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Old 13.05.2021, 16:35
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Majority shareholder wants a pay rise

My business partner and I started a business 5 years ago. I was unable to invest from day 1 however I have owned shares for a couple of years now (enough that he cannot make any decisions without having to consult me first).

We are on the same salary (except for a company car he has had for about 4 years). Late last year, he agreed I should get a car except that I didn't get it because he disagreed on the amount of the monthly lease (which would have been equal to his, BTW)

He is now proposing I get the car + a 2.8% pay rise and he wants a 30% salary increase. We both bring in the same amount of income each year, he claims he does more towards growing the business. I am unable (at this point) to ascertain or quantify this. Of course, prior to my financial investment, he drew out substantial dividend amounts which is fine.

I can't help but think I am being taken for an idiot here. Looking forward to your opinion and ideas on how to move from here.
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Old 13.05.2021, 17:04
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Re: Majority shareholder wants a pay rise

I just checked, it is only Thursday today...
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Old 13.05.2021, 17:17
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Re: Majority shareholder wants a pay rise

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My business partner and I started a business 5 years ago. I was unable to invest from day 1 however I have owned shares for a couple of years now (enough that he cannot make any decisions without having to consult me first).

We are on the same salary (except for a company car he has had for about 4 years). Late last year, he agreed I should get a car except that I didn't get it because he disagreed on the amount of the monthly lease (which would have been equal to his, BTW)

He is now proposing I get the car + a 2.8% pay rise and he wants a 30% salary increase. We both bring in the same amount of income each year, he claims he does more towards growing the business. I am unable (at this point) to ascertain or quantify this. Of course, prior to my financial investment, he drew out substantial dividend amounts which is fine.

I can't help but think I am being taken for an idiot here. Looking forward to your opinion and ideas on how to move from here.
Concede your demand for a company car if your partner exchanges his for a shared e-bike (think environment!) and agree upon a mutual 15 % wage increase for both of you. You’ll soon catch up on him.
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Old 13.05.2021, 17:33
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Re: Majority shareholder wants a pay rise

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I just checked, it is only Thursday today...
Holidays in some parts though, today and tomorrow in Basel for example, so it probably makes it Friday on average.

OP, why on earth would you share that here, and what sort of input do you think you can get from a bunch of strangers on t'internet?
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Old 13.05.2021, 17:51
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Re: Majority shareholder wants a pay rise

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Holidays in some parts though, today and tomorrow in Basel for example, so it probably makes it Friday on average.

OP, why on earth would you share that here, and what sort of input do you think you can get from a bunch of strangers on t'internet?
Agree that the weekday was my first take too but invoking a wider perspective, I thought why not push my workshop "101 corporate compromise strategies" and virtue signal at the same time?
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Old 13.05.2021, 19:00
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Re: Majority shareholder wants a pay rise

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I just checked, it is only Thursday today...
But it's a holiday, and most people do the bridge tomorrow, so in a certain sense it IS Friday!

Tom
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Old 13.05.2021, 19:40
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Re: Majority shareholder wants a pay rise

It depends I guess on how the company is set up and who has control over it.
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Old 13.05.2021, 19:46
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Re: Majority shareholder wants a pay rise

Silverdust

This question can hardly be taken seriously for many reasons, one of which would be, that your data is a mix of number facts, estimations, qualitative facts, personal judgements and unknown factors. It is like saying, that there is a current agreement with your partner to use on equal terms the dildo you've made together in a high school from his father's oak walking stick, which you two take care regularly and make videos with and encrust with equal amount of gems, but your partner had a bragging and display rights, since the oak was his, and you want to have them too, but your partner claims he is polishing it more, yet you don't feel like that, so there is an option to let him use let him get 13% more profit share from the dildo's tiktok account account letting you have 3.14% more (sacrificing reinvestment, obviously), but you don't know if your partner is trying to take advantage of you.

On a serious note: this kind of questions shall be resolved on a start-up phase, it is rare, when they survive the breakeven or a positive cash flow stage.
You have your business structured in some way (unknown to us), you have your work conditions as employees of the company, and you shall resolve the salary issues according to your company policy (e.g. is the CEO is one defining O-level's salary and other perks, then it is his domain and shall be negotiated as n HR problem, if it is some board decision made by equal voting right, then it is a matter to negotiate with this board meeting). Shifting status of founders and early investors is one of serious issue to tackle by a maturing company and it would be advised to either find trust and common ground between yourself (takes some experience, diplomacy and EQ) or ask for some external help (has to be professional in impartial to be successful).

Last edited by evop; 13.05.2021 at 20:01.
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Old 13.05.2021, 20:05
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Re: Majority shareholder wants a pay rise

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I can't help but think I am being taken for an idiot here. Looking forward to your opinion and ideas on how to move from here.
Obviously we can't know all the facts from your description. It seems to me that you (like most people) are in a mix of financial business arrangements and your feelings.

Here are some questions to ask yourself, as suggestions to help figure out what you feel and think is right, and how to find the balance. I don't mean these - not at all! - for you to answer here, in public! Just as aides for your thinking process.

  1. If you were not yet part of this company but were a newcomer, being told of the current conditions, would you join?
  2. If you did not know your business partner at all, and he was an anonymous, faceless person, would you sign such a business deal with him?
  3. If you decide you don't like what he's proposing, why? Would it be bad for the business to say yes, or no?
  4. Do you actually have the power (business-wise or in terms of the personal levels of your relationship to him) to veto his decision?
  5. If yes, would your veto be protecting or harming the business?
  6. If no, are you willing to continue on this basis? What would the next steps be?
  7. Is there some completely different aspect of the running the business, that you want and he has been stalling, with which you could negotiate, until you're both satisfied with the way things have been agreed?
  8. If you left because of this disagreement, what would you gain or lose?
  9. Where would you go, instead?
  10. Would leaving affect your permit status?
  11. If you left, would it matter to him, or could he run the business just as well without you (or with a replacement for you)?

