Communication of the Supervisory Board (Chair): What Requirements Do Internal and External Stakeholders Have?

Communication by the Supervisory Board is an important instrument and can have both positive and negative effects. As the recent example involving OpenAI and its CEO Sam Altman shows, incorrect communication approaches can, in the worst case, destroy trust and corporate value.

Dr Sandra Binder-Tietz, Managing Director of the Günter Thiele Foundation for Communication and Management and of the Center for Research in Financial Communication at Leipzig University, spoke at the latest edition of the Frankfurt School Corporate Governance Working Breakfast (CGWB) about the requirements that internal and external stakeholders place on Supervisory Board communication. The CGWB is a recurring event series hosted by Professor Dr Julia Redenius-Hövermann, Professor of Civil Law and Corporate Law at Frankfurt School, and Sabrina Biedenbach, Board Office Biedenbach.

The German Corporate Governance Code recommends that the Chair of the Supervisory Board should, within an appropriate framework, be prepared to engage in discussions with investors on Supervisory Board-specific topics (Recommendation A.6). Similar recommendations can be found in other international corporate governance codes, some of which even broaden the perspective to include communication by the chairs of various committees (e.g. the UK Corporate Governance Code).

With regard to the stakeholders of Supervisory Board communication, three groups can be distinguished:
(1) the socio-political public (including the media),
(2) the corporate public (including the Management Board and executives), and
(3) the capital market public (including investors, shareholder representatives, proxy advisors and financial media).

A key requirement for communication is comprehensive and up-to-date information regarding Supervisory Board activities and corporate governance matters. Disclosure obligations, as the most important communication measure of the Supervisory Board, generally already cover a large part of the information needs. In special situations, however, increased demands from all stakeholder groups may require more proactive communication for a limited period of time. The specific expectations of stakeholders differ in this context – for example, proxy advisors typically seek clarification of technical issues, whereas journalists are more concerned with contextualising events.