Shareholder Disputes: Difference in Compensation and Contribution 

August 12, 2022

shareholder disputesThere are many causes of shareholder disputes.

Someone may breach the shareholder agreement or simply disagree with the company’s direction. The minority shareholders may feel disrespected. Fiduciary duties may get mishandled.

However, one significant cause of conflict between shareholders is the difference in compensation and contribution. This problem typically arises among employee shareholders who feel they are not being given what they are worth.

Shareholder disputes can be avoided and settled without high cost if you have a Palm Harbor business dispute attorney on your side.

Differences in Shareholder Compensation and Contribution

There are two methods of shareholder compensation.

There is, of course, the typical salary; paid for from net income. Dividends may compensate a shareholder, paid for out of the retained earnings in a company.

Shareholder contribution is also known as contributed capital, maybe in cash or other assets such as equipment or real estate. In the case of employee shares, their contribution is labor.

How Shareholder Compensation and Contribution Cause Shareholder Disputes

Of course, everyone wants to be compensated fairly for their contribution. But sometimes, people just do not play fair. Nepotism tends to rear its ugly head.

For example, George has been working with Penan Inc. for ten years and got a modest share in the company as a Christmas bonus. All is well until he finds out Louis, who was hired last week and barely did anything, received a jumbo share. George suspects that Louis, the boss’s nephew, has something to do with it. George may have grounds for a case.

Some people may be discriminated against for color, gender, disability, or other superficial reason outside their control. This violates Section 10 of the U.S. Equal Employment Opportunity Commission.

Settle Your Disputes With a Palm Harbor Business Dispute Attorney

These things can be challenging to manage on your own. Contact us today if you are under shareholder disputes on compensation and contribution. Our team’s Palm Harbor business dispute attorney will see that you get your fair share.

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