Last edited by doropfiz; 14.05.2021 at 04:01. Reason: grammar
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Old 13.05.2021, 21:29
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Re: Majority shareholder wants a pay rise

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My business partner and I started a business 5 years ago. I was unable to invest from day 1 however I have owned shares for a couple of years now (enough that he cannot make any decisions without having to consult me first).

We are on the same salary (except for a company car he has had for about 4 years). Late last year, he agreed I should get a car except that I didn't get it because he disagreed on the amount of the monthly lease (which would have been equal to his, BTW)

He is now proposing I get the car + a 2.8% pay rise and he wants a 30% salary increase. We both bring in the same amount of income each year, he claims he does more towards growing the business. I am unable (at this point) to ascertain or quantify this. Of course, prior to my financial investment, he drew out substantial dividend amounts which is fine.

I can't help but think I am being taken for an idiot here. Looking forward to your opinion and ideas on how to move from here.
Get yourself a good lawyer and negotiate a discount, because I suspect you’ll need regular consultations.
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Old 14.05.2021, 10:06
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Re: Majority shareholder wants a pay rise

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My business partner and I started a business 5 years ago. I was unable to invest from day 1 however I have owned shares for a couple of years now (enough that he cannot make any decisions without having to consult me first).
He's the majority shareholder.

You have an AGM or EGM. The shareholders vote on the proposal for a payrise (that's you being consulted), the votes are counted according to shareholding, the proposal is accepted.

Do you have any contracts in place governing pay rises that stipulate it must be unanimous vote? What do the articles and statutes of the company say?
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Old 14.05.2021, 10:41
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Re: Majority shareholder wants a pay rise

Do you believe your business partner is trying to cheat you?

Is there a trust problem?

Can you not discuss these differences with him directly, rather than seeking the opinions of strangers on the Internet?

Because a small business partnership requires an incredible amount of trust and confidence. If you don't have that in your partner, you should be asking yourself why you are continuing this venture at all.
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Old 14.05.2021, 10:47
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Re: Majority shareholder wants a pay rise

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OP, why on earth would you share that here, and what sort of input do you think you can get from a bunch of strangers on t'internet?
What's the purpose of a "Business and Entrepreneurs" forum if you cannot ask the community their opinion? Maybe best if you stick to the "Ski Instuctors" forum
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Old 14.05.2021, 11:02
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Re: Majority shareholder wants a pay rise

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What's the purpose of a "Business and Entrepreneurs" forum if you cannot ask the community their opinion? Maybe best if you stick to the "Ski Instuctors" forum
Ouch!

How about you answer the questions ppl have asked in this thread then?
Without those it will be impossible to offer any advice, unless you want to take up skiing of course
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Old 14.05.2021, 11:13
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Re: Majority shareholder wants a pay rise

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My business partner and I started a business 5 years ago. I was unable to invest from day 1 however I have owned shares for a couple of years now (enough that he cannot make any decisions without having to consult me first).

We are on the same salary (except for a company car he has had for about 4 years). Late last year, he agreed I should get a car except that I didn't get it because he disagreed on the amount of the monthly lease (which would have been equal to his, BTW)

He is now proposing I get the car + a 2.8% pay rise and he wants a 30% salary increase. We both bring in the same amount of income each year, he claims he does more towards growing the business. I am unable (at this point) to ascertain or quantify this. Of course, prior to my financial investment, he drew out substantial dividend amounts which is fine.

I can't help but think I am being taken for an idiot here. Looking forward to your opinion and ideas on how to move from here.
If you don't agree with his proposal and have the power to veto such an action, then don't agree to it and instead propose something that you are happy and comfortable with.

We are not you and we do not know how much effort you each put into the business. It's up to you and him to discuss this and reach an amicable solution.
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Old 14.05.2021, 11:29
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Re: Majority shareholder wants a pay rise

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Do you believe your business partner is trying to cheat you?

Is there a trust problem?

Can you not discuss these differences with him directly, rather than seeking the opinions of strangers on the Internet?

Because a small business partnership requires an incredible amount of trust and confidence. If you don't have that in your partner, you should be asking yourself why you are continuing this venture at all.
There is no trust issue. He genuinely believes he is entitled and doubt he has considered fully the financial consequences of his proposal.
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Old 14.05.2021, 11:30
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Re: Majority shareholder wants a pay rise

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What's the purpose of a "Business and Entrepreneurs" forum if you cannot ask the community their opinion?
Nobody stopped you asking, but all you've done is made everyone aware of your problem without having any real chance of getting a useful answer.
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Old 14.05.2021, 11:44
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Re: Majority shareholder wants a pay rise

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Do you have any contracts in place governing pay rises that stipulate it must be unanimous vote? What do the articles and statutes of the company say?
We have an agreement whereby any outgoing over a certain amount have to be sugned off.
I need to revisit the statutes but suspect these are silent on this kind of matter.
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Old 14.05.2021, 11:49
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Re: Majority shareholder wants a pay rise

I get it that you do not have a Shareholders Agreement in place. In the absence of one, I think you will have to negotiate any such proposal.
I would get in a mediator, not just to resolve this current stand-off but to draft a comprehensive SA.
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