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Profit Sharing

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Profit Sharing

Post by arjosoer » Thu, Feb 10, 2011, 9:02 PM UTC

If you were given the following options for remuneration - which would you pick?

(1) Hourly Rate $70; no profit sharing

(2) Hourly Rate $60; 1% of net revenue; capped at $20,000 per year

(3) Hourly Rate $50; 2.25% of net revenue; capped at $50,000 per year

(4) Hourly Rate $40; 5% of net revenue; capped at $80,000 per year

Also, the hourly rate bumps up to $70 automatically once there is $1.5M of cumulative revenues.

Re: Profit Sharing

Post by camz » Thu, Feb 10, 2011, 11:28 PM UTC

Honestly this depends on the company because its a question of confidence. Do you have confidence that the company will be generating real revenues and how bad to you need the money.

If you have a family and need to have guaranteed income at set levels, then you should be conservative and pick option 1.

But, to put it in perspective. To see what the back-of-the-napkin calc is for the maximun annual total income.

1. 140k no matter what 2. 140k Max (60 x 2 = 120k plus the max 20K) This option sucks balls. 3. 150k Max (50 x 2 = 100k plus the max 50k) 4. 160k

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