At 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?
And why was it there?
And why was it lifted and taken somewhere
far from the narrow end of the IPO spike?
Old Dan Walter still lives here.
Ask him. He knows.
You may see Dan.
Or, you can just send him a note
He writes at the Comp Café, in a running monologue,
and talks about equity in the seventh post on this blog.
Now I’ll tell you, he says, with his presenter’s voice on
how equity was changed before IPOs were gone.
It’s happened before several times in the past
this time took longer, but it won’t be the last.
Way back in the days when unicorns were not real
and pre-IPO meant that and not just pivots and cartwheels.
Companies gave options to help themselves grow
It saved so much cash and allowed them to show
a link between talent and investors and success,
without requiring a game of billion-dollar chess.
But it isn’t forever,
the stock option ride.
Huge growth begat RSUs
with changed vesting and performance besides.
Following the leader
lead many over cliffs
Employees looked elsewhere, wondering what if?
The smart companies realized
that uniqueness was their brand.
They figured out who they were
before designing their plans
These companies built programs
that were custom fit.
The narrow end of an IPO spike
was their goal to outwit.
They understood equity was not about now,
or a simple addition to pay and income.
The secret was in what it could become!
Each grant is a seed, each plan a fertile field,
each investor is rain and sun to increase yield,
the management team is tasked with
making equity value more than a myth.
Deep roots allow a tree to survive,
in the dry times when others may die.
At 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.
Your equity must be unique with strong, deep roots.
Make it reflect who you are and the stars
to where you shoot.
Know that the market will stumble and fall
And a great equity plan can get through it all.
This is the In this seventh installment of my “Stock Options on the Precipice” series (other articles: 1, 2, 3, 4, 5, 6)
Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and has been deeply involved in equity compensation for a long, long time. Dan has written several inustry respurces including the recent Performance-Based Equity Compensation. He has co-authored “The Decision Makers Guide to Equity Compensation”and “Equity Alternatives” and a few other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation and @SayOnPay.
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