Agreeing to Higher Salaries Than The Company Can Afford

Here’s a scenario that may sound familiar: C-level hires of a start-up are all successful businesspeople who command six figure salaries. Soon after forming, the company puts in place employment agreements which reflect this salary history (even after taking into account equity incentives). At this stage of the game, however, the company does not have the funds to pay such high salaries and will apply the limited funds it does have toward other important expenses. “No worries,” everyone thinks, “accrued but unpaid salary will be paid as soon as the company can.” Click her to read the full article.