Equity Based Compensation Programs:
Creating Meaningful Ownership in the Organization
There continues to be significant change in how companies create a strong sense of ownership with their employees. Regulations, financial impact and confidence in these programs have changed dramatically over the last few years. Whether these efforts are directed to senior executives, critical leadership, technical or sales talent, or an entire organization, equity ownership remains a critical element of a total system of rewards. However, there is no longer a common approach to how companies structure and utilize these programs.
Equity compensation programs seek to create a sense of ownership, a stake in the long-term value of the company or a tool to attract and retain critical talent. Further, companies use these programs to create a balance between short-term, operational results and long-term, strategic value creation. Ownership provides more than just a “monthly paycheck” relationship with employees; it reinforces a mutual commitment to the long-term success of the company.
What the Wilson Group Offers:
We understand the legal, administrative and organizational implications of these programs. We have access to market data on both trends and practices that can be tailored to provide a useful comparison to the market. Our challenge will be to develop programs that provide you with a strong competitive advantage and provide a clear “return on investment.”
We can assist you in the following areas:
1. Identify the philosophy and key objectives for creating ownership, long-term commitment to the corporation. This provides the framework necessary to assess the effectiveness of your current programs or develop new or different types of programs for specific groups.
2. Assess the effectiveness and competitiveness of existing programs in relation to your peer group, industry or key competitors. We can examine the value, ratio of vested to unvested, prevalence of vehicles (e.g., restricted stock versus stock options) or other questions of particular interest.
3. Determine the guidelines and criteria to be used for these programs and how to make them highly meaningful the recipients. We can examine the ratio of share ownership as well as the criteria, target value and guidelines used to make equity award decisions.
4. Research specific issues you have regarding prevalence, overhang and run rates, dilution, cost of equity, retention or general competitiveness.
5. Develop specific programs or modify existing programs so they are more effective in achieving your desired objectives. This work can involve our collaborating with your legal, accounting and other advisors to assure the design is consistent with your corporate charter and all tax and regulatory requirements.
We are strong believers in the power of ownership. Whether the company uses variable cash compensation plans, equity ownership type plans, or a combination of both, the power of these programs comes not from the design but from how they are utilized by the organization. By working with members of the Wilson Group, you can realize the benefits that go with a renewed sense of ownership, commitment and understanding of what makes your company great.
Contact us at 978-371-0476 or at info@wilsongroup.com.
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