Those of you working at “pre-IPO” companies need to learn more about Special Purpose Acquisition Companies (SPACs). SPAC s are also known as “Blank Check” or “Reverse Merger” companies and provide a rapid path to becoming a publicly-traded company. This can create amazing opportunities, but not without the cost of significant effort for those involved.

What the heck is a SPAC transaction? Basically, some investors form a company (Company A) with the express purpose of collecting funds that will be used to acquire another company (Company B). The team of Company A is made up of people with the experience and expertise to find and acquire companies with significant untapped potential. After forming Company A they sell shares in a public offering and raise funds for a future merger or acquisition.

SPACs are going to be here for a while. I guess that means it’s time for all of us to learn what that means to compensation professionals. In a recent post I explained the basics of a SPAC, or Blank Check transaction, and emphasized why this recent phenomenon has received so much press (hint, it’s the money.) In my next few posts, I want to drill into some key considerations for compensation and HR professionals.

A SPAC transaction is an easy, exciting, and invigorating path to your goals! Just kidding. It’s like being told to race up a hill dragging a giant piece of meat while being followed by your hungry, but loving dogs. While you are running up the hill you will need to go ahead and change nearly everything about your executive compensation and be ready to explain all of that, in writing, to a group of shareholders and Board members you have not…

More and more companies have compensation programs that look like this guy. Pay for executives is muscular and impressive. It has outpaced pay at lower levels for a long time. Despite how strong and impressive these companies’ pay look, the truth is they are vulnerable to a competitor kicking their…

Let’s start by discussing a couple of the new things where you will need to help. Publicly-traded companies need to produce a Compensation Discussion and Analysis (CD&A) and a Summary Compensation Table as part of their public filings. The CD&A is a narrative document that tells the story of your executive compensation program. The Summary Compensation Table details the prior three years of compensation for your Named Executive Officers (the Top 5 paid officers including your CEO and CFO.

SPAC transactions move fast. They move so fast that it can be difficult to know who Is doing what, and when. The first thing you need to identify your team. Unless you are part of the inner circle, much of this will likely be done before you even know about the potential transaction. Once you are brought into the process you need to learn…

Equity compensation drives these types of “search for a cure” every three to five years. The market turns, new regulations get rolled out, or the tax regime changes and companies, investors, plan participants, politicians or the media start calling for equity compensation to be “fixed.” In response, solutions and bad ideas spring up all over the place.

The De-SPAC process usually runs from 3-5 months. During this time both parties work to convince current and potential shareholders that the union will work. Regulatory bodies like the SEC also get involved and provide their opinions on the impending marriage. The companies involved may also look to…

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.

When granting equity compensation, take the time to understand the purpose of the awards and how your grant details, practices, and data contribute to or hinder your long-term success. Take the time to educate managers of the additional responsibility they have in managing their staff to their awards. Ensure your processes do not undermine the hard work you are putting into correcting DEI issues. Remember that equity compensation is missing more than it includes. Things reported as trends are probably only things a few very visible companies are doing. Best practices are just the most common way of using equity, not the best use for your company.

A widely held belief is that the underlying purpose of a Performance Improvement Plan is to begin the documentation process toward termination. This might be the case. But it may not be.

Employers spend considerable time and money searching for a candidate and even more time and money training that employee to carry out the job responsibilities. Employers generally want to work with employees and try to retain them.

Equity Compensation has been slowly going through its own version of climate change. Much like our planet, the environment for equity compensation has been changing for decades and very few have adjusted or even noticed. Whether you agree with the causes of climate change it is hard to deny that weather is different than it was even 50 years ago. Regardless of the driving forces, it is impossible not to recognize that equity compensation is delivering different results than it was when it became the major currency of tech startups in the 1980s and 1990s.

It’s time to be honest and evaluate what your talent acquisition team and managers are telling prospects and employees about their awards. Are you Tom Sawyer getting people to whitewash a fence or just one more employer looking to put another cog in the machine?

During challenging times, focus your efforts on the things that are absolutely required for future success. Every working veteran who has survived tough times in their career has become stronger for the experience. Dealing with challenging conditions is a vital, if not career-essential practical lesson. Solid contingency plans followed with calm resolution, patient endurance, and unflappable confidence can and will succeed.

Rather than stress the inherent risks in a quick path to IPO, try to remind people who they will be compared to once the company is publicly traded. Provide your staff with examples of companies that have weathered five or more years of post-IPO media and investor coverage. Explain what those companies did right and how your company can do similar things. In the end, a SPAC is…

In a sense, the SEC is asking if the Emperor is wearing any clothes. Many SPAC transactions have been completed successfully. Some have seriously less successful. This is to be expected and is not dissimilar from the traditional IPO market. Some succeed, some fail. But the SEC has seen…