Activist Directors in Germany

In Delaware, the practice of activist shareholders placing their own nominees on boards has become routine. In Germany, by contrast, so-called activist directors (namely directors or employees of activist hedge funds serving as members of supervisory boards of German stock corporations) were, until quite recently, extremely rare. This is rapidly changing. Notably, in 2024, activist investor Jeffrey Ubben joined the supervisory board of Bayer AG, and Scott Ferguson of Sachem Head took a seat on the supervisory board of Delivery Hero SE. These developments highlight the increasing involvement of US shareholder activists—who have been at the forefront of major German activist campaigns in recent years—and reflect the growing vulnerability of DAX and MDAX constituents to such strategies.

As German companies and their long-term investors encounter this new phenomenon, it is critical to clarify distinctions between German and Delaware law, particularly regarding directors’ duties. US activists cannot assume that German law mirrors Delaware’s approach; the contrasts are both substantive and consequential. Hence, activism needs to adapt to different corporate governance environments (Ringe, 2025). This post provides a comparative analysis, identifying key divergences central to the governance of activist directors.

The Path to Board Representation: Legal and Structural Constraints

In Delaware, hedge fund activists typically achieve board representation through one of two avenues: a contested proxy fight or, more frequently in recent years, a settlement agreement (Christie, 2025). German corporate law, by contrast, provides for only a single pathway: election at the annual general meeting. Activist shareholders can submit a counterproposal with their own candidate. This was the case, for example, at Primestone/Brenntag SE. Primestone's nomination was the first one in Germany to be supported by recommendations from ISS and Glass Lewis, although ultimately unsuccessful.

The recent successful examples at Bayer and Delivery Hero diverge from this approach. In both cases, the activist director was nominated not by shareholders, but by the supervisory board itself, with Delivery Hero’s nomination following a settlement agreement with Sachem Head. However, the jurisprudential landscape in Germany makes clear that such settlement agreements do not carry the same legal force as in the US. Under German corporate law, the supervisory board’s discretion in making nominations and decisions cannot be irrevocably surrendered, not even through shareholder agreements. Only ‘best effort’ obligations are permissible: at most, the board may commit to advocate for, but never guarantee, a specific nomination. 

Further, while Delaware boards may be rapidly transformed via proxy fights, the structure and cadence of German supervisory board appointments, characterized by multi-year terms, render a wholesale ‘board sweep’ as seen in US proxy contests practically impossible. This is a similar effect to the once widely used, but now rare staggered board in Delaware. The German regime of co-determination, which requires that a third to half of supervisory board members of certain corporations are employee representatives, further insulates supervisory boards from such rapid change. However, shareholder activists can submit a shareholder proposal to dismiss incumbent supervisory board shareholder representatives and to fill the vacancies with their own candidates if they hold 5% of the shares or €500,000 of the share capital. A supermajority of 75% of the votes cast is generally required to remove supervisory board members. A prominent example of a successful proxy fight in Germany is AOC/STADA AG. In this case, the activist hedge fund gained a supervisory board seat and obtained the removal of the incumbent chairman of the supervisory board.

Strict Duty of Confidentiality—a Clash of Cultures?

The duty of confidentiality of supervisory board members represents a central and stark divergence between the two legal regimes. Rising numbers of activist directors in Germany present potential risks to the sanctity of confidential board deliberations. A robust body of empirical work from the US (Coffee and others, 2019) and experience from Delaware (eg, Ackman/J.C. Penney, Icahn/Illumina) demonstrates the hazard of information transmission from activist directors to sponsoring funds. 

There is no reason to assume that the tendency toward information sharing would be any different in Germany. Yet, in Germany, the duty of confidentiality is a strict legal obligation, applying even (and perhaps especially) to information flows between activist directors and their hedge fund sponsors. Where information qualifies as inside information under the European Market Abuse Regulation (MAR), these duties carry even greater weight. It is immaterial whether the hedge fund’s shareholding is significant or whether the activist director is a dual-fiduciary as a director of the hedge fund.

This legal stringency sets the stage for a pronounced ‘clash of legal cultures’ in German supervisory boards. Most activist investors operating in Germany are socialized in the US context, where Delaware law does not per se prohibit the sharing of board information (see Hyde Park and the case law referred to therein). Nevertheless, even Delaware imposes boundaries, as seen in the recent Icahn v deSouza litigation. In Germany, by contrast, the expectation and enforcement of confidentiality seems more categorical.

The Duty of Peace

Directors in both Germany and Delaware owe strict fiduciary duties; however, the contours of these obligations may differ. German law imposes fiduciary duty that is essentially equivalent to a ‘duty of peace’, which prohibits supervisory board members from publicly criticizing peers on the supervisory or management board. Disputes must be resolved within the confines of the boardroom. This norm imposes real constraints on activist campaigns the moment the activist director takes office. Furthermore, a German activist director cannot justify breaches of duty by appealing to shareholder primacy. Unlike in Delaware, German corporate law demands that directors consider a spectrum of stakeholder interests, employees, creditors, and the company as such, not exclusively shareholder value.

The Limited Scope of Settlement Agreements

In Delaware, settlement agreements are a versatile tool: typically, activist hedge funds agree to pause their public campaign for a certain period of time, to refrain from submitting shareholder proposals or from increasing their shareholdings. In return, the company grants them one or more board seats. Experienced US practitioners also report that some settlement agreements (19%) expressly permit information sharing between activist directors and hedge funds.

German law, however, is more restrictive. Settlement agreements cannot override or diminish the statutory duty of confidentiality. They serve mainly to align the parties on a shared corporate vision, rather than to effect legally binding commitments around information-sharing or nomination.

This post is based on the author‘s recent paper published in the German law journal Zeitschrift für das gesamte Handelsrecht und Wirtschaftsrecht (ZHR).

Karl Döding is a senior research fellow at the Max Planck Institute for Comparative and International Private Law in Hamburg, Germany. 

Jannes Drechsler is an Associate at Freshfields PartG mbB in Frankfurt, Germany.