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Company director salary

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  • 14-03-2012 12:33pm
    #1
    devilshalo
    Registered Users Posts: 34 ✭


    Hi,

    First time poster here.:)

    We have an issue about company directors for an Irish limited company. The company was set up here for low tax reasons and the parent company in Asia is large and doing very well. The company is involved in regulatory affairs.

    There is 1 Asian director and another Irish director. The Irish guy is there in name only (nominee director I think) and doesn't do any day-to-day work or have input into decisions etc.

    Can anyone give an estimate of what salary the Irish guy should expect? I know it's quite a subjective topic but I would be very interested to hear any opinions.

    Thanks.


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    #2
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    He can expect whatever renumeration was agreed on. A company MUST have a resident director in Ireland, so he has some leverage with that. Also as a director he is expected to be aware of and responsible for company operation (even if he has 0 shares).

    Probably a small salary of 5-10k would cover it? Depends how much work the guy puts into it.


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    #3
    Chonker
    Registered Users Posts: 412 ✭✭Chonker


    I think a better question is how much he wants for doing nothing.

    Simply, as a figure head his salary must be negotiable there can be no rule of thumb here.

    What a great job! He is a lucky guy.


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    #4
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    srsly78 wrote: »
    He can expect whatever renumeration was agreed on. A company MUST have a resident director in Ireland, so he has some leverage with that. Also as a director he is expected to be aware of and responsible for company operation (even if he has 0 shares).

    Probably a small salary of 5-10k would cover it? Depends how much work the guy puts into it.

    Well not strictly, the parent company can pay a non-resident director's bond and have 2 non-resident directors then.

    I guess that's part of the problem - if you don't know the day-to-day stuff how can you be prepared to stand over it if there's any problems?

    The lower salary you gave above is about 5 times higher than what he currently gets - no wonder he's not keen!



    Chonker wrote: »
    I think a better question is how much he wants for doing nothing.

    Simply, as a figure head his salary must be negotiable there can be no rule of thumb here.

    What a great job! He is a lucky guy.

    He certainly doesn't see it that way (see salary indication above) and from the type of work done there is a certain amount of risk. It's a bit of a grey area tbh.


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    #5
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    If there were any shenanigans, your mate would be the one in trouble. Is this potential trouble worth e1000?

    If someone offered me a grand to be the token Irish director for some dodgy Chinese operation I would say HELL NO. If they offered a lot more I would consider it. Going over company books etc takes up a lot of time, and this is a legal responsibility of a director.


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    #6
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    srsly78 wrote: »
    If there were any shenanigans, your mate would be the one in trouble. Is this potential trouble worth e1000?

    If someone offered me a grand to be the token Irish director for some dodgy Chinese operation I would say HELL NO. If they offered a lot more I would consider it. Going over company books etc takes up a lot of time, and this is a legal responsibility of a director.


    It's not a "dodgy Chinese operation".

    They're just very stingy - I guess that's how they're so rich.


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    #7
    PCPhoto
    Registered Users Posts: 6,584 ✭✭✭PCPhoto


    as the others have said ...the guy in Ireland has his/her reputation to cover and will be the person that will take the fall if sh1t hits the fan.

    so your faced with get someone really really stupid who does not understand what they are getting paid for or get someone who understands the risk and is willing to do it for X-amount.


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    #8
    Chonker
    Registered Users Posts: 412 ✭✭Chonker


    PCPhoto wrote: »
    as the others have said ...the guy in Ireland has his/her reputation to cover and will be the person that will take the fall if sh1t hits the fan..

    I dont understant this comment, Legally nothing can happen to cause him issue in Ireland that he does not authorize.

    I sold my first business to Chinese and my uncle became director, everything went through him so nothing dodgy took place, if he felt it was dodgy he simply opted not to do it.


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    #9
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    You need to go read up on the legal responsibility of a director. Saying "oh I did not authorise that" is no excuse. Directors have to sign off on the accounts, they are responsible for making sure everything is above-board.


