Performensation articles 201107 201112

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Performensation articles 201107 201112

  1. 1. JULY-­‐DECEMBER  2011 MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: DECEMBER  20,  2011 Some%mes  the  Road  Less  Traveled  leads  to  a  Band  of  Flying  Monkeys We  all  get  bored.  Most  of  us  fill  that   boredom  by  exploring  something  new.  OLen  this   leads   to   an   exciNng   new   restaurant,   but   someNmes   it   means   a   terrible   meal.   SomeNmes  this  means  meeNng  new  friends,  other  Nmes  it  means  gePng  stuck  at   a   colleagues  holiday   party  listening  to  stories  about  office  poliNcs  and   sick  children.  In   my   experience,   very   few   compensaNon   professionals   are   also   extreme   sports   fanaNcs.  I  seldom  speak  to  someone  in  our   industry   who  has  recently   snowboarded   MORE...LOCATION: COMPENSATION  CAFE DATE: DECEMBER  19,  2011 Prepare  for  Compensa%on  Mee%ngs  Like  an  NFL  Broadcaster Like   many   of   you,   I   have   football  games  playing   on   my   TV   during   most   autumn   Sunday   aLernoons.   Also,   like  most  of  you,  I    pay  a  lot  aUenNon  to  the  big  plays,  but   liUle  aUenNon   to   the  broadcast   itself.   This  past   Sunday,   for   perhaps  the  first   Nme   ever,   I   focused   on  the  incredible   preparedness  of   the  professionals  producing   the   television  events.  It  got  me  to  thinking.  What  if  compensaNon  professionals  prepared   themselves  in  the   same  way?  Our   meeNngs  with   ExecuNve  Management   and   more   MORE...LOCATION: COMPENSATION  CAFE DATE: NOVEMBER  29,  2011 How  to  Explain  Stock  Op%ons  to  a  Dog Stock   opNons   are   one   of   the   most   used   and   least   understood   tools   in   the   compensaNon   toolbox.   Recently,   a   new   opNonee     asked   if   I   could   explain   stock   opNons  in  a  manner  that   even  his  dog  could  understand.  I  have  included  my  answer   below. "Come here Rover, I have got something to explain to you. Stock Options ....STOP scratching yourself and listen....Stock Options are an offer from the company that allows you to buy company stock at a later date. The cool thing...STOP If MORE...LOCATION: COMPENSATION  CAFE DATE: NOVEMBER  10,  2011 Goldilocks  and  the  3  Broad-­‐based  Stock  Plans There   once  was  a  dedicated  professional  who  was  tasked  with  creaNng   a  company-­‐ wide  stock  plan  at  her   new  company.  HenrieUa  Rachel  Goldilocks  (let’s  just   call  her   “HR   Goldilocks”)  had  years  of  Human   Resources  and   CompensaNon  experience,   but   liUle  interacNon   with  broad-­‐based  equity   compensaNon.   She  searched  the  web  and   spoke  to  some  experts  on  the  topic.  Each  expert  had   a  ton  of  informaNon,  but  many   tended  to  discuss  general  trends  rather  than  HR  Goldilocks’  very  specific  needs. MORE...
