I am planning to start a consultancy business with two work colleagues. I need advice on director's contracts and shareholder structure. I will run the company (and be a director) and my colleagues will also be directors. I want to give my colleagues a stake in the profits of the company, but I do not wish to give them equal status as myself. In the start up phase of the business, I want to minimise fixed costs, so an idea is to reward the directors with a minimal salary, but a significant share of revenues. As the business grows, their salaries would increase and their percentage of revenues reduce. I would be grateful for any advice on the structure of a director's contract that achieves these aims. I will put in most of the capital into the company, but there may be a need for outside capital, some of which may come from the co-dierctors. Once the business is over is start-up phase, I do not expect it to be particularly capital intensive. I am reluctant to give outside shareholders full equity stakes pari passu with the shares I would myself hold. I would like to offer outside shareholders a hybrid type of debt/equity which provides an attractive rate of interest (but only payable if sufficient profits), some participation in profits, no voting rights, redeemable by company and shareholders. Again, I would welcome advice on such a capital structure or any alternative suggestions. mibry