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    #10
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    PCPhoto wrote: »
    as the others have said ...the guy in Ireland has his/her reputation to cover and will be the person that will take the fall if sh1t hits the fan.

    so your faced with get someone really really stupid who does not understand what they are getting paid for or get someone who understands the risk and is willing to do it for X-amount.

    Yes he understands the risk (and moans about it quite a bit) but accepted the role at the start of the year as a favour for the low salary. I wouldn't do it myself for less than 15K-20K pa based on the risk (admittedly low) and rich parent company. However a non-resident directors bond is about E1600 every two years, so they wouldn't go for it.

    I'll let you know what happens anyway.


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    #11
    Chonker
    Registered Users Posts: 412 ✭✭Chonker


    srsly78 wrote: »
    You need to go read up on the legal responsibility of a director. Saying "oh I did not authorise that" is no excuse.

    You need to understand that he controls what happens in Ireland. If he allows it and does not take the time to voice his objections then he is clearly at fault.

    But nothing happens that he does or does not sign. Whats hard to understand there?


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    #12
    srsly78
    Registered Users Posts: 7,157 ✭✭✭srsly78


    Can you not see that they could hide stuff from him? Then if he signed unknowingly he is in trouble.

    So you are saying "if everything is legit then there is no problem". Well duh?


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    #13
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    srsly78 wrote: »
    Can you not see that they could hide stuff from him? Then if he signed unknowingly he is in trouble.

    So you are saying "if everything is legit then there is no problem". Well duh?



    The same guy prepares the accounts so that's not an issue.

    This is going off topic. Any other suggestions/wild guesses for salary welcomed!:)


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    #14
    Chonker
    Registered Users Posts: 412 ✭✭Chonker


    srsly78 wrote: »
    Can you not see that they could hide stuff from him? Then if he signed unknowingly he is in trouble.

    So you are saying "if everything is legit then there is no problem". Well duh?


    What can they hide from him?
    If he allows that to happen then he is an idiot, Op he is not an idiot correct?
    I am sure he fully understands the implications of casually signing things.

    So Duh! Back at ya :p


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    #15
    Chonker
    Registered Users Posts: 412 ✭✭Chonker


    devilshalo wrote: »
    The same guy prepares the accounts so that's not an issue.

    This is going off topic. Any other suggestions/wild guesses for salary welcomed!:)

    Devilshalo, is he looking to renegotiate his salary?

    If so maybe he should discuss the value of the operation with the accountant and not our team of armchair experts.

    I would suggest that they can find many willing figure heads for possibly even less than this chap earns, unless he can bring added value to the business that another random person can not then he may have to settle for what they offer.


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    #16
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    Chonker wrote: »
    Devilshalo, is he looking to renegotiate his salary?

    If so maybe he should discuss the value of the operation with the accountant and not our team of armchair experts.

    I would suggest that they can find many willing figure heads for possibly even less than this chap earns, unless he can bring added value to the business that another random person can not then he may have to settle for what they offer.

    Sorry for the drip feed of info -the guy is an accountant so am sure is aware of the value. He also has the Irish company accounting work also. The company isn't actually trading at the moment, maybe if this changes (which I think it will soon) he can ask for more.


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    #17
    nompere
    Registered Users Posts: 1,678 ✭✭✭nompere


    devilshalo wrote: »
    Sorry for the drip feed of info -the guy is an accountant so am sure is aware of the value. He also has the Irish company accounting work also. The company isn't actually trading at the moment, maybe if this changes (which I think it will soon) he can ask for more.

    The bond - as an alterntaive to a local director - isn't very expensive. This firm will arrange it for c€2500 for two years: http://www.formations.ie/formation/info/bond.jsp That mightn't even be all that competitive.

    So the value of a local director probably isn't really all that much.


