Is the BoD’s compensation retractable?

With the recent ruling of last July (ruling no. 3755/2020), the judges of the business section of the Court of Milan analyzed again the issues connected to BoD’s members compensation but, while the last ruling no. 27335/2019 was focusing on the onerousness or gratuitousness of the role (, this time the Court focuses on the nature of the compensation after it has been awarded by a shareholder resolution.

First of all, it should be noted that the Court, recalling the majority leanings of the Supreme Court (Supreme Court no. 24139/2018), perhaps resolving the doubt of interpretation that had arisen in the previously mentioned ruling, argues in favor of the onerous nature of the directorship appointment. On such point the verdict clearly states: “[…] with the acceptance of the role, [the director] acquires the right to be remunerated for the activity performed“.

Starting from the above basic assumption, the Court recalls that the right of the directors to be remunerated is an available right and is not included in the protection granted by clause 36 of the Constitution to employees. Therefore, it may be subject to different regulations: at a corporate level (the By-Laws could provide for the gratuitousness of the appointment) and at a negotiation level (it could be withdrawn).

Before analyzing the merit of the case, the Court also recalls that the withdrawal, pursuant to article 1236 of the Italian Civil Code, is a unilateral act that produces its effects after its communication to the debtor (so-called “atto recettizio“). Therefore, the withdrawal would be invalid if addressed to a third person who is not a part of the relationship to which the withdrawal refers.

Moving on to the merit of the case, after resolving a certain compensation to the director, due to a liquidity crisis faced by the company, the shareholders’ meeting resolved a unilateral reduction of such compensation. This gave rise to a dispute as to whether or not the shareholders were entitled or not to unilaterally modify the compensation already resolved in favor of the company’s director.

The ruling recalls the general principles on the effectiveness of a contract in force by and between the parties (1372 Civil Code) and the rules which regulate the unilateral termination of it (1373 Civil Code) and clearly states that “[the right to remuneration] is no longer retractable by the company itself [after having been resolved]“. Therefore, the right to obtain compensation after it is resolved by the competent corporate body is an individual right of the director and its modification mandatory needs the agreement of the director itself, regardless of the reasons underlying such modification.

Carlo Riso