UPDATE ISS Equity Plan Scorecard EPSC 2.0

untitled3Have you ever played a card game with 5-year olds? Before you start, they explain the game in vague details and provide a list of rules that are customized to their needs. Then you begin playing, doing your best to remember the rules and keep the game moving and fun for everyone. STOP!

The game is no longer fun. The 5-year has just realized that one of their rules is not beneficial to them. Because they are a kid and generally pretty darned cute, you allow the change of how the rules apply to them without comment (yet you must continue following their original rules). It doesn’t take long for Continue reading

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

The Lorax Explains Equity Compensation

untitledAt the narrow end of an IPO spike

where the stock market slows

and the stock options lose value and the investors say no

and RSU vesting periods continue to grow…

is the street of the equity Lorax.

And deep in this narrow place, some entrepreneurs say,

if you look deep enough you can still see today,

where the bubble once stood

Just as long as it could

Before somebody lifted the funding away.

 

What was the Equity Lorax? Continue reading

Equity Compensation: I Have the Cure You Seek!

6a0134836082f8970c01b8d1aeb429970c-200wiIs 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!

Welcome to another installment in Continue reading

How to Determine Equity Grant Sizes (it’s probably not what you think)

6a0134836082f8970c01bb08c1f798970d-200wiDetermining grant sizes or values is Part 4 and the next challenge in my ongoing series, “Stock Options on the Precipice”. At some point, you will arrive at a place where you will need to determine award sizes. There have been times where this was less difficult than it is right now. And, there will never be a time where this is as formulaic and consistent as base pay amounts.

The first question is whether grants should be based on a percentage of the company, a given number of shares or options or a dollar value converted into a grant amount. Much of this depends on Continue reading

11 Reasons Your Equity Compensation Survey Data is Wrong

6a0134836082f8970c01b7c8191c03970b-200wiPart 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?

You haven’t lost your mind. Equity compensation really is 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

Employee Stock Options on the Precipice?

6a0134836082f8970c01bb08b4abc0970d-200wiI am declaring February “Stock Option Month” at the Café (at least in relation to my posts). For more than 20 years I have been directly involved in the ebb and flow of employee stock options. When they are great, they are the best. When they are not great, they can be truly destructive. I will call it right now. We are, once again, on the precipice of the downfall of stock options. Consider the headlines below. 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

Navigating the Whitewater of LTI Design

11252015 6a00d83451df4569e201b7c7f13efa970b-200wiSomeone recently asked me to explain how I knew what direction to take plan design conversations. She had participated in a several plan design discussions and it seemed like there was not much rhyme or reason to the process. After giving it some thought, I told her it was a bit like navigating a river with occasional whitewater.

Much of any long-term incentive plan design is like gently steering your boat in slow moving water. But, every plan design has stretches (sometimes miles) of whitewater. The path through these Continue reading