All in Start-up Pay

The world of compensation is filled with odd inconsistencies. Are you motivating someone to retain them, or are you retaining people, so you can motivate them? Are you looking to hire “world-class talent”, or do you want to pay more like your peers? Perhaps the most frustrating is the dilemma of compensation data being absolutely accurate and almost completely wrong.

This rule is a modification of a proposal that has been floating around for a few years. It is designed to allow individuals who exercise stock options, or vest in RSUs to delay recognizing the income and associated taxes. The theory is that this will allow people to become owners at a lower initial cost and catch up when there is some liquidity in the stock. BUT…

It is the holiday season and during this chilly time of the year many reach for a nip of whisky to create some warmth. Scotch is not a drink for everyone. But, for those who partake little else can replace it. Equity compensation is similar. It isn’t perfect for every company, or every situation, but when is done right it can be a game-changer.

Stock Options, Restricted Stock Units, young Performance Units and their cousin Non-Qualified Deferred compensation tragically died in 2017 as an unintended consequence of colliding with the 429 page U.S. tax reform called the ‘‘Tax Cuts and Jobs Act.’’ It should be noted that Employee Stock Purchase Plan is currently in critical condition at a local hospital.

Hiring a great salesperson is the key to success for many high-growth companies. The Rainmaker, high-earner, big kahuna or closer can change the growth directory for any company, large or small. These great revenues generators do not come cheap. In fact, they may often make more money than anyone else in the company. They may be worth it.

IPOs and equity compensation have become almost mythical in the media and entertainment. Because of this they are often mythical in the eyes of your employees. We have all read about the massage therapist, artist or receptionist who became multimillionaire when their company went public. We have all see the headlines about twenty-something billionaires.