Management contracts in the company supervision and management system

Abstract

The paper presents the essence, structure and significance of management contracts in the process of company supervision and management. The basic premises for introducing management contracts and supervisor contracts resulting mostly from the growth of the company have also been characterised. In particular, the first part of the paper provides the definitions of corporate governance and ownership supervision, and mechanisms of this supervision have been identified along with statement of their effectiveness and efficiency. The theoretical grounds for management contracts have been broadly analysed, with special attention paid to the ownership rights theory, contractual view of a company (nexus contracts), the management productivity concept, the issue of trusting business partners, the theory of affectuation, the agency theory, and the stewardship theory. The predictive and projective functions of the agency theory have been criticised, which is commonly considered the leading concept in corporate governance. As regards the essence and premises for introducing management contracts, organisational and legal forms of business management have been described in detail, namely management personalisation, management autonomisation, management deconcentration and decentralisation. The analysis of the issue has been mostly focused on the provisions of a business management contract, with a special view on the subject matter of the contract, duties of both parties, responsibility of the manager, costs of the agent (manager) and the method of their compensation. The components of the manager’s salary and the methods of their determination have been defined. Finally, a postulate for building high culture of contracts in the economy in general and management contracts in particular has been included.