Incentive presentation 070410

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A presentation I gave on incentive plans for startups. Download it to get the accompanying audio

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Incentive presentation 070410

  1. 1. Incentive Plan Seminar<br />Mark MacLeod<br />April 2010<br />startupcfo.ca<br />@startupcfo<br />
  2. 2. Agenda<br />Incentive Compensation<br /><ul><li> What does incentive mean?
  3. 3. Issues
  4. 4. Suggestions
  5. 5. Bonus Plans
  6. 6. ESOP
  7. 7. Questions</li></li></ul><li>Introduction<br />Me:<br />
  8. 8. Incentive Comp<br />Incentive:<br />any factor (financial or non-financial) that enables or motivates a particular course of action.<br />
  9. 9. What Motivates You?<br />Depends….<br />
  10. 10. Incentive Drivers<br />
  11. 11. Issues<br />Structuring Incentive Plans:<br /><ul><li> Who designs them vs. who is impacted
  12. 12. Where to focus? Strategic vs. Practical
  13. 13. Cause and effect
  14. 14. Clarity
  15. 15. Alignment
  16. 16. Culture
  17. 17. Inconsistency
  18. 18. Frequency</li></li></ul><li>Suggestions<br /><ul><li> Start with practical, non-financial incentives
  19. 19. Make goals clear and tied to individual / team actions
  20. 20. Annual goals and quarterly goals
  21. 21. Communicate consistently & regularly
  22. 22. Reward excellent results and those people who</li></ul> make them happen<br />
  23. 23. Bonus Plans<br />Who, When, Where, Why?<br />Who: Senior execs, Department directors, people with quotas & /or quantifiable time-driven targets<br />When: Annual, based on company & individual performance, spot grants can be used<br />Where: After minimum revenue or break-even<br />Why: Reward quantified short term performance<br />
  24. 24. Bonus Plans<br />How Much?<br />
  25. 25. Bonus Plans<br />Mechanics<br />Bonus = Corporate Performance * Individual Performance * Base Salary %.<br />Bonuses will be paid twice yearly, at the discretion of the CEO. Bonuses will only be paid if corporate AND individual performance are 50% or higher and the company is profitable.<br />
  26. 26. ESOP<br />Who, When, Where, Why?<br />Who: Depends. Everyone? Admin? Senior team?<br />When: At time of hire. Spot grants & annual top ups<br />Where: Anytime after ESOP in place<br />Why: Reward long term performance <br />
  27. 27. ESOP<br />How Much?<br />Senior Management - % of company<br />Non-founder CEOs - 8 - 10%Founder CEOs - 0 - 3%COO / President - 3 - 5%CFO - 1 - 3%CTO - 1 - 3%VPs 0.75 - 1.5%<br />Team - % of base<br />
  28. 28. ESOP<br />Benchmarks<br />
  29. 29. ESOP<br />Issues<br /><ul><li>Top heavy
  30. 30. Valuable?
  31. 31. Unfair rules
  32. 32. Early exercise</li></li></ul><li>ESOP<br />Suggestions<br />Align grant with real contribution & role impact<br />Make them real!<br />Follow standard structure<br />Vest everyone on exit<br /> Voting Trusts, buyback rights<br />
  33. 33. Questions<br />

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