Addressing these five topics over the next 12 weeks will provide a foundation for the new year. They will also provide the foundation for information to include in communications to shareholders as your company discusses successes and needs in the future. Most importantly, you will be ensuring your very limited equity compensation budget is being used as efficiently as possible.
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Now is the time to fix your worst incentive plans, or adjust pay structures that have crumbled under the weight of furloughs, lay-offs, remote work, shrinkage, growth, or any other of the myriad of issues that are being faced in business. Yes, you are tired. But so are your competitors. The best time to win is when they can’t respond. In a world where increases have been in low single digits for a decade, it doesn’t take too much to set your company above the crowd.
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There are some bad and good things that apply to gift cards that simply don't apply to cash. Nearly all gift cards have a finite life expectancy. Many expire within five years of purchase or activation. Some require annual maintenance fees that draw down against the value until fully utilized. But, they can also inspire people to delay use until some real need or item with great personal value becomes available. This type of delayed gratification is seldom seen as a benefit of cash in your pocket.
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The term “unicorn” refers to a pre-IPO company valued at more than $1B. When the term was coined in 2013 there were only 39 such companies. As of October 2020, there was a herd of at least 450 of them! Terms like “decacorn” and “hectacorn” have been used to define $10B and $100B companies, but I prefer Godzillas. Godzillas are truly unexpected. They cause you to change your approach. And if you don’t handle them well, they may destroy things that everyone finds valuable.
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Sales people are eager and enthusiastic to get started with a new plan, new sales cycle, new anything. This can be tough on the people who are trying to enhance or create sales plans. You want them to be engaged. Once this goal is achieved, your sales people are ready to sprint. It can be a challenge when every project begins with: On your marks! Get set! (The 5 year-old next to you starts running.) GO! And once again you are playing catch up. Prepare well before you start explaining your approach because you won't get much time once everyone is involved.
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Being locked up at home for the past nine months has given me the time to watch some videos that wouldn’t have made the list in a normal year. The rabbit hole of streaming information recently brought me to a series of videos on triathlons. Watching a few of these events (appropriately sped up) reminded me of the power of a compensation philosophy.
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On November 24, 2020, the SEC published proposed long-anticipated changes to Rule 701. As a reminder, Rule 701 allows companies to provide offers and sales of securities with an exemption from Rule 144. Basically, it makes it easier to grant equity or sell shares to employees. No need to go into the legalese here, since there are a ton of other places that cover it in detail.
The proposed rules cover some esoteric stuff like REITS and Foreign Issuers and also cover things that every pre-IPO company (or long-term private company) should be aware of.
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