The Legal Form of the Executive Service Agreement
The service agreement of an executive manager in Georgia is written under the chapter of mandate contracts of the Civil Code. It is precisely this corpus that determines the nature of the contract, the rules on remuneration, accountability, confidentiality and the termination regime. The corporate form of appointment as director is a separate matter governed by the Georgian Law on Entrepreneurs, but the contractual content of the parties' relationship is filled by the civil-law rules of mandate. At the same time, the norms of American executive employment agreements — at-will employment terminable at any moment, golden-parachute-type guarantees — are non-Georgian models and do not carry the content of a Georgian contract. The Georgian carrier is the system of the five mandate provisions.
The Concept of the Mandate Contract
Under a mandate contract, the mandatary must perform for the mandator one or more entrusted acts in the name and at the expense of the mandator. This definition precisely describes the position of a chief executive: he acts in the company's name and with its resources, and the scope of his authority is defined by the subject of the mandate. Every decision of the executive manager formalized in this form must be directed at the company's expense and for its benefit. Freedom of contract allows the parties to define a detailed list of acts, the level of decision-making and the format of accountability.
Remuneration and Its Presumptions
The mandator must pay the mandatary remuneration only in cases provided by the contract or by law. Remuneration is deemed tacitly agreed if, according to the circumstances, the performance of the act is expected only for remuneration — a rule of particular importance for an executive manager, since the nature of his activity excludes gratuitous service by itself. If the amount of remuneration is not determined, then, where any fee scale exists, fee-based remuneration is deemed agreed; likewise, where no fee scale exists, customary remuneration applies. In compensation structuring this means that the fixed remuneration, the rules on bonuses and other incomes must be expressly written into the contract; otherwise the risk of customary market remuneration arises.