New Study Reveals Sharp Decline in Founder CEO Stock Ownership at IPO

Presidio
Pay Advisors' IPO Pay Reporter™ finds surprising convergence of
ownership levels for founder and non-founder CEOs of companies going
public

www.presidiopay.com

www.prediopayadviosirs

Today, very few companies go public with limited revenue and nonexistent net income

The prevailing IPO profile has shifted to a company with healthy revenue and positive net income, which is significantly affecting how compensation is delivered.

Good compensation programs can't be developed overnight

We encourage companies to get started now so they are prepared as the market recovers.

San Francisco, CA (PRWEB)
June 3, 2009 -- A new analysis of IPO compensation and financial data
from Presidio Pay Advisors shows that over the past seven years,
founder CEO equity holdings in companies going public have plunged. As
a result, there is very little difference between ownership levels of
founder and non-founder CEOs at the time of IPO. This and other changes
in compensation practices reinforce the need to review compensation
programs well in advance of going public.

Data from the San Francisco-based compensation consulting firm's newly
released IPO Pay Reporter™, an executive compensation database that
allows users to create customized data sets and reports, reveals that
median founder CEO ownership at IPO fell to under three percent of
total shares outstanding in 2008. This is down sharply from a high of
over 10 percent in 2002. Conversely, non-founder CEO ownership has
remained relatively consistent at slightly greater than one percent of
total common shares outstanding at IPO.

The firm's analysis finds investors are returning to a more rational
financial expectation of companies looking to raise public capital.
This has forced a change in the financial profile and compensation
strategies of IPO companies. In 2008, median company revenue, market
capitalization and net income at IPO were at the highest levels since
Presidio Pay Advisors began collecting IPO data in 2002.

"Today, very few companies go public with limited revenue and
nonexistent net income," says Brandon Cherry, a principal at Presidio
Pay Advisors. "The prevailing IPO profile has shifted to a company with
healthy revenue and positive net income, which is significantly
affecting how compensation is delivered."



In an effort to meet a more sustainable financial profile, companies
are taking an additional two to three years to file for IPO. According
to Cherry, the most pronounced result is the dilution of founder CEO
ownership; this is likely due to less favorable term sheets or
additional rounds of financing required to reach IPO.

Presidio Pay Advisors' analysis also found that the mix between
options and common stock ownership among all executives has undergone a
transformation. In 2002, executive officers had a stronger link to
investor success, with over 85 percent of their ownership in the form
of common stock and less than 15 percent in stock options. By 2008,
nearly 40 percent of executive officer ownership was stock options,
which have no downside risk for executives, creating a potential
disconnect between the financial interests of executives and company
investors.

Other major findings include:

As they prepare to go public, a lengthy process, companies should
anticipate harsh scrutiny of their executive compensation plans. "Good
compensation programs can't be developed overnight," Cherry cautions.
"We encourage companies to get started now so they are prepared as the
market recovers."

About Presidio Pay Advisors, Inc.
Presidio Pay Advisors is a
San Francisco-based compensation consulting firm that provides
companies and their Boards of Directors with independent compensation
consulting services for executives, broad-based employees, sales forces
and specialty business units.

IPO Pay Reporter™ is an online tool that delivers customized
executive compensation data based on user-defined peer groups.
Companies or parties interested in learning more can visit IPO Pay Reporter or contact Presidio Pay Advisors at (415) 438-3400.