What is the reward of directors?

Rewarding

directors is a complete package of compensation received by the director from the company. It is not only a salary, but may also include bonus payments, shares, stock purchase options and other benefits. Relevant legislation on the structures of the company may limit the way in which the remuneration of directors is calculated, especially if it has tax consequences.

The director is a supervisory officer of the company. In most countries, directors exist only in an enterprise that is an independent legal entity, such as corporation or a similar type of society rather than one own ownership or common partnership. While the director can own shares in the field, it is usually not mandatory. The work of the director is not usually associated with the daily operation of the company, but rather as a representative of shareholders in supervision of the company. Directors often have the power to vote on issues that are not considered to be so significant enough to require the vote of all share.

Exactly what the level of directors should be, it is usually a matter for society itself to determine, for example, through articles of the association. Some companies allow shareholders to vote on proposed reward packages, while others allow the directors to set levels. The fact that directors must act in the best interest of society may be a natural legal restriction. If the company is in financial problems, the excessive level of directors remuneration could be considered a violation of this restriction.

One of the more complex elements of directors' reward is that it consists of many different elements compared to ordinary employees. The basic salary is often supplemented with benefits such as health care insurance or retirement benefits. Based on the company's performance, there may also be bonuses, payment in stock or payment in the form of stock options that allow the director to buy shares from the company at a fixed price that can be sold in the open market forprofit.

accurate tax treatment and further restrictions on remuneration of directors may depend on the country or state and the legal structure of business. The differences that may be important are whether the director is also a shareholder in the company, whether the director fulfills other professional duties for the company, such as playing in the role of direct management. It can also change whether the reward is completely fixed or dependent on the performance of the company.