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    #18
    antoinolachtnai
    Registered Users Posts: 9,800 ✭✭✭antoinolachtnai


    If you want to hire a person in this circumstances and pay him fairly what you pay him will depend on the complexity of the business (which will determine how much effort the work will take), and the person's qualifications and expertise (which will determine how well he can do it).

    If this is a company of the scale you describe and entails a tax avoidance setup of some sort, I cannot see him being able to fulfill his duties in any less than 10 days of work every year. So work everything else off that.

    If he is working as the accountant for the company (though originally you said he didn't do any day-to-day work for the company) and so is familiar with the company's affairs, he isn't necessarily entitled to an awful lot more. He can reallistically be expected to be paid to go to a few board meetings, and that's about it.

    For the risk, I'd imagine he would want to be covered by suitable insurance. This would be for the company to pay. He might also need professional advice in relation to his role at some point, and again this would be at the expense of the company.

    There is no such thing as a director 'not having any input into decisions'. As far as the law is concerned, as a director he has an input into decisions, and he has responsibilities in relation to the company's administration. More importantly, he bears responsibility for what the company does.

    This is really something that requires expert advice.


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    #19
    smeharg
    Registered Users Posts: 300 ✭✭smeharg


    devilshalo wrote: »
    ...
    The company was set up here for low tax reasons ...

    ...The Irish guy is there in name only (nominee director I think) and doesn't do any day-to-day work or have input into decisions etc.
    nompere wrote: »
    The bond - as an alterntaive to a local director - isn't very expensive...

    ...So the value of a local director probably isn't really all that much.

    To be resident in Ireland for corporation tax the company must be centrally managed and controlled in Ireland. An Irish resident director could facilitate that, thus adding more "value" to the role.

    Of course, if the director doesn't have any input then you'd have to wonder why he/she would bother in the first place. No salary is worth being restricted or disqualified because you didn't fulfil your statutory duties. No judge will take "I was a director in name only" as an excuse.


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    #20
    devilshalo
    Registered Users Posts: 34 ✭devilshalo


    nompere wrote: »
    The bond - as an alterntaive to a local director - isn't very expensive. This firm will arrange it for c€2500 for two years: http://www.formations.ie/formation/info/bond.jsp That mightn't even be all that competitive.

    So the value of a local director probably isn't really all that much.

    Yes, the cost is low and basically the same as 2 years of the director's salary so IMO they should just buy the bond.
    antoinolachtnai wrote: »
    If you want to hire a person in this circumstances and pay him fairly what you pay him will depend on the complexity of the business (which will determine how much effort the work will take), and the person's qualifications and expertise (which will determine how well he can do it).

    If this is a company of the scale you describe and entails a tax avoidance setup of some sort, I cannot see him being able to fulfill his duties in any less than 10 days of work every year. So work everything else off that.

    If he is working as the accountant for the company (though originally you said he didn't do any day-to-day work for the company) and so is familiar with the company's affairs, he isn't necessarily entitled to an awful lot more. He can reallistically be expected to be paid to go to a few board meetings, and that's about it.

    For the risk, I'd imagine he would want to be covered by suitable insurance. This would be for the company to pay. He might also need professional advice in relation to his role at some point, and again this would be at the expense of the company.

    There is no such thing as a director 'not having any input into decisions'. As far as the law is concerned, as a director he has an input into decisions, and he has responsibilities in relation to the company's administration. More importantly, he bears responsibility for what the company does.

    This is really something that requires expert advice.

    He doesn't do day-to-day work and doesn't have input into decisions in the specific area that the company works in.
    smeharg wrote: »
    To be resident in Ireland for corporation tax the company must be centrally managed and controlled in Ireland. An Irish resident director could facilitate that, thus adding more "value" to the role.

    Of course, if the director doesn't have any input then you'd have to wonder why he/she would bother in the first place. No salary is worth being restricted or disqualified because you didn't fulfil your statutory duties. No judge will take "I was a director in name only" as an excuse.

    That is why he either wants a much higher salary or will resign.


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