What’s Equity Really Worth?

untitled2We all know that equity compensation is the driver behind the astronomic growth in executive compensation. We all know that it is also the reason that tech lords make millions before the tenth year of their careers. It is the reason that the average home in San Francisco and San Jose is more than $1 Million. We all know that these things are true because we have all read or heard the stories. What if these stories were only partially true?

What is equity compensation REALLY worth? How do you know how much to give? How do your employees know how much they are getting? What truly drives, impacts, reduces and magnifies this value? In this post, Continue reading

“Employee-Friendly” Equity Compensation

6a0134836082f8970c01b7c82ab74a970b-200wiIn this sixth installment of my “Stock Options on the Precipice” series (other articles: 1, 2,3, 4, 5), I will cover some common concerns employees have about equity compensation. The term “employee-friendly” equity compensation has become popular over the past couple of years. What does this mean and do the people using the term actually understand the purposes and technical issues surrounding equity compensation? More importantly, is there equity compensation that isn’t employee-friendly? Lastly, what should you be doing about it?

Part of the inspiration for Continue reading

Equity Compensation Triage Assessment (Stock Options on Precipice Part 2)

6a0134836082f8970c01b7c8140d49970b-200wiThe first article in this “Stock Options on the Precipice” series covered some of the main issues that are currently impacting employee stock options (check it out here). This article will discuss some of the paths you might take if you are having stock option concerns. For many executives, human resources and compensation professionals, this may be the first time to experience the trials and tribulations of stock options. For others, the questions below and the assessment process may be a new way of addressing this issue.

Luckily, Continue reading

When will the new 2016 GPS Stock Options become available to view?

Question: (org. on Quora)

When will the new 2016 GPS Stock Options become available to view?

Answer (by Dan Walter)

The updated 2016 version of the GPS Stock Options document was released yesterday, January 27, 2016, in draft format (GPS options DRAFT.pdf), and is currently available for Public Comment through February 17, 2016. The final publication, which will include public comment, is expected to be available towards the end of March 2016. Please take a look and provide your feedback. Additional details can be found at:  https://www.scu.edu/business/cepi/gpsproject/public-comment/

HELP! Was I Just Arrested or Incentivized?

Jan 13 6a0134836082f8970c01bb08ab64e4970d-200wiWe 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.

  1. Incentivized
  2. Arrested
  3. Confused

The correct answer, in our industry, is Continue reading

Our Nearsighted Friends and Us

12022015 6a00d83451df4569e201b7c7f4012c970b-200wiI have a brother with 20:15 vision. For those of you normal humans, this means he can see things clearly in the distance that the rest of us see as only a blur (if at all). I have a sister with, to be kind, worse vision. Like many people, her vision imperceptivity worsened over decades. She began to think it was normal to see street signs only as she came close to them. It did not seem odd that she depended on her experience rather than her senses. And, simultaneously, most of her friends were also slowly losing their ability to see into the distance so they didn’t notice anything changing.

Perhaps the world of executive compensation and all of our friends have slowly become nearsighted.

A recent New York Times Continue reading

You are Not Lebron James (or Facebook, or Google)

6a0134836082f8970c01bb088b1ce3970d-800wiLebron James has just become the youngest person in NBA history to score 25,000 points in his career. He is not yet 31 years old. You are not Lebron James. It is an obvious fact. You are not 6’8”. You are not 250 lbs. of muscle. You cannot dribble a basketball while running faster than your neighbor being chased by a bear. You cannot leap 3 and half feet into air and gracefully land with a smile. You haven’t spent your entire life optimizing your skills and talents to be the best basketball player in the world. You know this.

Yes, you may be about 31 years old. Maybe you weigh 250 lbs. You might even be 6’8”. Even if these things were true, it would be a mistake to directly compare yourself to Lebron. Lebron is fun to watch, but at no point would you fool yourself into believing you can do what he does. Even those players who contend with him for the title of “best basketball player” don’t try to do things the way Lebron does.

Your company is also not Facebook or Google. Your product is Continue reading

Delicious Amber Transparency

6a0134836082f8970c01b7c7e30888970b-200wiWe talk a lot about pay transparency. It seems like half the time half of compensation professionals argue for more and half argue for less. New Belgium Brewing is a company who does a great job at being open. In fact, they are so good that they are an example used by the media, other companies and even the U.S. Government.  More importantly, they seem like great company.

Kim Jordan, the cofounder of New Belgium, has made it a priority to make sure the company is always paying a living wage. Her passion for making sure everyone at New Belgium has the opportunity to thrive is an essential component of Continue reading

Speed, Velocity and Acceleration in Pay

untitledI was reading a Facebook message a parent posted about their kid’s physics homework and it resonated as a reminder for the compensation world. The question was how do you explain the differences between speed, velocity and acceleration. A few years ago, I wrote an article about Newton’s Three Laws of Compensation Motion and I guess it’s time for another physics lesson.

Speed is a point on a graph. It tells you a whole bunch about an instant. Much of the data we use in compensation is like this.  We know exactly the amount or percentage, but we have little information regarding the path to that point. We feel like we somehow already have this information, but in most cases it’s a deception. Most pay data provides as little Continue reading

How does HR contribute to an organization’s success?

Question: (org. on Quora)

Answer (by Dan Walter)

Whether you have an HR professional or not Human Resources is likely the single greatest contributor to your organizations success.

First. Unless your company is really large, HR controls more of your revenue than any other department.  At small and mid-sized company as much as 65-75% of revenue is used to pay staff and provide their benefits. This means that even small improvements in HR can result in material budget increases for other departments. Improvements in this area are often simply viewed as controlling pay or limiting staff. But, even better improvements may be gained by improving the perception of pay or creating a work environment where people actually do their best, instead of operating at three quarters of their potential.

Second. The best strategy and tactical planning in the world cannot be well executed by incompetent, uninterested or unmotivated people. Human Resources first goal is making sure you have the right people. Without them you will fail, 100% of the time.

Third. They protect you from the problems that come from the mercury poisoning of disgruntled employees and lawsuits that come (mostly) from disgruntled ex-employees. Whether it is mediating disputes, motivating personal and professional growth or simply documenting and enforcing policies that keep people from becoming injured, a good HR department has your back, by being out in front of things.

Fourth. Great HR build your company culture and communicate your company strategy. (poor HR departments may not do either.) Your company culture or personality drives employee (and often investor) perceptions. Perceptions are reality for most people. Every company’s strategy is clear to its founders. But communicating this strategy and how it will become reality requires a broader vision and understanding of human dynamics. The task of communication usually falls to HR. So your HR department is in charge of how your employees define reality and how you make it better.

This most could stretch many pages. It should also be noted that failure in each of the above items can directly lead to your company’s failure or stagnation.