SPAC Attack: Looks Like We’ve Made It!

For the past several weeks I have been writing about SPACs and their impact on compensation. Much of that information has been cautionary, and some of it may have been overwhelming, but there is a real upside. Once you have navigated everything discussed in my prior articles (listed below) you will find yourself in an entirely new, and often lucrative, publicly-traded world.

If you’ve been with your company a while this may mean a small pot of gold at the end of the rainbow. Of course, SPACs are unusual, so yours will seldom end as quickly as finding the mythical leprechaun’s fortune. Let’s cover the last few unique hurdles and get on to the good stuff.

With the De-SPAC complete, your company will begin trading publicly as part of the new entity, but unlike a traditional IPO, the transaction will not yet be complete.

  1. You will likely be dealing with a mostly, or entirely new Board of Directors. Approval processes will probably change along with the personalities that must be navigated.

  2. You will not be able to roll out an ESPP and have the shares registered under an S-8 until at least 60 days after the De-SPAC, and only if the new Board approves the new plan that you hopefully were designing during the de-SPAC.

  3. Your employees are unlikely to become super-rich, super-fast. They may expect this. They may also expect that they will get entirely new amounts of base pay after the transaction.

  4. You will need to deal with all of the disclosure, reporting, and competitive poaching issues that are a challenge for every popular public company.

But the main benefit of being a compensation professional at a publicly-traded company is that all of your pay tools, and some new ones, can now work in the ways employees expect.

  1. You will likely have the cash available for some sort of predictable Short-Term Incentive Plan. This plan may not rival larger companies, but it should give you a confident pay element that may have been a bit sketchy in your pre-SPAC days.

  2. Equity compensation plans will have planned and predictable liquidity. Employees will have confidence in knowing that when their shares vest there is a way to turn them into money, or at least cover the cost of taxes owed.

  3. You will finally know how much your peers pay their executives…with specificity. Your peers will need to report their pay data just like you will need to report yours. Learning to navigate and use this data and turn it into useful information will include a learning curve, but you won’t be guessing anymore.

  4. All of the above puts you on more equal footing when trying to attract, motivate and retain high-quality staff. Less imagination and more evidence mean less guessing when pricing a specific job.

The list, of course, goes on. You can read many of the other 3,000-ish posts on the Compensation Café to learn more about those topics. The point is this: SPACs are rowdy, hard-playing corporate transactions that will stretch your skills and talents and ultimately make you a better compensation professional. Some people estimate that as much as 70% of the “heavy lift” in a SPAC involves compensation (I honestly think it’s more like 50%.) In the best case, you will do a year’s worth of work in four or five months. Let your imagination define the worst case.

SPACs are unlikely to go away. They are likely to slow down and may even have a crash sometime during the next year. But, just like the Dot-com crash did not end the use of IPOs, the potential SPAC-crash will not end their use. They will become more refined and predictable. There will be better data that allows better decisions. There will be more people with experience who can guide you through them. And this series of articles will become a quaint reminder of the past, much like a sepia-toned picture of Billy the Kid reminds us of the old west. Until then feel free to reach out and ask questions and exchange ideas!

Other articles in this series

  1. SPAC Attack: Intro

  2. SPAC Attack: 5 Critical Equity Compensation Issues

  3. SPAC Attack: Executive Compensation Top 10 List

  4. SPAC Attack: Unwieldy Expectations, Proxy Time

  5. SPAC Attack: Who’s On First?

  6. SPAC Attack – Welcome to the Starting Line

  7. SPAC Attack: The Emperor’s New Clothes?

  8. SPAC Attack: Bridging the De-SPAC Gap

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or follow him on Twitter at @DanFutureSense.

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