15 The clash between labour law and company law

The second role that company law plays in executive compensation at listed companies is related to the division of decision-making powers and representative authority. In general, there is agreement about considering Art. 2:132.1 of the Dutch Civil Code (‘DCC’) (appointment of the executive) and Art. 2:135.4 DCC (determining individual executive compensation) to be representative regulations. Nevertheless, there is still a lack of clarity about how these representative powers relate to the power to enter into an employment contract/contract for services. Several authors appear to be of the opinion that the board of management, on the basis of the ordinary representative rules of Art. 2:130 DCC, is in principle empowered to draw up and enter into an employment contract/contract for services with a prospective or sitting executive. This gives rise to the belief that it is possible for one body (i.e. the supervisory board) to determine remuneration while the other body (i.e. the board of management) agrees different remuneration with the executive in the employment contract/contract for services. This would result in a clash between company law and labour law.

In my view, this presumed clash is much more limited than the literature suggests. A rather clear division can be made between, on the one hand, the appointment of and entering into an agreement with an executive that mainly takes place within company law, and on the other hand the implementation of the agreement which is subject to labour law regulations. The current system is in my opinion sufficient in this case.