SP&H provided an ESOP owned company with a fair market compensation study to serve as a basis for the future compensation of an executive transitioning from full to part-time employment.

Case Background:

A former majority shareholder ("the Shareholder") of an ESOP company had an exit strategy that involved selling a significant portion of his shares to the ESOP. To maintain continuity of operations, the majority shareholder agreed to provide consulting services on a part-time basis to the Company.

The Company and shareholders agreed to create an employment agreement with a fixed term with specified services and hours. SP&H was retained to determine the fair market compensation to the Shareholder for the employment agreement.

SP&H's Analysis:

SP&H conducted an in-depth analysis of compensation paid to executives of companies of similar size and in similar industries. In calculating future compensation, SP&H considered typical base salaries, annual bonuses and other employee benefits. Based on this analysis, SP&H determined a fair market compensation that accurately reflected the Shareholder's future duties, his experience and the part-time nature of his future employment.

Result:

Both the Shareholder and the Company's other shareholders agreed on the level of compensation determined by SP&H.