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Linkedin, Microsoft and 'Stock-Based Compensation'

"Silicon Valley Pre and Post-IPO companies used stock options almost exclusively until the last six or seven years.... LinkedIn was an early and enthusiastic member of the companies who moved to RSUs.... If LinkedIn had used exclusively stock options over the past 3 years, most of those options would have little or no readily ascertainable value in the Microsoft transaction. This would have been demotivational for LinkedIn staff and executives. It would have also been costly to Microsoft[.]"

Why Is It So Difficult to Get Equity Amounts Right?

"The main selling point of equity compensation is that it provides unequaled compensatory upside through its extreme variability, while allowing a predictable and fixed compensation expense. This can be frustrating when things don't go as planned.... The reason equity is so hard to value is that all of the methods provide inaccurate results at some point. Given the uncertainty in the markets, [this article discusses] some of the ways people assign value to equity."

What's Equity Compensation Really Worth to Your Employees?

"What is equity compensation REALLY worth? How do you know how much to give? How do your employees know how much they are getting? What truly drives, impacts, reduces and magnifies this value? ... [This article addresses] valuations, taxation, restrictions, dilution, perceptions and competition ... the shapers of equity value that are seldom discussed."

Five Predictions about the CEO Pay Ratio Rule in Practice

"[1] The media will be the most voracious consumers of this data.... [2] CEOs and Boards will use historically low ratios as an argument for raising CEO Pay.... [3] Compensation professionals will be tasked with explaining why 'pay ratio' at their company is not directly comparable to their peers.... [4] Companies with high ratios will work to explain how this benefits their shareholders.... [5] Some companies will find themselves stuck between hiring, or keeping, the right person and staying within the guidelines to receive positive Say on Pay recommendations from proxy advisory firms."

SEC Wants Link Between Executive Pay and Shareholder Returns

"The new rule will just make it easier for all of your shareholders to know what your more engaged and advanced shareholders already know. Do you pay your executives in a way that aligns with total shareholder return for a three to five year period? It is an important thing to know, but it is not earth shaking new information, or even the most important metric for some companies or their shareholders."

Eight Things You Need to Know About Equity Compensation

"[1] It's an 'except when' set of rules.... [2] Accounting (compensation expense) really matters.... 3) [E]very country has its own set of tax, security, currency and other rules.... [4] Plan design cannot be done in a vacuum.... [5] Stock administration systems are far more limited than your imagination.... [6] Taxes are hard. Really hard.... [7] You should join, or at least follow, these organizations.... [8] It's still worth the effort."

ISS's New Approach to Equity is Better and Worse

"[W]hat was once a beautifully simple and critically flawed up or down vote is now a beautifully complex and differently flawed scorecard ... Overall, the better aspect is that the approach is less didactic than it has recently been. This means a bit more wiggle room to shape your company's approach to suit your objectives. Frustratingly, the things that make this better also make it worse."

Beware of Statistic-Laden Compensation News

"[Recent] reports on 401(k) ... discuss that the average company match was about $3,540. Average of what companies? Average of which employees' contributions? ... Most also mention this amount is $1,000 more than 10 years ago without mentioning 'why'. Could it be that people are paid more than a decade ago? Maybe the companies in the survey offer better 401(k)s now, but have cut short-term incentives, long-term incentives or other benefits.... Only after reading multiple articles do we learn that Fidelity reports that the average employer contribution is currently 4.3% per year vs. 4.0% in 2006. So, no big change there."

A Response to: The Warped Math of Executive Compensation

"Time-based vesting gives the CEO stability and security. If the CEO is always worried that any misstep will be the end of his income, job and perhaps career they have little incentive to try anything new. Systems that depend only on more of the same are destined to create nothing new of true import. Time-based vesting provides the foundation on which our technology innovation was built. Correctly designed performance-based equity provides the reward if the risks payoff (for everyone)."