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Remuneration

Remuneration for the management board

Payments to management board members are laid down by the supervisory board; however, remuneration for management boards is a highly regulated area in Slovenia, with the Companies Act (ZGD-1) containing individual principles for their remuneration, while the so-called Lahovnik’s Act (Act Governing the Remuneration of Managers of Companies with Majority Ownership held by Republic of Slovenia or Self-Governing Local Communities) even lays down remuneration amounts for board members at companies with majority ownership of the State.

The basic salary of board members should depend on the size of the company, complexity of its operations (group of companies, internationalisation), the industry engaged in, and whether or not it is a listed company. A supervisory board must also consider the company’s financial position. The variable share of remuneration for board members depends on indicators that are agreed every year between the management board and supervisory board, and are related to the attainment or surpassing of the plan in pre-set quantitative or financial indicators as well as in other qualitative indicators that are important for company operations and the realisation of its strategy and sustainable development. The salary amount should, therefore, reflect such an agreement between the supervisory board and management board.
A supervisory board should assess the performance of the management board every year and adopt a resolution on the disbursement of the variable share of remuneration. Pursuant to Article 270 of the Companies Act, a supervisory board may request under certain conditions that a performance bonus already paid be returned, in part or in full.
Remuneration for board members must be in line with the remuneration policy as per Article 294 of the Companies Act. If the General Meeting fails to lay down a remuneration policy, the supervisory board must follow the principles from that Article of the Act.

Remuneration for supervisory board members

Remuneration for supervisory board members is laid down by the General Meeting or a company’s Articles of Association. Remuneration must be in suitable proportion to the tasks of supervisory board members and the company’s financial position. Supervisory board members cannot participate in profit. Remuneration for supervisory board members should be composed of an amount for performing the function, while attendance fees for meetings should be the variable share of remuneration for supervisory board members. Supervisory board members are also entitled to the reimbursement of travel costs.

 
NEW

Article 279(3) of the Companies Act: “Remuneration for committee members who are not supervisory board members shall be laid down by the supervisory board with a resolution.”

Before that, the legal theoretical opinion and prevailing practice was that remuneration for external experts in supervisory board committees fell within the competence of the supervisory board and not the General Meeting.


Legislation:
  • Companies Act (ZGD-1), Official Gazette of the Republic of Slovenia, No.65/09 - ZGD-1- official consolidated text 3 (amendments)
  • Act Governing the Remuneration of Managers of Companies with Majority Ownership held by the Republic of Slovenia or Self-Governing Local Communities, Official Gazette of the Republic of Slovenia, No.21/10
  • Act on additional taxation of a part of managers’ incomes in the period of financial and economic crisis, Official Gazette of the Republic of Slovenia, No. 78/09 (Constitution Court Decision repealing Article 12, Official Gazette of the Republic of Slovenia, No.107/2013)

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