Shareholder oppression \u2013 at least in New Jersey \u2013 does not necessarily mean you must prove that your business partner is acting maliciously.\u00a0 In fact, he could be a wonderful human being who honestly believes that he is doing the right thing for the business at all times and would never intentionally hurt you or the business.\u00a0 But even acts taken in good faith can constitute minority shareholder oppression and possibly entitle you to a business divorce remedy.<\/p>\n
One of the most common areas of disagreement is salary and bonus for the majority shareholder.\u00a0 If your business partner sets his own salary at $350,000, but it should really be only $150,000 on the open market, that does not mean the majority owner believes he is overpaying himself.\u00a0 Very likely, he believes in his heart-of-hearts he \u201cdeserves\u201d that salary based on all he does for the company.\u00a0 After all, psychological studies have shown that employees who go so far as stealing from a company believe they are doing nothing wrong since they \u201cdeserve\u201d the money based on some perceived \u201cunfairness\u201d that exists.\u00a0 Why would an owner not go through the same psychological self-justification?<\/p>\n
If you were to place the company for sale, what would a buyer have to pay someone to do that owner\u2019s job?\u00a0 That is the true reflection of what someone should be paid.\u00a0 In the example above, the majority owner is overpaying himself by $200,000, regardless of whether or not he really believes he \u201cdeserves\u201d it.\u00a0 If you are a 1\/3 shareholder, $66,666 of that $200,000 effectively belongs to you.<\/p>\n