board chairman of a DAX 30 company when she was elected at Henkel in 2009. She is also on the board at Bayer.
Nicola Leibinger-Kammueller, the chief executive at machine tools maker Trumpf GmbH, holds board seats at Siemens, Deutsche Lufthansa AG, Voith GmbH and Axel Springer AG, while Renate Koecher, the director of market research and opinion organization Allensbach Institute, is on the board at Allianz, Bayerische Motorenwerke AG, Infineon Technologies AG and Robert Bosch GmbH.
The new rules don’t just apply to supervisory boards. All companies also have to set targets for increasing the number of women on their management boards, which are responsible for day-to-day operations.
“We simply can’t wait, we need something to change,” said Ramona Pisal, the president of the German Women Lawyers Association, a Berlin-based pressure group that has attended more than 300 annual shareholder meetings since 2009. “Supervisory boards are a strong signal and they are not powerless.”