Last December (2014) the Capital Corporations Act was amended and introduced, among other changes, important amendments in relation to directors’ remuneration.
In particular, the reform set out that all companies governed by a board of directors, in which one of them has been appointed as a managing director or any other executive function, must enter into an agreement with the managing director or executive by which the duties and remuneration of the position will be regulated, detailing not only fixed and variable salary, but also retirement benefits and golden parachutes.
This agreement shall be approved by two thirds of the members of the board of directors.
This amendment was introduced with the purpose of increasing flexibility in the regulation of the director’s remuneration, which before the amendments had to be exhaustively regulated in the by-laws of the company. However, it is important to remark that according to the literal wording of the law, the agreement with the managing director is compulsory regardless the position is remunerated or not.
As a result of the above, any Spanish company with a board of directors in which a managing director has been appointed should check with its legal team that they abiding with this new regulation.