All tagged dan walter

As we fly through another holiday season let’s take a look at some of the stockings hanging on the executive compensation mantle. This is the time of year for gifts and coal. Some are based on lists and requirements, others are a tad bit more…discretionary. In the end, like every year, most get something nice, some get more than they deserve, and others finally get a reminder that being bad has a cost.

Pay has been in the news so often lately, it can be hard to choose a topic to write about. But on November 12, 2018, I read an article titled Setting a maximum wage for CEOs would be good for everyone.” The author was Mark Reiff, a person with an impressive academic resume who asks if setting a maximum wage could “be the long-awaited solution to economic inequality?”

I’m not going to bury the lead. The answer is no. No, a maximum wage is not a solution to economic inequality. In fact, it isn’t a solution for anything

I began my compensation career in 1994. People still typed things (on typewriters). Email was a new thing used by only a limited few. Equity compensation was the wild west. It cost companies nothing. It was used as liberally as salt at a corner burger joint. Few companies knew all the rules and fewer followed them. Gains were expected and repricings were performed without much thought. Importantly, equity was used to fill sometimes massive gaps between cash compensation expectations and cash compensation realities. Stock options were a secret weapon of startups and IPOs to asymmetrically compete for talent against the tech titans and other big companies of the day.

Equity is a term that has become a keystone in the world of compensation. We use it in a wide-ranging list of topics including stock-based compensation, pay transparency, gender and race. I recently did a presentation about the topic titled “Three Buzzwords and One Truth. The buzzwords being fairness, transparency, and internal equity, the truth is the continued growth in variable (differentiated) pay.

On October 11, 2018, Uber filed a request (available from Axios) with the SEC to allow these workers to receive pre-IPO equity that is compliant with Rule 701 and allow those equity awards to be registered for post-IPO use and issuance under an S-8 Registration. This would be a fundamental change to equity compensation and change the playing field for companies active in the gig economy.

The more useful type of tension can be as magical as the tug of a helium balloon on the string in a child’s hand. It can also be equally difficult to control and similarly capable of escape. It can also be as dynamic as launching from a trampoline. Learning to use it properly takes practice, but the results can be pretty impressive. This is the tension that effectively links pay and performance. It is also the tension that links groups, and entire companies, together into a stronger, more cohesive entity.

43% of Millennials and 61% of Gen Z plans to leave their current jobs within two years. Only 28% of Millennials and 12% of Gen Z plan to stay for five years. First, that’s a big ol’ gap! Second, this means that the majority of these workers do not intend to benefit from the entirety of their Long-Term Incentives (LTI). In the case of LTI awards with 3-year cliff vesting (like many RSUs), they don’t plan to get ANY of the value. This creates Opportunity 1 for new, more effective, approaches to LTI.

So, why did I shut down my growing company to join another? I did it because I want to help as many companies succeed as possible. The decision, although somewhat melancholy, is also invigorating, exciting, and full of potential. I cannot wait to share new ideas, services, and experts with all my current clients and every company I am lucky enough to work with in the future. Give me call, send me an email, or shoot me a message if you’d like to chat. (We are also hiring, but only the best should apply.)

You achieved the goal that seemed impossible an hour earlier. You’ve made some friends and told some stories while building the foundation for a complete new one. It cost you a few bucks, but far less than having your parents find out. You still have to help people get home and then get the car back in your own garage, but those things seem easy after reaching your goal.