My co-founder and me founded a company about 9 years ago. Originally we had a 5-year vesting schedule, so now the vesting period is long over. Two years ago I started to only work half-time. The main reason for working less is a burnout-episode I experience about two years ago. We ensured that he gets double the pay. But we agreed, that we would also talk about our shares again and find a fair solution to rearrange or shares.<p>Does anyboy here have experience with this? I think it is fair to honor the fact that he works more, but I am not sure how.<p>Let me give as much data as possible:<p>- We started the company 9 years ago.<p>- We originally had a 5 year vesting schedule, that is now done.<p>- One of our investors owns a single digit percentage of the company, the rest is evenly divided between us two.<p>- The company has revenues in the (low) double digit millions and profits in the (low) single digit millions.<p>- Our company has been profitable for the last 8 years.<p>- It is very hard to estimate the current risk of the company. Corona was tough for us, but we came back stronger than ever. At the same time we sill have a lot of risk because of regulatory environments.<p>- My co-founders works more than 60 hours per week for the company and earns a low six digit yearly wage.<p>- I work about 20 to 30 hours per week for the company and earn half of this.<p>- My co-founder has a lot more responsibilities and a lot more stress than me. He basically runs the whole company, while I help out with special projects.<p>- Last two years were especially stressful and my co-founder did an outstanding job.<p>- I think if would have devastating effects on the success of our company, if my co-founder would stop working full-time.<p>We thought about three possible ways:
- Give my co-founder about 10 % of the yearly profit in addition to his wage.
- Give my co-founder additional bonus depending on yearly revenue growth
- Transfer some shares of mine to my co-founder on a yearly basis<p>I would love to hear examples on what people think is "fair".
Think of you the owner and you the employee as 2 separate people.
Same thing applies for your co-founder.<p>If you cease to work as an employee it has no bearing on vested shares held by "you the owner".<p>If your co-founder is considering leaving (as an employee) the share owning entities (which include "you the owner" and "co-founder the owner") need to decide how much (money from share sales or actual shares) they are willing to part with as added compensation so as to keep your co-founder on and protect the value of the remaining shares they hold.<p>Increased compensation to your co-founder as a employee should come proportionally from all shareholders (as it would in a dilution) as it is a negotiation between an employee and the company as a whole.<p>It is best not engage in a deal whereby employees extract compensation from specific shareholders, as, however well intentioned that starts out, it can too easily become a pattern of extortion (or a means to seize ownership).
Since the vesting is done you own your shares and could work zero hours and still be entitled to them. The hard work you did over the 5 years as they vested means something.<p>But, if you want your co-founder to like his situation and work hard to make the company keep going I see this as like doing another round.<p>You need to raise X and valuation Y and dilute yourself accordingly. i.e. the company is in crisis because one of the co-founders is sort of leaving. To make up for that, raise some capital. Figure out the amount needed to raise and then work backwards from that number.