Le leader of a company can benefit from a remuneration in exchange for his functions or exercise his mandate on a voluntary basis. The founding partners have several means to determining the CEO's salary : in the articles of association or by collective decision of the partners. Here are the rules to follow when it comes to definition of executive salary.
Provide for the remuneration of the company director in the articles of association
The terms of remuneration of the directors of a company can be directly fixed in the articles of association. In this case, the statutory clause concerning the manager or a specific clause determines the terms of compensation for each member of the company's board of directors.
However, this system is not recommended as it would require constantly changing the company's articles of association to match the changes in remuneration.
For more information on the content of the statutes:
- the content of the SASU statutes / the content of the SAS statutes ;
- the content of the EURL statutes / the content of the statutes of SARL.
Allocate the compensation of the manager by collective decision of the partners
A company's articles of association may provide that the terms of executive compensation are determined by collective decision of the partners. Minutes of the meeting will then mention the components of each executive's remuneration. With each change in remuneration, a new collective decision is required.
The voting conditions for this resolution must be specified in the articles of association, it is usually a decision taken at an ordinary general meeting.
This method is easier than to define the remuneration directly in the statutes because, in the event of a change, the statutes remain unchanged.
Here is an example of a paragraph to insert in your articles of association if you wish to allocate the remuneration of the director in a separate document:
The methods for allocating the remuneration of the (chairman, managing director, manager, etc.) as well as its amount are defined by ordinary decision of the partners.
Voting by the company director on the amount of his remuneration
When an executive is a shareholder of the company, he has the right to take part in the vote concerning the amount of his remuneration. Generally, this decision is not governed by a regulated agreement.
If the leader is in the majority, this does not mean that he is free to define a salary as he pleases. A salary or a method of determining it contrary to the corporate interest and solely in favor of the executive's personal interest would be considered as a abuse of majority.
Implications of failure to pay fixed
The entrepreneur cannot grant himself salary increases or other advantages without the approval of the shareholders or without respecting the terms of the articles of association. Any manager who fails to comply with this rule is liable to prosecution for embezzlement of corporate assets.
For further discussion on executive compensation:
- Remuneration of the president of SASU
- Compensation of the Chairman of SAS
- Remuneration of the manager of EURL
- Remuneration of the manager of SARL
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