© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.© Copyright 2013. Compensation Venture Group, Inc. ...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.© Copyright 2011. Compensation Venture Group, Inc. ...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Passion and Purpose
3
• Find ways to allocate an o...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Pay in Public Companies is All Messed Up
Because o...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
The Prevailing Performance Measure: TSR
• Stock pr...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
To Increase TSR You Can Take Money from Others
6
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Or, Optimize Value for All Stakeholders, and Share...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Pay at Startups Used to Look Like This
• Base Sala...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Realizing Good (or Better) Pay Required a Transact...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Pay at Startups is Homogenous Due to the Financing...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Financing
11
Founders InvestorsBoard
Members
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Growing Up
12
Founders Investors
Board
MembersBoar...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Now Compensation Discussions Turn To…
13
• Timelin...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Finding a Balance: Capitalism and Social Impact
14...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Referencing the Model of Conscious Capitalism
 Tr...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Very Difficult to Do in Larger Companies
16
Founde...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
So We’re Focusing on Other Kinds of Companies
17
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Who Can Grow into a Larger Social Impact Company
18
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
It Starts with Some Fundamental Decisions
19
Form ...
© Copyright 2013. Compensation Venture Group, Inc. All rights reserved.
Then the Decisions Keep Coming, and Getting Harder...
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Paying People at Impact Startups

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Paying People at Impact Startups

  1. 1. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved.© Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Conscious Compensation®: Paying People at Impact Startups The Impact HUB Seattle 30-May-2013 Compensation Venture Group, Inc. www.compensationventuregroup.com fred@compensationventuregroup.com
  2. 2. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved.© Copyright 2011. Compensation Venture Group, Inc. All rights reserved. Compensation Venture Group Equity Interests and Advisory Roles Professional Roles Online Content Pay and Performance: The Compensation Blog Conscious Compensation: The Impact Compensation Blog Effective Equity: The Equity Compensation Blog Compensation Consulting 2 Expert Witness
  3. 3. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Passion and Purpose 3 • Find ways to allocate an organization’s financial capital… • To its human capital… • Based on creating success for all stakeholder groups… • Over an extended time period… • Increasing the economic benefits for all stakeholders… • To enable the organization to find and engage the right people to fulfill the mission, purpose, and business objectives
  4. 4. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Pay in Public Companies is All Messed Up Because of… • Activists • Consultants • Media • Wall Street • Government 4 Pay is… • Short-term Focused • Complex • Homogenous • Compliance-focused • Targeted by populists • Increasingly regulated
  5. 5. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. The Prevailing Performance Measure: TSR • Stock price growth Plus • Dividends (Reinvested) 5 Why? Exclusive Focus on One Stakeholder Group
  6. 6. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. To Increase TSR You Can Take Money from Others 6
  7. 7. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Or, Optimize Value for All Stakeholders, and Share 7 • This is Conscious Compensation©
  8. 8. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Pay at Startups Used to Look Like This • Base Salary • Stock Options • Lean Benefits 8
  9. 9. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Realizing Good (or Better) Pay Required a Transaction • IPO • Acquisition • Restructuring 9 But what if you want to build a sustainable company and not liquidate?
  10. 10. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Pay at Startups is Homogenous Due to the Financing Cycle 10 Investors Founders Board Members
  11. 11. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Financing 11 Founders InvestorsBoard Members
  12. 12. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Growing Up 12 Founders Investors Board MembersBoards of Private Companies Boards of Public Companies Boards of Venture Companies Boards of Other Companies
  13. 13. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Now Compensation Discussions Turn To… 13 • Timeline for return to (liquidity for) investors • Conformity with market norms = less innovation • Burn rate (dilution) = less sharing of ownership with employees • Exit strategy focus = public company norms for pay • Formalization of pay processes = less discretion • Risk management = decisions driven by avoiding litigation
  14. 14. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Finding a Balance: Capitalism and Social Impact 14 Traditional Capitalist Compensation Conscious Compensation© Socially/Politically Correct Compensation
  15. 15. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Referencing the Model of Conscious Capitalism  Transcend profit maximization  Create stakeholder engagement 15 Source: Conscious Capitalism  Managed for simultaneous benefit of stakeholders  Create value for all stakeholders  Multiple constituencies  Profit important, not sole purpose  Trust  Authenticity  Caring  Transparency  Integrity  Learning  Empowerment
  16. 16. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Very Difficult to Do in Larger Companies 16 Founders Venture Investors Board Members Proxy Advisers Institutional Investors SEC Media Peer Companies
  17. 17. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. So We’re Focusing on Other Kinds of Companies 17
  18. 18. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Who Can Grow into a Larger Social Impact Company 18
  19. 19. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. It Starts with Some Fundamental Decisions 19 Form of Organization C Corp S Corp LLC Value Sharing Stay Closely Held= Compensation + Dividends Broad Ownership with Interim Liquidity Broad Ownership with Transaction- Contingencies Equity Compensation Alternatives Partner- ship Sole Proprietor
  20. 20. © Copyright 2013. Compensation Venture Group, Inc. All rights reserved. Then the Decisions Keep Coming, and Getting Harder… 20

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