S Corp Salary Question

I am based out of Utah.

I have a Shareholder in the company that owns 24.5% of the stock. He only works about 4 days a month. He thinks he should get paid his salary no matter what even if he works 0 hours. Is this correct? Or is there a law requiring him to work the hours to equal his salary in order to get his salary? Also, does the same apply with his distribution?

Don't confuse salary with dividends. Salaries are for employees, dividends are for shareholders. To make it easier to understand, think of this gentleman as wearing both hats.

As a "shareholder" he is entitled to dividends on the profits proportionately equal to his percentage of ownership in the company.

Now, as far as his salary as an "employee" . . . what it his position within the company? Is there an employment agreement in place for him? If so, what are the terms? Is he a full-time employee with sick pay, vacation time?

If he is not an employee, per se, but rather acts as a director on the Board, what do your corporate bylaws say with regard to directors' compensation?

If he is an officer of the corporation appointed by the board of directors, then there should have been a resolution and employment agreement which spells out the terms of compensation. He cannot just arbitrarily determine his own compensation.

This is why it is so important to have agreements in writing.

By the way, is he hiring? I would love to work 0 hours and get a paycheck!