  2. 2. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: NOVEMBER  2,  2011 Equity  Compensa%on  Data  for  Start-­‐ups  and  Other  Private  Companies During  the  month  of  November  I’m  going  to  focus  on  my   equity   compensaNon  roots.   With  both  the  IPO  and   M&A  markets  once  again  starNng   to  gain   aUenNon,   we  can   start  by  discussing  a  recent  survey  on  equity  compensaNon  at  private  companies. The   NaNonal  Center   for   Employee   Ownership,   (www.nceo.org)   just   released   their   2011  Private  Company  Equity   CompensaNon  Survey.   This  survey  is  unique  because  it   focuses  exclusively  on  data  from  more  than  200  privately  held  companies.  Given  the   MORE...LOCATION: COMPENSATION  CAFE DATE: OCTOBER  18,  2011 Compensa%on  In  the  Eye  of  the  Tornado In   a   world   of   swirling   regulaNons,   opposing   forces   of   needs   versus   budgets   and   increasingly   pressing  deadlines,  it   is  far   too  common  to  get  caught  up  in   the  tornado   that   is  our  everyday   work.  Generally,   when  a  tornado  comes  the   best   plan  is  to  get   out   of   its  way.   When  that   is  not   possible  and  the  tornado   takes  hold,   our   survival   insNncts  immediately  look  for  a  way  out.  I  am  here  to  propose  a  beUer  plan.   Think  about  it.  What  happens  as  you  move  towards  the  edges  of  a  tornado? MORE...LOCATION: COMPENSATION  CAFE DATE: OCTOBER  4,  2011 Compensa%on:  The  Word  May  Not  Mean  What  You  Think  it  Means What   does   “compensaNon”   mean?   Those   of   us   who   work   as   compensaNon   professionals  consider   it  a  posiNve,  professional     word  that  speaks  to  people  gePng   paid   for   services,   effort   or   performance.   Like   many   words,   compensaNon   actually   means  something  else  enNrely.From  the  Collins  World  English  DicNonary 1.     the act or process of making amends for something MORE...LOCATION: COMPENSATION  CAFE DATE: SEPTEMBER  19,  2011 Either   Put  Me  in   Charge  or  Let  Me   Be  a  Lackey.  Im  Fine  with   Either,  But  I  Cant   Do   Both. A  friend  recently  updated  their   status  with  the  Ntle  to  this  arNcle.   Ironically,   I  saw   it   just   as  I   got   off   a  call   with   a  client   who     was   explaining   that   somehow   she   was   expected   to   serve   as   both   the   strategic   visionary   and   tacNcal   processor   for   her   company’s  mulN-­‐naNonal  LTIP   programs.   The   simple   request   in   my   friends  status   update  seemed  reasonable,  well  thought-­‐out  and  familiar.  As  we  traverse  the  crags  of MORE...
  3. 3. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: SEPTEMBER  12,2011 How  Much  to  Keep  Your  Mouth  Shut? How  does  compensaNon  interact  with  reputaNon?  Let  me  count   the  millions  of  ways.     The  calculus  of  reputaNonal  damage  can  be  more  intertwined  than  we  account  for  in   our  current  severance  agreements. Recent   news   arNcles   have   discussed   comments   by   Yahoo’s   deparNng   CEO,   Carol   Bartz.  Famously,   or   infamously,  she  declared  in  a  media  interview  that   she  disagreed   with  her  terminaNon  and  felt  that  perhaps  the  company  had  not  been  completely   MORE...LOCATION: COMPENSATION  CAFE DATE: AUGUST  31,  2011 Compensa%on  Crack  the  Whip!  Managing  the  Velocity  of  Change I  am  sure  that  when  some  people  saw   this  Ntle,  their  first  thought   was  of  the  mighty   compensaNon   professional   standing     above   the   fray,   bullwhip   in   hand,   direcNng   execuNves  and  employees  to  do  what   is  required  to  ensure  their  company   success.   But  let’s  be  realisNc,  that’s  probably   not   going  to  happen.  More   importantly,  in   this   case  I  am   talking  about   an  enNrely   different   type   of   “crack  the  whip.”   Changes  to   corporate  strategy,  compensaNon  rules,  market  forces  and  other  influences  mean   MORE...LOCATION: COMPENSATION  CAFE DATE: AUGUST  29,  2011 Say  on  Pay  –  The  Excep%on  Proves  the  Rule? Say   on   Pay   is   currently   the   largest   driver   of   change   in   the   world   of   execuNve   compensaNon.   This  provision  of   the     Dodd-­‐Frank   Act   was  the  talk  of  the  media  and   consulNng  firms  during   the  2011   proxy   season.  And  it   will  certainly   be  a  major  force   as  we  prepare  for  the  2012  proxy  season.  This  focus  is  interesNng  since  shareholders   overwhelmingly   supported   execuNve   say   on   pay   proposals   this   past   year.   The   majority  of  pay  programs  received  an  average  of  more  than  90%  support,  and  less   MORE...LOCATION: COMPENSATION  CAFE DATE: AUGUST  23,  2011 Cheater  Cheater  Integrity  Eater:  Teachers  and  Pay  for  Performance Some  people  say  the  recent  cheaNng  scandal  in  Atlanta  area  schools  gives  rise  to  the   ugly   side  of   performance-­‐based  pay.   CriNcs  loudly   shout   that   teachers   cheaNng   on   standardized   test   scores   only   to   earn   beUer   compensaNon,   proves   that   pay   for   performance   doesn’t   work.   Equally   loud   criNcs   on   the  other   side  of   the   argument   shout   that   pay   without   performance   has  been   proven,   over   many   years,   to   work   when  used  properly.  Both  sides  believe  that  our  priority  should  be  educaNng  our   MORE...
