This is my first non-equity focused article in a few months but a high school graduate inspired me to change direction this week. The video below shows the valedictorian speech at the high school graduation of a friend’s kid. It’s five minutes well spent, but here’s s snippet if you are in a hurry.
“No matter how many details I give I will not able to express the full truth about today…As much as I would like to say that I was chosen because of my hard, dedication and intellect, I would be far from truthful in doing so because I have met and studied with individuals more diligent and talented than myself… 4.63. This three digit number is the reason I stand before you. But, what does it really mean? My GPA is just an artificial number meant to measure my academic prowess.”
And that’s where it starts getting really good! In the next section he tells you why Continue reading →
This is not the article I intended to post today. I had something else ready to go, but realized this was more important. I am sitting in my hotel room in San Diego, California getting ready to head over for the second day of the annual WorldatWork Total Rewards Conference. Total Rewards is a BIG category.In three days it is not possible to dive into every type and flavor of “reward”. But one important family of compensation, equity, is almost completely missing from this year’s event.
This February, the Harvard Business Review published Stop Paying Executives for Performance” by Dan Cable and Freek Vermeulen. The basis of the article is that we do away with all executive incentive pay and replace it with high (in cases much higher) salary. Their argument is that there is no evidence that pay for performance works and some evidence that it is dangerous. Since this post is part of my ongoing “Stock Options on the Precipice” series (earlier articles: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11), I will try and focus only on that one aspect of incentive pay. Perhaps some of you will add additional information in the comments.
Note: We are not arguing that top managers such as CEOs should be paid less. That may very well be the case too, but that’s not the focus of our analysis. HBR , Cable, Vermeulen, Feb. 2016
Let’s start with the premise that pay for performance does not work. There is Continue reading →
Is your mind already racing about how the new overtime regulations will affect your company? The media is buzzing about today’s release of the U.S. Department of Labor’s new rules regarding overtime pay. The recent DOL publication highlights the following changes:Continue reading →
On May 7, 2016, it was reported that a giant chrome panda predicted the imminent crippling of stock options in the Silicon Valley. Dropbox has been a star of the unicorn sector. But, in October of 2015 and again in April of 2016, their value was written down by major mutual funds, including Fidelity. With their unicorn value and subsequent write down, they have become a high tech “canary in the coal mine” for employee stock options.
Just last month Dropbox moved into new digs in San Francisco. In their lobby, they installed a giant chrome panda (their mascot) that is meant to welcome guests with an iconic Bay Area flair of irreverence. The bad news is Continue reading →
Is your equity program on the fritz? Are your stock options in the dump? Could your RSUs use a bit more pep? Are your stock appreciation rights feeling a bit more like wrongs? I have got the cure for what ails you!
Like the snake oil salesmen of yesteryear there is always someone pitching some unique feature or approach that will solve all of equity compensation’s potential problems without having any side effects. And, just like the people who purchased those sometimes poisonous and sometimes pointless solutions, the buyer had better beware!
Part 3 of my ongoing “Stock Options on the Precipice” series.
How much equity should I give (or get)?
It’s probably the most common question I get asked. The answer, as I am sure you know, is “It depends”. And, with equity compensation the final answer is even squishier than other types of compensation. Data seems to be all over the place. Trends appear to vary based on who is providing them. It often feels like survey data is pulling companies in specific directions, when it should be reflecting directions that have already been taken. What in the heck is going on?
The discussion regarding the efficacy of incentive compensation is ongoing. So many questions, seemingly so many answers! Does it focus people on things that you find important? Does it trump autonomy, mastery and purpose? Does it make a difference even when it isn’t the main component of pay? Will people jump through a few hoops if there is a reasonable prize at the end?
A group of turtles answered yes to all of these questions.
We all wish we were better at communicating. We create presentations (decks) and plan summaries (SPDs). We carefully choose our words and have our colleagues review things before sending them. Our efforts need to be understood by people with wide ranges of experiences, education and levels of interest. But what if our best efforts were making things worse?
Fill in the blank from the selections below:
Today I was _______ for my collaboration in a scheme.
Pay for performance continues to grow as a solution for motivating people in a world of flat compensation. The title of this post probably had you thinking about incentive plans that required real goals to be met before payment was earned. Maybe you thought about one of your programs where people got paid even when performance wasn’t great. While these are common themes in motivational pay, this post is about an entirely different kind of teeth.