Resignation from a board position
November 29, 2010 | 45,00 EUR | answered by RA Kristian Hüttemann
Dear Sir or Madam,
I intend to resign from my position as a board member of a public limited company for an important reason (not at an inopportune time) (= resignation due to the incompatibility of business policy with the duties of my employment contract or law and statutes). My employment contract as a board member still has a remaining term of just under 2 years. Do I generally have a right to a severance payment or payment of the remaining salary for the remaining nearly 2 years due to the premature termination? There is nothing regulated in the contract regarding this.
Sincerely, [Your Name]
Dear inquirer,
Thank you for your inquiry, to which I would like to respond based on the information you provided as follows.
I.
In general, the law does not require payment of a severance package when a board member leaves the company. Severance agreements are usually the result of explicit contractual agreements between the board member and the company. Typically, the conclusion of such severance agreements is based on Section 4.2.3 of the Corporate Governance Code. According to this framework, many executive contracts provide for a severance payment of two years' worth of annual salary in the event of premature termination without a justifiable reason for termination (fixed monthly salary, bonus, and incentives).
II.
Although there is no explicit severance agreement in your employment contract, you are entitled to payment until the scheduled end of your employment relationship. Since your employment still has nearly two years left, you are entitled to the corresponding payment until the contractually agreed end date.
III.
Given this situation, it may be in the company's best interest to grant you a severance package and release you from your duties as a board member. In this case, the amount of the severance would be calculated based on the remaining salary for the duration of your board membership, including the two remaining annual salaries.
IV.
Therefore, you should approach the company and propose the conclusion of a corresponding severance agreement with release from your board duties for the remaining period of your contract.
I hope I have provided you with a comprehensive overview of the legal situation. If you have any questions, please feel free to ask.
Best regards,
Kristian Hüttemann
Attorney