  4. 4. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: AUGUST  8,  2011 How  is  Pay  for  Performance  like  Driving  a  Fire  Truck? San   Francisco  has  lots  of  tall  buildings,  so  we  need  those  cool  ladder  fire  trucks  that   you  see   in  the  cartoons.   There  is   a   firefighter   in  the  front   seat   and  another   with  a   steering  wheel  in  the  back.  As  one  drove  by  on  an  emergency  call  my   nephew  asked   me  who  was  in  charge  steering  the  truck.  It  took  me  a  second,  but   my  answer   was,   “both.” As  so  many  things  tend  to  do,  this  immediately  popped  into  my  mind  when  discussing MORE...LOCATION: COMPENSATION  CAFE DATE: JULY  27,  2011 Defining  Pay  for  a  Compensa%on  Unicorn At  a  recent  client  engagement,   the  HR   department  described  a  specific  posiNon  they   were   having   a   hard   Nme   trying   to   fill.     The   posiNon   was  incredibly   specific   and   required  knowledge  and   a  skill  set  that   was  nearly  impossible  to   conceive.  They  told   me  that   they   had   been  trying   to   fill  the  posiNon  for   almost   two  years.   During  that   period,  the  department  in  need  had  created  “beUer  and  more  specific  definiNons.”  As   I  probed  deeper  it  became  clear  that  this  posiNon  was  more  than  difficult  to  fill,  it  was   MORE...LOCATION: COMPENSATION  CAFE DATE: JULY  19,  2011 How  Much  Money  to  do  a  Job  You  Don’t  Want? Companies   are   trudging   their   way   through   this   slow   and   oLen   painful   economic   recovery.   ReorganizaNon   has   become   a   mantra   of   survival,   but   where   do   your   employees  and  their  compensaNon  fall  into  the  mix?  Recently   both  friends  and  clients   have  been  telling   me   about   their   troubles  at   work.   Many   aren’t   really   complaining   about  their  compensaNon,  they  are  griping  about  the  job  they  are  doing  for  the  pay.   MORE...LOCATION: COMPENSATION  CAFE DATE: JULY  6,  2011 Equity  Compensa%on:  Gi,  Reward  or  Lease? Skype  as  been  vilified  for   buying  back  shares  from  vested  and  exercised  stock  opNons   (see  details  here  and  here).  The     acquisiNon  of  Skype  by  MicrosoL  increased  the  stock   value  enormously.   Ex-­‐employees  complained  that   the  company   required  the  return   of  shares  exercised,   while  only   providing   the  original  exercise  cost   as  repayment.  In   the   paradigm   established   during   Equity   CompensaNon’s   Golden   Decade   (the   late-­‐1990’s),  this  type  of  provision  was  nearly  unheard  of.  In  the  more  than  10  years MORE...

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