Opinion ID: 70923
Heading Depth: 2
Heading Rank: 3

Heading: Compensation to bank officers

Text: The salaries of Murphy and Wren and two other principal officers of the bank are paid by FSC. The bank pays FSC a management fee. This is explained on the ground that the officers provide service for the bank and FSC (and thus for the other subsidiary bank). So that all entities can fairly share in the compensation of those officers they are paid by FSC, and the subsidiaries pay management fees to FSC, which in turn pays the officers. Plaintiff contends these payments by FSC to the bank officers violate O.C.G.A. § 53-6-151, which we set out in the margin.4 4 53-6-151. Compensation of resident executor or trustee by corporation or business enterprise for rendition of certain services; execution and approval of contract. (a) Any executor of a decedent resident of this state and any trustee resident in this state may receive compensation for services, as specified in this subsection, from a corporation or other business enterprise, where the estate of the decedent or the trust estate owns an interest Subsection (d) points out that the statute was enacted to permit extra compensation to be paid to a trustee for business management and advisory services without having to apply to the in the corporation or other business enterprise, provided that: (1) The services provided by the fiduciary to the corporation or other business enterprise are of a managerial, executive, or business advisory nature; (2) The compensation received for the services is reasonable; and (3) The services are performed and the fiduciary is paid pursuant to a contract executed by the fiduciary and the corporation or business enterprise, which contract is approved by a majority of those members of the board of directors or other similar governing authority of the corporation or business enterprise who are not officers or employees of the fiduciary and are not related to the fiduciary and provided the contract is approved by the judge of the probate court of the county in which the administration proceeding is pending or which is the situs of the trust. (b) Any executor receiving compensation from a corporation or other business enterprise for services to it as described in subsection (a) of this Code section shall not receive extra compensation in respect to such services for extraordinary service as provided in Code Section 53-6- 150; provided, however, that nothing contained in this Code section shall prohibit the receipt by the fiduciary of extra compensation for extraordinary services rendered in respect to other assets or matters involving the estate or trust. (c) Nothing in this Code section shall prohibit the receipt by executors and trustees of normal commissions and compensation for the usual services performed by executors and trustees pursuant to law or pursuant to any fee agreement executed by the testator or settlor. (d) The purpose of this Code section is to enable additional compensation to be paid to executors and trustees for business management and advisory services to corporations and business enterprises pursuant to contract, without the necessity of making application for extra compensation for extraordinary services rendered pursuant to Code Section 53-6-150. probate court for approval of extra compensation for extraordinary services as otherwise would be required by § 53-6-150. The position of the bank is, first, that this claim is a nonsensical attack on ordinary salaries paid to bank officers and on a bank's power to set the salaries of its officers. To the contrary, the claim questions salaries paid to officers of a trustee bank by a corporate affiliate whose stock the trustee holds in trust. Second, the bank says that the compensation paid by FSC is paid to the individual officers of the corporate trustee, not to the trustee itself. But this argument runs afoul of the corporate veil. Are the officers of the bank to be considered as the bank? Does the benefit to the trustee of being relieved from having to pay salary to its officers, a benefit conferred by the affiliate, violate common law trust principles? Third, the bank says that § 53-6-151 does not apply because the corporate trustee performs no service to FSC of a management, executive, or business advisory nature. Again, this encounters the corporate veil issue. Does the bank perform services for FSC when its principal officers and directors do—indeed they are FSC's senior management. Or, putting it another way, in this case does the difference matter? Additionally, the bank says that these officers had no duties relating to plaintiff's trust. Even if this is relevant, it is wrong. Both are members of the trust committee. The bank's position exposes it to an additional question. If the compensation paid by FSC to the bank's officers is not extra payment required to be authorized pursuant to § 53-6-151 is it payment for non-extra managerial services performed in violation of common law trust principles that, because of conflict of interest, a trustee may not serve as an officer of, or receive compensation from, a corporation whose stock the trustee holds? Murphy testified that he had no understanding one way or the other whether a trustee could receive compensation from a corporation in which the trust owns stock. The trust committee never considered whether bank officers could properly receive compensation from the holding company. The compensation issue could not be disposed of by summary judgment.