On 19 June 2009, the German Parliament (Bundestag) passed legislation which aims at limiting remuneration of the members of the management board (Vorstand) of German stock corporations (Aktiengesellschaften (AG)). The act comes as a reaction to the financial market crisis and targets what is perceived as misguiding incentives for senior management. It requires that any remuneration structure is aimed at improving the long-term business development of the relevant corporation.

While the act does not contain an absolute or relative upper limit for remuneration, it requires remuneration to be customary in the circumstances and in comparison to similar companies and to ultimately mirror performance of the management board. Also, any variable component must be assessed on the basis of a multi-year period and must be granted subject to specific caps in cases of "extraordinary developments".

Under the terms of the act, the members of the supervisory board (Aufsichtsrat), the corporate body that is responsible for determining management board remuneration, may be held personally liable where the remuneration is not adequate. In addition, the act provides that management board remuneration will now generally be reduced if the corporation suffers what the act refers to as "extraordinary developments" – circumstances that would make it unfair to continue to pay full remuneration, such as a loss making situation, salary/wage reduction at the level of the general work force and mass dismissals. Moreover, the mandatory holding period for stock options has been increased from two to now four years.

The act additionally aims at strengthening responsible behaviour of management by providing for a deduction of 10% of the damages claim or up to one and a half times annual fixed salary in respect of D&O (director and officer) insurance for senior management. Existing D&O insurances must be generally be amended by 1 July 2010.

Also, to enhance transparency, remuneration for the management board may no longer be determined by a committee of the supervisory board but must instead be approved by the entire supervisory board.