Figuring out the right amount of equity compensation at startups is a challenge. How much should I grant? How big should the grant be? How should I size the grant relative to base pay? Investors, boards, executives, HR and compensation departments at start-ups have conflicts over these questions all the time. In the past I have written about the11 Reasons Your Equity Compensation Survey Data is Wrong. This article focuses on three common ways to determine equity at startups regardless of your survey source.
%Percentage of FD Outstanding Shares
This is where most companies start. The first 10 or 20 key players at a start-up are Continue reading →
Remember that time you spent weeks modeling a new incentive plan only to have it shot down? They explained that any goals needed to be based on RESULTS! You maintained that the reason interim goals were included, was to ensure that success could be achieved and communicated throughout the process.
Remember that other time you explained to your managers that they needed to have frequent conversations on the new pay for performance program? And, when it didn’t work they told you Continue reading →
What do ‘Up’, ‘Cars’, ‘Inside Out’, ‘Monsters, Inc’, ‘Ratatouille’, ‘Toy Story 3’, ‘The Incredibles’, ‘Finding Nemo’, ‘Toy Story’ and ‘WALL-E’ have in common? First, they are 10 of the best animated movies made by Pixar. Second, they all follow Pixar’s “22 Rules of Storytelling.” As it turns out, these rules adapt well to the world of compensation plans and philosophy. Continue reading →
“You won’t believe what this star from the ‘80’s look like now!” “The best banana bread EVER!” “This great trend is your next haircut!”
It happens to everyone. We see the headline and click through to see the interesting pictures or stories. When the new page opens up (and we get past the explosion of ads) we find nothing surprising, new or even interesting. In fact, we are disappointed and annoyed that we were fooled again. Before you stop reading, you should know that this is exactly what many of our compensation programs are doing during the recruitment process.
Attract, Motivate, Retain (and hopefully Engage). This is the mantra of Continue reading →
How are great salespeople able to seamlessly turn every one of your concerns into a demonstration of the prowess of their product? Are they really just that convincing or is there some type of method to their success? The best salespeople personalize every discussion. The trick is years of practicing a simple process until it has become part of how to explain everything. Your recruiters, staffing professionals and talent acquisition stars can do the same with your compensation plans (and you can easily help them).
The key in the absolutely fabulous method is the F.A.B.
Sales compensation is an uncomfortable area for many compensation professionals. Many of us have never been professional sales people. Many of us don’t have the technical modeling expertise to flesh out these plans. The plans don’t operate the same way as most incentive plans. Sales people do not react to pay programs the same way as most other employees. Sales managers often are simply great sales people who have been put in charge of similar, but less great, sales people. Often we are tasked with supporting or communicating a plan when we have had little interaction during the fact finding and design phases. With all the being said, let’s talk about sales comp!
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 →
Let me start this by saying that there is little new in this post. If you have been a senior compensation professional during a market downturn, this should sound familiar. If you have not had this exciting and seldom pleasant experience, buckle up and let’s go!
The main selling point of equity compensation is that it provides unequaled compensatory upside through its extreme variability, while allowing a Continue reading →
We 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 →
In 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?