Paying a General Manager to manage day to day operations

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by a searcher
in Illinois, USA

2yrs ago

Paying a General Manager to manage day to day operations

for a sizable $2 million revenue company what different ways GM can be/should be compensated. Would you give up your equity for incentivizing him to play long game or fixed salary plus handsome bonus ? How much bonus is reasonable.

This will be a promotion from Flat monthly pay with title of Director Operations.

Also want to understand how do you put guard rails so they cannot take (mis)advantage of the power.

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reply by a searcher 2yrs ago
from University of North Texas in San Antonio, TX, USA

Considering the absence of information about the specific state and legal context, if I were in your position, I suggest the following approach: Given the relatively minor business valuation (BV), I recommend implementing a tiered compensation structure. Initiate with an annual salary and quarterly bonus system. After a year, assess the performance against revenue targets and overall fit. If the trajectory is positive, consider transitioning to a potential 5% equity stake. Again, I don't know the specifics or industry; this is just a thought to begin formulating your proposals.

reply by a searcher 2yrs ago
from China Europe International Business School in Rio de Janeiro, RJ, Brasil

Watch out as traditional search fund investors might not like it. If the operation is not a core or crucial part of the deal, you might consider hiring just a manager or COO.