Compensation of Directors/Trustees (Section 29, Revised Corporation Code)

Summary

Attorney Marie Chris Batan Lasko's video on the MBL Classroom YouTube channel clarifies the compensation rights of corporate directors and trustees. Generally, they are not entitled to compensation unless specified in bylaws, and can only receive per diems for meeting attendance as per Section 29 of the Revised Corporation Code. Compensation, if any, must be approved by shareholders or members, with a cap set at 10% of the corporation's net income before tax from the previous year to prevent excessive payouts. The video educates viewers on the legal framework guiding director and trustee compensation, ensuring fairness and protecting the corporation's interests.

Takeaways

• 📚 The video is an educational resource by Attorney Marie Chris Batan Lasko, aiming to simplify the law.
• 🏢 The main topic discussed is the compensation of directors or trustees in a corporation.
• 📖 According to Section 29 of the Revised Corporation Code, directors or trustees are generally not entitled to compensation unless specified in the bylaws.
• 💼 Directors or trustees are typically not compensated because they are considered owners of the corporation, holding at least one share of stock.
• 💼 As owners, directors are expected to act in the best interest of the corporation, which is also in their benefit as shareholders.
• 💼 The concept of 'per diem' is introduced as a reasonable allowance for attendance in meetings, which is allowed under Section 29.
• 🚫 If the bylaws do not provide for compensation, directors or trustees should not receive any, except for per diems.
• 🔍 The determination of compensation, if provided in the bylaws, should not be made by the directors or trustees themselves to avoid conflict of interest.
• 🗳️ Stockholders or members, representing at least a majority, have the power to grant and approve compensation for directors or trustees.
• 💰 There is a legal limit on the total yearly compensation for directors or trustees, which should not exceed 10% of the corporation's net income before income tax from the preceding year.
• 📋 Corporations with public interest must submit an annual report detailing the total compensation of each director or trustee to their shareholders and the commission.

Q & A

What is the general rule regarding compensation for directors or trustees according to the revised corporation code?

According to Section 29 of the revised corporation code, directors or trustees are generally not entitled to compensation, unless the bylaws of the corporation provide for it.

What is the meaning of 'per diem' in the context of director or trustee compensation?

A 'per diem' is a reasonable allowance given to each director or trustee for their attendance at a meeting.

Why are directors or trustees typically not entitled to compensation as a general rule?

Directors or trustees are usually not entitled to compensation because they are considered owners of the corporation, holding at least one share, and are expected to act in the best interest of the corporation, which also benefits them as shareholders.

Can the board of directors or trustees determine their own compensation if it is provided in the bylaws?

No, the board of directors or trustees should not determine their own compensation to avoid conflict of interest and the potential for excessive self-awarding.

Who is responsible for determining the compensation of directors or trustees if it is provided in the bylaws?

The stockholders representing at least a majority of the outstanding capital stock or majority of the members can grant directors or trustees compensation and approve the amount at a regular or special meeting.

What is the maximum total yearly compensation that can be given to directors or trustees?

The total yearly compensation for directors or trustees must not exceed 10% of the net income before income tax of the corporation during the preceding year.

Why is there a limit set on the compensation for directors or trustees?

The limit is set to curb the practice of giving excessive bonuses to directors or trustees, thereby protecting the corporation and its stockholders or members.

Are directors or trustees allowed to participate in the determination of their own per diems or compensation?

No, directors or trustees are not allowed to participate in the determination of their own per diems or compensation to prevent bias and ensure fairness.

What is required for corporations vested with public interest regarding the compensation of directors or trustees?

Corporations vested with public interest must submit an annual report of the total compensation of each of their directors or trustees to their shareholders and the commission.

What is the purpose of discussing the compensation of directors or trustees in the video?

The purpose is to simplify and clarify the legal provisions regarding the entitlement and limitations of compensation for directors or trustees, as outlined in Section 29 of the revised corporation code.

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