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Thread: Defining a directors salary

  1. #1
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    Defining a directors salary

    Hi there, am one of two partners who hold 50% shares in a SA CC. My business partner moved to JHB, this was not a move planned by the business but out of necessity for the family. The "unofficial" agreement is that we would try to see if our model can be doted by the JHB market for a period of 1 year. My question pertains to salary. In the past we have always paid each other the exact same salary regardless of work/effort/ sales afforded to the company. This has never sat comfortably but now as I am running the local business by myself this salary issue is particularly biting as I am doing, what feels like 80% of the business and I don't want resentment to grow and damage what has the potential to be a successful national operation. Please can someone advise what salary model we should look put in place to ensure fair remuneration. We as directors wear lots of different hats: managers, administrators, marketers, sales people etc. Sincere thanks in advance for your feedback and brainstorming.

  2. #2
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    There should ideally be two components.
    Firstly remuneration. This should be based on actual work done as you sketched.
    The second is really profit share, on the assumption that near enough all profit (after remuneration) is shared between members.

    The model is fair, because the alternative would be to hire competent managers instead. If your partner is fair and reasonable, he should see fairness in the model.

  3. #3
    Site Caretaker Dave A's Avatar
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    How active is your partner in trying to get a Jhb branch going? You're going to have to be careful about the "performance measurement criteria" you select in this situation. Measuring "partner performance" at the start-up stage is not the same as for an established setup. Your partner may well be producing less turnover and/or bottom line than you at this point - it doesn't mean your partner's not working as hard as you are.

    If there are no results coming in from Jhb, obviously the "are you earning your salary" question is valid.
    But if there are results... be careful. One day you might be running the smaller branch.
    The trouble with opportunity is it normally comes dressed up as work.

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