New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-11-16
MAKE DIRECTORS LIABLE
Public Demand for Personal
Responsibility Manifested.
COMPENSATION QUESTION
Abstract of German Laws Al
fecting Boards of Directors
No Dummy Members

Considerable publicity has been gwen
IN the question of the responsibility ol
directors in the event OF damages result
ing from accidents such as occurred on
the New York, New Haven q HARTFORD
when il was said there had been negll-
cence on the part of the roads ofhclals
in carving out necessary changes LOT the
protection of life and prevention OF aCCi-
dents. During this discussion or the SUD
iect. which has called forth vigorous
protest against the present system inc
ouestion of compensation and a cohslu-
Grafton Of the fitness of directors for thelr
official positions has not been emphasized
Germany offers a good example FOR con-
trasting the difference between American
directors and the directors OF German
corporations. In Germany executive OIL
GERS of corporations consist Of the man
ager or the board Of managers ana the
hoard Of supervision, in addition to the
authority centred in stockholders. The
hoard of mana gers represents the German
corporations in all matters OF business
and in dealings of the corporation with
the public, both in and out OF court Al
though primarily unrestricted ooaras ol
managers are expected 10 follow lnsuuc-
tons.
Germans Place X to Higher Board
The nrinciple of German law is that the
hoard of supervision as superior organ
controls the managers who conouct COT
poration affairs, but the managers theih-
selves are trusted with the actual duties
in connection with the management d!
6tviding the functions in this way mem
her of the board of managers or clerA
Of the corporation is prevented from De-
ing a member Of the board of SUPERVISION
While the law is not very speclhc con-
earning the remuneration Of the managers
and the stats employed by corporations
there Is a legal provision which stipulateS
that managers shall participate in the
annual profits. The paragraph Oh ''0
commercial code reads as follo"s'
1.-THE participation Of managers VIM
are entitled to share of the annual
profits shall be calculated on the net
profits which remain after the appropiia-
ton for depreciation and reserve luhuS
shall have been made.
This paragraph refers only 10 members
of the board of managers, and not 10
clerks and implies participation IN lne
,ro6ts hut does not refer TO hXed DO
muses. or other remuneration. AS resalu
bonuses paid to managers and CLERKS, IhoS
vary. hut are fixed by contract anu 4ie
orentI, are not disclosed in the reports Oh
cornorations. In the event the members
~ tho hoard of supervision are compeh-
Gated for their services by participation
IN annual profits their snare Is ca4ou-
lated on a basis Of net profits renldliiiHs
after all appropriations for depreclauol,
and reserve funds have been oeuuCteu
and after a sum representing at least
nor cent on paid-up capital has been set
aside for stockholders. Any corporation
nrovision as to remuneration TO members
~ the board of supervision may De
changed by a majority vote at genera
meeting 10 reduce the amount OF such
remuneration.
The statutes Of corporations ORGANIZED
in recent years since the commercial code
was amended, provide fixed bonuses Tor
the boards Of Supervision in addluon 10 d
participation in the profits. For instance
the Friedrich Krupp Corporation supu-
lates that members os me board or sur
vision shall receive 4 per cent or the sur
plus remaining after appropriations lot
depreciation and reserve fund and per
cent dividend on the capital stock nave
been provided. No member, however
shall receive less than 1900 marks, nor
more than 5000 marks, and the chairman
NOT less than 5000 marks, nor more than
$1,000 marks.