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This question is directed at Ed Hatton. Thank you for your response to my question regarding my Father’s retirement. Further to your response, may I ask, if my Father has decided he does not wish to work and has retirement annuities arranged, would a monthly payment to him, for a undetermined period, be fair? I agree that we should have the company valued and will certainly put that into action. Regards Stuart
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Ed Hatton
Posted 3 months ago
Dear Stuart
Firstly let me offer my most sincere apologies for the long delay in responding to your question. This has nothing to do with Entrepreneur magazine and is entirely my fault.
Assuming that the shareholding issues have been resolved, and that the monthly payment we are discussing is not a part of that, the decision to pay him a monthly amount would depend on the current directors and their sense of gratitude to him. Please bear in mind that any money paid to him would reduce the shareholders funds, so if the shareholders are not also the directors, I would suggest you get their views. Having said this, it is probably reasonable to reward the person who was presumably the founder and guide of the business for many years for value and the goodwill that he has generated for the business. If the directors and shareholders agree I suggest you offer your father a monthly stipend or gratuity for a number of years, and ask that he be available to advise the business if necessary during this period. It is important to agree the terms of this gratuity with him in advance – what amount, duration, extensions, increases if any, and obligations on his part.