Calculating Investor and CEO Shares with a 20percent Increase for the CEO

Understanding the Scenario

In this scenario, we have a company with several investors and a CEO. The CEO currently holds 20% ownership, 
while the remaining investors hold varying shares. We're tasked with calculating the new ownership percentages 
after increasing the CEO's share by 20%.

Calculation Steps

Determine the total capital:

Add up the capital contributions from all investors and the CEO.
Calculate the new CEO capital:

Multiply the CEO's current capital by 1.20 to increase it by 20%.
Calculate the new total capital:

Add the new CEO capital to the total capital from step 1.
Calculate the ownership percentage for each investor:

Divide each investor's capital by the new total capital and multiply by 100 to get the percentage.
Example Calculation

Let's assume the following initial capital contributions:

CEO: 200,000
Investor 1: 70,000
Investor 2: 130,000
Investor 3: 45,000

Step 1: Total capital = 200,000 + 70,000 + 130,000 + 45,000 = 445,000

Step 2: New CEO capital = 200,000 * 1.20 = 240,000

Step 3: New total capital = 240,000 + 70,000 + 130,000 + 45,000 = 485,000

Step 4: Ownership percentages:

CEO: (240,000 / 485,000) * 100 ≈ 49.48%
Investor 1: (70,000 / 485,000) * 100 ≈ 14.43%
Investor 2: (130,000 / 485,000) * 100 ≈ 26.70%
Investor 3: (45,000 / 485,000) * 100 ≈ 9.28%

Notes:
The total capital in this example is 445,000. We increase the CEO's ownership by 20%, which results in a new 
total capital of 485,000. Please refer to Step 2 and Step 3 for the detailed calculations.

Conclusion
By following these steps, you can accurately calculate the new ownership percentages for the CEO and investors 
after increasing the CEO's share by 20%. This calculation is essential for understanding the distribution of 
equity in a company and ensuring fair compensation for all stakeholders.

Last update on Sep 08, 2024

Tags: investor,invest