The principle:

(2) The supervisory board has to monitor the executive board and to control whether there are claims for damages against members of the executive board.

Thereby, the supervisory board has to take into consideration that the executive board has a wide latitude to act, without which an entrepreneurship was impossible.

The reasons:

(II. 2. b. aa)

Besides the admissibility of wilfully taken risks, so the court, the elbowroom of the executve board includes the danger of committing misjudgements, because no entrepreneur, may he be as prudent as possible, is immune to mistakes. Even if the executive board does not have the right touch for the necessary entrepreneurial decisions, the supervisory board may only work towards a replacement. Not having a good nose, however, is no basis for liability.

A personal liability of the executive board members presupposes that the boundaries of reasonable decisions - as there are exclusive (vide iQ) orientation towards the company’s benefit, good governance, careful determination of the facts - are massively exceeded, or that there is irresponsible hazard instead of a merely aggravated risk, or that there are other - likewise severe - irregularities.

iQ: The reference to the company's benefit is not to understand as a statement against shareholder value, a term not that common in Germany at the time of the decision. Shareholder value, in the end, is to be seen as a part of the company’s benefit.

(II. 2. b. bb)

Given the supervisory board comes to the conclusion that there is room for a claim for damages, it has to sue the involved members of the executive board.

iQ: There is one problem. The allegation, that a supervisory board member has violated a duty, may well imply mistakes by the supervisory board itself. The latter has to monitor the executive board, so that every error of the executives may mean that the supervisory board did not perform its obligation to effectively control. Thus, supervisory boards will only willy-nilly sue members of the executive board.

CLM