BusinessSalary Of The Executive Director Can Be Approved Without The Board

Salary Of The Executive Director Can Be Approved Without The Board

It is not necessary for the remuneration of executive directors in limited liability companies to be approved by the general meeting, as established by the General Directorate of Legal Security and Public Faith (DGSJFP), in a resolution of July 7, 2021.

It considers that, although the remuneration concepts of the executive directors must be included in the bylaws, these can be referred to the contract that is entered into between the executive director and the company to specify whether they will be remunerated for all or only for some of these concepts.

Thus, it considers that the protection of the partners is made compatible, by fixing the possible remuneration concepts in the statutes and the maximum amount of the annual remuneration of all the administrators is approved in the general meeting, with the adaptation to the needs of the practice by How much is attributed to the board of directors the power to choose, from among the different remuneration items provided for in the bylaws, those that must be included in the contract, without the need to modify the bylaws.

Remember that, in its resolution of November 5, 2015, of article 249 of the Capital Companies Law (LSC), it is concluded that it is necessary to enter into a contract between the executive administrator and the company, which must be previously approved by the board of directors with the requirements established by said precept.

It is in the contract that all the concepts for which you can obtain compensation for the performance of your duties are detailed, including, where appropriate, the eventual compensation for early termination and the amounts to be paid as insurance premiums or contribution to savings systems.

And said contract, in accordance with the last subsection of article 249, section 4, must be in accordance with the remuneration policy approved, if applicable, by the general meeting. “But the reference to that contract and that remuneration policy should not necessarily appear in the statutes. These are issues on which there is no statutory reserve,” stated in the resolution.

The Supreme Court, in a ruling of February 26, 2018, categorically excluded any statutory reservation and competence of the general meeting of the company with respect to the remuneration of executive directors.

Other statutory clauses
For this reason, in the resolution of October 31, 2018, and subsequent resolutions, the DGSJPF has considered other statutory clauses that do not include any mention that contradicts the possible statutory reserve to accommodate certain points related to the emoluments of executive directors or deny the competence of the general meeting to define elements of its quantification.

The DGSJFP limits itself in these resolutions to foreseeing the right to receive the corresponding additional remuneration for the performance of executive functions and to substantially reproduce the requirements established in the LSC.

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