French Labour law : The director’s compensation of listed companies must be submitted to the shareholder’s vote from March 18, 2017 (Decree n°2017-340 march 16th, 2017)

This a revolution. The law of December 9th 2016 sets forth that all the director’s compensation elements must be submitted to the shareholder’s vote.

The decree of March 16th, 2017  determine the conditions of such scheme.

From March 18th, 2017, the General Meeting of listed company (sociétés anonymes) must approve the Director’s compensation

Formerly, the General Meeting had only to give an advisory opinion in this matter.

1) Directors (dirigeants) concerned

This measure applies to listed stock companies (sociétés anonymes cotées).

This applies to:

  • The Chairman (présidents), General Managers (directeurs généraux) et Vice General Manager (directeurs généraux délégués) of listed stock companies with board of Directors (SA  à conseil d’administration) (C. com., art. L. 225-37-2),
  • The members of the executive board (membres du directoire), the unique General Manager and the members of supervisory board (conseil de surveillance) in French société anonyme governed by an executive board and a supervisory board (SA  à conseil de surveillance) (C. com., art. L. 225-82-2).

2) Approval of Director’s compensation by shareholder’s vote

The General Meeting must approve on Director’s remuneration at least once a year through a resolution.

The shareholder’s approval will be necessary for any modification of element of compensation and for renewal of the mandate (mandat) of a Director.

3) Elements of compensation that must be approved : all fixed, variable or exceptional compensation elements

The resolution adopted must define the principles and determining, distributing and awarding criteria’s of such compensation element that can be granted to Directors (Dirigeants).

The decree defines the fix, variable and exceptional element of the compensation and all benefit in kind.

In this respect, the decree indicates Directors’ elements of compensation and benefit in kind mentioned in Article L. 225-37-2, and in particular:
« 1° the attendance fees (jetons de présence) ;
« 2° the fixed annual compensation;
« 3° the variable annual compensation;
« 4° the variable pluri annual compensation ;
« 5° the stock options;
« 6° the free shares;
« 7° the exceptional compensation;
« 8° the golden hello;
« 9° the commitments indicated on article L. 225-42-1 (alinéa, 1 and alinéa 6);
« 10° the compensation element and any benefit indicated on Article L. 225-37-2 (alinéa1);
« 11° all remuneration element granted to the mandate (mandate);
« 12° all benefit in kind.
Decree n°2017-340 March 16, 2017 - Légifrance

Frédéric CHHUM, Avocats à la Cour (Paris et Nantes)

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