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.
Read MoreIntentionally building stock options to take back what someone has earned through effort, time and investment is just a bad faith deal, in my humble opinion. Don’t use stock options if you are unwilling to commit to their commonly understood intent, and don’t buy your partner a gift because you really want to use it.
Read MoreThere 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.
Read MoreThe 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.
Read MoreOn 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.
Read MoreEditor's Note: There are a lot of reward terms out there and they aren't always universally understood. Leave it to Dan Walter to illuminate this challenge with his Classic humor!
We all wish we were better at communicating. We create presentations (decks) and plan summaries (SPDs). We carefully choose our words and have our colleagues review things before sending them. Our efforts need to be understood by people with wide ranges of experiences, education and levels of interest. But what if our best efforts were making things worse?
Read MoreThose 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.
Read MoreSPACs 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.
Read MoreIf 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.
Read MoreRound and round it goes, where it stops, everyone knows. Lately, I have been wondering what it will really take to change things in the world of compensation. It would seem that we have more than enough motivation to result in real changes to compensation practices that have been ineffective, or worse, seemingly forever. There seem to be enough incentives to create more successful companies and pay people in a way that allows them to have better lives. A large number of Human Resources and Compensation professionals seem engaged enough to give them the push to make materials improvements. But the hamster wheel keeps squeaking.
Read MoreAnyone who has taken a class or performed a Google-search on performance goals has learned about the concept of “SMART” goals. The most common breakdown seems to be: S - Specific, M - Measurable, A - Attainable, R - Relevant, and T - Time-bound. We all seem to know this and yet many still seem to have problems creating successful pay for performance programs. I would like to propose a new D.U.M.B. approach that celebrates the spirit of insanity.
Read MoreThe reason the client needed help was due to one word…overhang. There was just too much overhang, and the company’s major shareholders said the overhang was already high as it was and adding more shares to the share reserve would only make it worse. The shareholders were right. The overhang was high and adding more shares would only make it worse.
This situation has played out hundreds of times and…
Read MoreJust a few months ago the last compensation professional on earth was terminated by their corporate overlord. She sits huddled with her former colleagues at the location of the final WorldatWork conference at a Gaylord Hotel in one of those big conference cities that no one actually got a chance to see during prior events. Artificial Intelligence, or “AI” as it likes to call itself, has taken over and made these once-proud CCPs, GRPs and LMNOPs a bygone memory of different times.
Read MoreExecutive compensation, especially at larger companies, continues to soar ever upward. Headlines in local newspapers and websites around the US are reporting record years, once again. While there are valid arguments for many huge CEO pay packages, there are at least as many that defy explanation. Why can’t we get our arms around this issue?
Read MoreSometimes we need to go back to our roots to be better compensation professionals. I have listed three lessons I learned while serving the public in retail establishments. I didn’t know that these would apply to a career in compensation when I started working about one-hundred years ago.
Read MoreSOYLENT GREEN IS PEOPLE!!! Yep, today’s post is about cannibalism. Not “eating human flesh” cannibalism, more of the “eating young people's futures” cannibalism. There are now schools and investors willing to pay for college in exchange for a percentage of your future earnings.
Read MoreCompanies love equity compensation. We often use it without understanding its cost. We also use it without understanding its tangential impact. As it turns out, there has been a ton of research over the past 20 years, much of it invisible to most compensation professionals. The types of equity, terms and conditions of awards, and communications supporting these programs all have greater weight than most people realize.
Read MoreEvery executive wants its employees to think and act like owners. They believe with ownership comes focus, engagement, and passion. With these triggered, success is supposed to be far easier. But ownership is tricky. I break it down into three main categories.
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