Global Summit of Women 2015 Creative Strategies for Successful Women-on-Boards Initiatives: The new Quota Law in Germany Elke Ferner, MP Parliamentary State Secretary /Vice Minister Federal Ministry for Family Affairs, Senior Citizens, Women and Youth, Germany Dear President Natividad, Dear Colleagues, I am delighted and honoured to open this session. Thank you President Natividad for having me here and share my views on this important topic with such an inspiring audience. On behalf of Minister Manuela Schwesig, a very sincere „Hello“ to all of you. On May, 1st 2015, a gender-quota law for the supervisory boards of large listed companies was enacted for the first time in German history. Why has Germany taken this step? The answer is simple. Nothing else has shown satisfactory results. Within German boards and in leading positions, we still have quite a solid glass ceiling that prevents women from getting there. 11.11.2018 1 1

A working world of equal participation today More girls than boys obtain a university entry qualification (Abitur) (53%), More women than men graduate from university, and often young women perform better. What’s the situation in Germany? Since years more girls than boys obtain a university entry qualification – 53 % (Abitur). In the last years even more women than men start their studies at university And an equal number graduate from university Often young women graduate with better grades. So, one could conclude: Gender equality has already been achieved in the educational system. However, this does not apply to the situation on the labour market, despite of the fact, that gender equality is anchored in our Constitution. Let’s take a closer look – for example at the gender pay gap: In Germany, it still is 22%, and much higher than the EU average of approximately 16%. 11.11.2018 2 2

Women in senior positions Industry and public service What about leading positions? The sad truth: Women still are hard to find in senior positions. Their share on the supervisory boards of the 200 largest companies is only 18.4% Only 5.4 percent of Executive Board members are women (source: DIW). And what about leading positions within the federal administration? Thanks to years of gender equality regulation in public administration, we have reached a share of 30% women here. 11.11.2018

The need for a quota 2015 (200 largest companies) Executive boards: 5.4% Supervisory boards: 18.4% Other nations set good examples: Role model nations such as e.g. France, Scandinavia have achieved a lot with women’s quotas 2006 (200 largest companies) Executive boards: 1.2 % Supervisory boards: 7.8% since 2001 Voluntary agreements with industry The experience of recent decades has shown, that progress can’t be achieved without binding regulations. Since 2001 voluntary agreements between government and industry have tried to increase the share of women in senior positions. However- as you can see on this chart - the results are minimal and keep us asking for more.  Within 10 years the percentage of women in the top 200 German executive boards has increased from 1,2 percent to 5,4  percent.  If industry goes at this pace we will need to wait another 30 years to reach parity in the supervisory boards and more than 100 years to reach parity in the executive boards This time is definitely too long! The more obvious increase – from 7,8 percent to 18,4 percent on the supervisory boards has an easy explanation in Germany: Supervisory boards consist of two benches – one half represents the employees and trade unions, the other half represents the shareholders. The share of women has increased mostly due to an increased number of the employee’s representatives 11.11.2018

It‘s a Question of Justice initiate cultural change more diversity results in more success Equal chances become the „rule“ So, since voluntary measures do not work, a gender quota law simply is a question of justice. A fixed quota is a means to an end – it is not a target. Women need the quota to get to the top – they don‘t need the quota to stay there. With this law, we aim to change the mind set, and truly change our business culture: This Change needs be to initiated from the top and from the bottom. More women on the top will bring more women into further leading positions. Why should we waste  this highly promising potential ? Enhancing the leadership diversity will make companies more powerful and more successful. It’s about women and men working together - hand in hand, as true and equal partners. And it’s about real partnership: We want women and men to equally share responsibilities, -  at home and at work     strengthen partnership 11.11.2018 5 5

What does the Quota Law do for us? The Quota Law increases the share of women: In senior positions in private industry In senior positions in the Federal service In positions on Federal panels Thus the Quota law for both the private and public working world, only was the next logic step. What will we achieve with this law? I am convinced: We will ensure that more women will be appointed to senior positions, particularly on supervisory boards, but also in executive boards as well as in higher management positions below board level. We also will ensure that more women reach the top positions not only in the Federal administration but also if the German government has the right to appoint members to boards, panels or commissions 11.11.2018 6 6

The essence of the Quota Law for industry Further goals set for industry Tightening up the laws for the public service 1st pillar 2nd pillar 3rd pillar  The Quota Law consists of three pillars. The 1st pillar, consists of a binding minimum 30% quota for the supervisory boards of Germany’s 100 major listed companies. Why 30 % ? We need to achieve this critical mass. The first female who will enter a male panel will change the management culture and open doors for further women. This is a fact. 30 % is the critical mass, that will change the way, how people treat one another The 2nd pillar relates to companies which are listed or have more than 500 employees. Since May 1st these companies are obliged to target an increase in their share of women within their supervisory and executive boards AND on the two highest management levels. These targets as well as the results have to be made public. The 3rd pillar relates to the Federal administration. As government, we want to be a role model and grow beyond the 30% share.     Our goal for 2018 is:  Parity ! 11.11.2018 7

What sanctions does the Quota Law embody? Example 12-member supervisory board Representatives employees of shareholder maxs Maximum or mins Minimum ors or ors What sanctions does the Quota Law embody. Let’s take as an example of a twelve member supervisory board! I would like to explain to you briefly our sanction of the so called “empty chair”: Why is this sanction so highly effective? As I mentioned before - we have a balance of powers on our boards. 50 percent of the members are elected by the employees and trade unions, 50 percent are chosen by the shareholders. This means for our example, only a maximum of 4 men can be elected on each side of the board. Further more, to fulfill the minimum 30 % quota each side has to elect at east 2 women. If they don’t elect enough women – the respective chair or chairs remain empty. The better each side implements the quota, the more seats they will get, the more powerful they will be. I see this as the most effective sanction, we can possibly have and my guess is: both sides will happily fulfill the quota. In three years our Quota Law will be evaluated. There still is so much more to share about this law. Much more than the fixed quota. There are regulations for the boards of government owned companies and bodies. but let’s not wonder off in too much detail here.  8

Let's make change happen! Thank you very much! However, may I just add one last comment? The quota only is one of many components on our way to gender equality. In Germany, it belongs to  a wider framework – opting for true partnerships between both sexes at eye level. This includes: equal pay, and fair share of work and family duties. Let’s not forget the importance of a good child care infrastructure and many more measures. Dear all, thank you for your cherished attention I am all ears for your comments . Let‘s make change happen! Thank you very much! 11.11.2018 9 9