A vice president may need to determine whether she is a company officer.
This issue comes up in legal issues, company documents, and lawsuits.
For example, Goldman Sachs recently found itself in litigation over whether a vice president was entitled to indemnity from Goldman, since Goldman’s policy was to indemnify all company officers.
While “vice president” may sound important, some companies give this as a courtesy title to many employees.
The real question is whether a vice president is a company officer under the law.
How to Determine Whether a Vice President is a Company Officer
To determine whether a vice president is an officer in a company, you should look to two places: the state statute that covers that business type and the official records of the company (e.g. articles and bylaws). If the answer still is not clear, the precedent established by the company’s track record may be a factor.
1. Check the State Statute
State statutes often state that at least certain positions are deemed “officers,” such as a CEO, president, chief manager, treasurer, or secretary.
- For an LLC, look in the state statutes that govern limited liability companies. In Minnesota, this is called the Minnesota Business Corporation Act, Chapter 322B of the Minnesota Statutes.
- For a corporation, look in the state statutes that govern corporations. In Minnesota, this is called the Minnesota Limited Liability Company Act, Chapter 302A of the Minnesota Statutes.
For example, section 302A.301 of the Minnesota Business Corporation Act says certain positions are officers:
A corporation shall have one or more natural persons exercising the functions of the offices, however designated, of chief executive officer and chief financial officer.
The Minnesota Business Corporation Act also says, in section 302A.311, that the business can name other officers:
The board may elect or appoint, in a manner set forth in the articles or bylaws or in a resolution approved by the affirmative vote of a majority of the directors present, any other officers the board deems necessary for the operation and management of the corporation, each of whom shall have the powers, rights, duties, responsibilities, and terms in office provided for in the articles or bylaws or determined by the board. To the extent authorized in the articles, the bylaws, or a resolution approved by the affirmative vote of a majority of the directors present, the chief executive officer may appoint one or more officers, other than the chief financial officer. An election or appointment as described in this section is subject to the provisions of a shareholder control agreement.
2. Check the Company Records
Company records may indicate the company’s official position on whether a vice president is an officer. The company’s corporate or LLC records include
- the articles of incorporation,
- articles of organization,
- operating agreement,
- shareholder agreement,
- member control agreement, or
- official actions decided by the board or owners.
While company records cannot override state law, most state laws give the company authority to decide positions that constitute “officers,” and this decision should be reflected in the company records. For example, corporate bylaws may provide as follows:
The Officers of the corporation shall be a Chief Executive Officer and a Chief Financial Officer, and such other Officers as the Board of Directors may from time to time designate. The Board of Directors shall elect such Officers at its regular meeting.
3. Check the Company’s Precedent
Courts may consider how the company has treated vice presidents in the past. If the company has a record of deeming vice presidents as officers, that could be persuasive evidence, especially if the statutes and company records do not conclusively answer the question.
Company Officer vs. Company Agent
A related issue is whether a vice president is an agent of the company, able to bind the company by contract. The law is clear that a vice president is an agent of the company, able to enter the company into all contracts except perhaps the largest company contracts (sale of the company, merger, real estate transactions, etc.). Go here to read more about the authority of an agent to enter business contracts. Limits on a vice president’s authority to enter contracts is an issue outside the scope of this article.