How Much Should I Pay Myself?
What constitutes fair and adequate self-compensation for owner-managers of growing businesses? That's never more difficult to answer than during the start-up phase. To find out how entrepreneurs set about resolving this thorny issue, we surveyed CEO's about their start-up experiences. Compare some of their thoughts with the advice of a lawyer who specializes in compensations. (See "CEO's Pay Strategies," No. 06921212)
CEOCEO's 1st salaryHow long till raise? To what?Any pay cuts?Words of wisdomRobert Bell Sun Pharmaceutical Sales of $70 million$04 years; $300 per weekYes, during bad times"If there's a cash crunch, you know you can get cash from yourself."Peter King-Smith KSH Systems Sales of $3 million03 years; $30,000+No, but would cut back briefly if necessary"If I can't pay myself a comfortable salary doing this, I'll change what I do."Teresa McBride McBride & Associates Sales of $17 million01 year; $40,000NoBases her pay on company's net profits and what she thinks it would cost company to replace her.Ned Link Link-Allen & Associates Sales of $5.5 million$10,0002 years; to cover family's subsistence levelNo, but has deferred raisesBelieves it takes 5 years or more till company founders can compare salaries with those of peers. -- Researched by Michael P. Cronin and Christopher Caggiano