Foundation board remuneration: document rules and court determination

Under section 19(1) PSG, members of the foundation board are to receive remuneration consistent with their duties and the position of the private foundation. This statutory rule applies only where the foundation declaration does not provide otherwise. The current foundation deed and supplementary deed are therefore the first documents to examine.

Section 9(2)(9) PSG allows the foundation declaration to contain rules on the remuneration of governing bodies. A single word such as appropriate is not necessarily enough. The wording should show whether the amount, calculation mechanism, decision-making authority or adjustment process is actually regulated. Ambiguous language cannot reliably replace the court route.

Our guide to the foundation board and liability explains appointment, duties and responsibility. Any payment requires a clear legal basis and an assessment of whether the court must determine the amount.

Where the foundation declaration does not provide otherwise, the court determines the amount on application by a foundation body or a member of a body. Section 40 PSG assigns the matter to the court of first instance exercising jurisdiction in commercial matters for the foundation’s registered seat in non-contentious proceedings.

In RS0128828, the Austrian Supreme Court states that without another rule in the foundation declaration the payment claim arises only upon final court determination of the amount. The determination is therefore not merely an optional later review of remuneration that the foundation has already set freely.

A foundation should not book flat payments for years and look for a legal basis only after a dispute starts. A board member should likewise not assume that carrying out the role alone produces an immediately payable amount. The documents, competent route and need for court determination must be settled first.

The legislation sets no single fixed decision period for the application. A coherent file can reduce requests for clarification. It does not replace the judicial decision where section 19(2) PSG applies.

Section 19 PSG contains no fixed tariff and no general percentage. Remuneration must be consistent with the actual duties and the position of the private foundation. The application therefore needs a factual description of the mandate rather than generic statements about board responsibility.

Relevant records may cover the division of responsibilities, meeting workload, asset structure, shareholdings, ongoing transactions, disputes and special oversight tasks. A foundation heading an active business group can present a different role from one holding a manageable securities portfolio. The distinction should be visible in records and resolutions.

The foundation’s financial position also belongs in the reasons. Financial statements, liquidity plans and exceptional burdens show whether remuneration fits the foundation. They do not produce an automatic figure. They provide the factual basis for a transparent assessment.

Our article on the foundation board’s duties of care explains how decisions should be prepared and recorded. The same quality is required for remuneration because members of the governing body have their own financial interest in the matter.

D&O insurance funded by the private foundation can form part of the compensation for assuming the board function. In RS0131960, the Austrian Supreme Court generally classifies payment of the premium under section 19 PSG. The benefit received by board members does not by itself turn the insurance contract into self dealing under section 17(5) PSG.

This does not make every insurance arrangement appropriate. Cover, deductible, insured persons, exclusions and premium must fit the risk profile. Classification as remuneration also does not answer every question about resolutions or conflicts of interest.

Consultancy or service agreements with a board member require separate analysis. If the member performs work outside the duties of the governing body, the service must be clearly distinguished. A direct contract between the foundation and a board member may trigger the additional approval requirement in section 17(5) PSG.

Our article on self dealing involving the foundation board explains the approval route. Remuneration for the board function and consideration for a separate service should not be mixed into one flat payment.

The core file includes the current foundation declaration and amendments, commercial register record, appointment documents, division of responsibilities, activity evidence, meeting minutes and relevant financial statements. D&O documents and agreements for separate services should be kept distinct where they affect the overall assessment.

A common error is to create a generic activity list retrospectively after payments have already been made. It is equally problematic to justify remuneration solely by the value of the assets. Section 19 PSG requires a connection between the duties and the position of the foundation. Both aspects must be demonstrably reviewed.

If the board role changes, the foundation should consider whether an existing rule still covers the new duties. Additional transactions, a business group or a foundation dispute may alter the role profile. That does not automatically mean higher remuneration. It does justify reviewing the legal basis and the supporting records again.

The foundation board liability self-check gives initial guidance on resolutions, conflicts and record gaps. For remuneration, the specific foundation declaration and the applicable court route remain decisive.