Representative Director - Risks without Rewards

[Moneymatters]

Just in case someone has some knowledge/experience to impart.

Firstly, I've been a Representative Director earlier in my carrier when I was young and inexperienced. And, whilst it didn't result in a nude woodland photo shoot, I'm determined to ask a few more questions this time round.

I've been a (取締役)director at my present employer for several years. An additional role with no change to compensation. Assuming the Rep Dir position will also not result in a compensation change.

The only material differences I see from being a Representative Director, as an additional role, are:

• Accident insurance. I'm already under another scheme as a Director.

• Employment insurance 解雇保険. Become ineligible. (I understand this isn't an option for Rep Dir even if you simultaneously perform another full time role in the company..)

Question. If I'm not eligible for Employment insurance. Should I expect it to be deducted from my salary each month?

Any other gotchas out there?

[zeroshiki]

I don't know how this works for other companies (or yours) but in my quite large multinational company, all the members of the board are on 1 year contracts to make it easy to fire them. We just had this guy who was quite popular with everyone and been with the company forever get shown the door recently due to this.

[TokyoWart]

I was a corporate officer for many years at a listed company. It was not the same title as 取締役 and we still had a board of directors above us but there were a number of similar changes to our employment terms. We were kicked out of the unemployment insurance system and so saved that 0.5% (or whatever it is) unemployment insurance payment but we also were no longer eligible for several 手当 that other employees received. That included the commuting supplement, free lunch, the subsidized employee stock purchase program and some of the random employee bonuses that seem to crop up now and again. We did get D&O insurance coverage. Contracts were on a year-by-year basis and at least in a few cases I saw people fired before their 1 year contract ended. It was also easier for our bonuses to be cut to 0 (as they were a few times for the group as a whole) when the company missed an important target even when the regular employees received a bonus. As I understand it we were technically not employees and so did not have register vacation days or working hours in any way, but it seemed like no officers ever took a vacation or if they did so were very discrete.

[Tsumitate Wrestler]

I don't know how this works for other companies (or yours) but in my quite large multinational company, all the members of the board are on 1 year contracts to make it easy to fire them. We just had this guy who was quite popular with everyone and been with the company forever get shown the door recently due to this.

Why did they not protect their jobs by getting a 無期労働契約 contract?

This is not the same thing as becoming a seishain.
The only aspect of the contract that changes is that the employment period goes from having a time limitation (有期) to having none (無期).
https://qbf-globalsupport.jp/en/blog/ab ... 0seishain.

[zeroshiki]

I don't know how this works for other companies (or yours) but in my quite large multinational company, all the members of the board are on 1 year contracts to make it easy to fire them. We just had this guy who was quite popular with everyone and been with the company forever get shown the door recently due to this.

Why did they not protect their jobs by getting a 無期労働契約 contract?

This is not the same thing as becoming a seishain.
The only aspect of the contract that changes is that the employment period goes from having a time limitation (有期) to having none (無期).
https://qbf-globalsupport.jp/en/blog/ab ... 0seishain.

Because those are for contractual employees at the bottom of the food chain. We're talking about really upper echelon board member positions here. I don't think its the same thing.

[TokyoWart]

Why did they not protect their jobs by getting a 無期労働契約 contract?

I think from a corporate governance perspective you would not want that to even be possible (making it impossible to fire directors or officers) but my understanding is that most of the Japanese labor law provisions that protect regular employees no longer apply when you are an officer or director.

[beanhead]

As I understand it we were technically not employees and so did not have register vacation days or working hours in any way, but it seemed like no officers ever took a vacation or if they did so were very discrete.

Yes, salary for directors is not actually salary.
It is 役員報酬 rather than 給与, and there are some restrictions on the payments.

https://corporate.ai-con.lawyer/article ... -change/14

[Moneymatters]

I was a corporate officer for many years at a listed company. It was not the same title as 取締役 and we still had a board of directors above us but there were a number of similar changes to our employment terms. We were kicked out of the unemployment insurance system and so saved that 0.5% (or whatever it is) unemployment insurance payment but we also were no longer eligible for several 手当 that other employees received. That included the commuting supplement, free lunch, the subsidized employee stock purchase program and some of the random employee bonuses that seem to crop up now and again. We did get D&O insurance coverage. Contracts were on a year-by-year basis and at least in a few cases I saw people fired before their 1 year contract ended. It was also easier for our bonuses to be cut to 0 (as they were a few times for the group as a whole) when the company missed an important target even when the regular employees received a bonus. As I understand it we were technically not employees and so did not have register vacation days or working hours in any way, but it seemed like no officers ever took a vacation or if they did so were very discrete.

thanks for sharing. And just curious. With that description why would you do it?

[TokyoWart]

I was a corporate officer for many years at a listed company....

thanks for sharing. And just curious. With that description why would you do it?

Well, in my world refusing a promotion to corporate officer would have been career-ending but the overall compensation, while more variable, was also higher than for regular employees. In my company such a promotion comes at a point in your career where your salary is unlikely to improve so financially it works out okay even accounting for the occasional missed bonus and of course the work itself is interesting because you get to see and experience more of the total management of the company.

[Moneymatters]

I was a corporate officer for many years at a listed company....

thanks for sharing. And just curious. With that description why would you do it?

Well, in my world refusing a promotion to corporate officer would have been career-ending but the overall compensation, while more variable, was also higher than for regular employees. In my company such a promotion comes at a point in your career where your salary is unlikely to improve so financially it works out okay even accounting for the occasional missed bonus and of course the work itself is interesting because you get to see and experience more of the total management of the company.

I suppose the year long contract hence job security was the concern I had when reading. Whilst I’ve only had directorships as an additional role I do appreciate the extra exposure.