good observation, but not entirely correct. ‘Board of directors’ is an ambiguous term as applied to German AGs. The board of an American listed company contains a mix of senior managers and external people as directors. (Closely-held companies are a lot freer to have insiders only on their board.) The AG by contrast has two boards, a supervisory board that consists solely of external directors and a management board that consists solely of senior executives.

These two boards together with the shareholders’ meeting are the three ‘organs’ of the corporation. The meeting elects the supervisory board; the supervisory board hires the management board. No organ may give binding instructions to another (though certain acts of one organ can be subject to approval by another). Nobody may serve on both the supervisory and the management board at the same time.

Under German law ‘co-determination’ principles, one third of the membership of the supervisory boards of mid-sized companies must be worker representatives; in larger companies, it’s one half. (The chairman has a casting vote. Though I believe a company is free, in theory, to choose a worker rep as chairman, I have never heard of this happening in real life; in effect, the shareholder reps can always prevail.) Worker reps are usually a mix of actual employees of the firm and union officials.

Especially in the case of big corporations (with their larger component of worker reps), and most especially when the unions concerned are known to be stroppy, an AG’s charter will typically keep the supervisory board’s competences to the minimum required by law.

So in a company like DaimlerChrysler, when we talk about the ‘board’, in almost all circumstances the board that matters is the management board. That said, Daimler is a bit unusual among German AGs in that its CEO is an enthusiast for co-determination (many German managers hate it). So far as I can tell, none of the managing directors is a state functionary; all seem to have worked their way up the ranks with the exception of one Thomas LaSorda, who is also Chrysler’s COO. Doubtless his board membership and executive title are sinecures conferred on him for his services to baseball*.

On the supervisory board side, again there are no state functionaries. Those worker reps who are union officials are certainly functionaries, and I suppose (especially in Germany) one can make a case for calling them ‘political functionaries’. But they are certainly not state functionaries in the sense Baums was speaking of.

BTW, if you take a close look at the offering documents Daimler published for the Chrysler acquisition, you’ll see that the company made clear it was going to adopt senior executive compensation packages on the piggish American model (this was a stark break with German tradition). As the company explained, now that it would be competing directly in the American market it was necessary to offer senior managers vast swimming pools full of loot in order to attract and retain the very best talent. Perhaps Daimler was right that this was necessary; but many people (not least Daimler’s shareholders) might think this a useful illustration of the difference between ‘necessary’ and ‘sufficient’.

* Joke (I hasten to add). I would not be surprised to learn that this is a different LaSorda altogether to the baseballing one.

Here’s a link to DaimlerChrsler’s official site:

http://www.daimlerchrysler.com/dccom

The board structure used by Daimler is here. The board controls the choice of Executive officers (the managers), and DOES include political appointments (i.e. State functionaries).

The really really cynical amoung us should note that DaimlerChrysler settled its US shareholder suits over misrepresentations during the acquisition of Chrysler. In fact, here’s an article from 2000 that was basically optimistic regarding the plant closures.

http://www.wsws.org/articles/2000/nov2000/chry-n28.shtml

It’s all nice and good to pretend the word “shareholder” includes trade union reps for a fraction of a company’s employees, and that German (and a UAW) union reps appointed to board positions aren’t political. But in the real world those board members backed their CEO’s aggressive Union busting in North America for years, and destroyed tens of billions of dollars of value in the process anyway. Now that they’re faced with the prospect of suffering the same fate as the US union shops they backstabbed from a distance, the German labor reps suddenly demand strikes! Thus the Daimler board manages a neat trick in that they betray organized labor AND capital with either hand! Yuck.

governance is the keyword here, although I think it’s not just about corporate governance. I think the scandal at VW and – the way it is being handled – is another example of what Wolfgang Streeck calls paradigm shift in German elite (self) perception in a recent working paper called “after corporatism, new elites, new conflicts”

http://www.mpi-fg-koeln.mpg.de/pu/workpap/wp05-4/wp05-4.html

From the abstract – “Postwar corporatism may be conceived as a conflictual partnership between organizing elites of labor and capital. Their contribution consisted in keeping their camps together and securing the compliance of their followers with compromises negotiated with counterpart elites. In the 1980s camp solidarity on both sides began to dissolve, due to both exogenous shocks and endogenous overtaxing. In the self-description of the new liberalism the emerging post-corporatist social formation appears as a market-meritocratic order liberated from political distortion, in which everyone earns what he has deserved with his productivity. There is reason to believe, however, that what is in fact developing is a restoration of hierarchical control at the enterprise level and growing power of the organizational elites especially of large firms set free from corporatist obligations. If this was indeed the case, one may expect new distributional conflicts of a sort resembling conflicts in liberal market economies like Britain and the U.S.”

I don’t agree with a lot of what he mentions in his article, in particular, I don’t think that secondary income spreads will increase to US levels. It is the relative absence of distributive conflicts in the US that allows the reestablishment of a kind of plutocratic hierarchical governance model. I think that what will remain of the “neo-liberal indoctrination” in Europe will have increased efficiency orientation and amended distributional patterns with additional meritocratic elements without endangering social cohesion. The CDU will fight this battle with the FDP in Germany come September.