Function-, incentive- and expense-related compensation of supervisory boards and audit committees - Empirical Evidence in the German DAX 30, MDAX, SDAX and TecDAX

This research examines the results of the empirical literature on the relationship between non executive board compensation (and audit committees), corporate governance quality, and firm performance. In addition, we tackle a lack of research and investigate the sustainability of compensation systems in an applied two-tier system. Our sample comprises all DAX30, MDAX, SDAX, and TecDAX listed firms from the business years 2010 to 2015. We derive recommendations for practical and regulatory action to encourage a sustainable compensation of supervisory boards. In contrast to the US-american board system, there is no empirical evidence for the relationship between supervisory board compensation, corporate governance quality, and firm performance for the German two-tier system. Our results show that most firms in our sample do not incentivize their supervisory board and audit committee with a sustainable compensation system.