"Everything You Need To Know About Stock Options - The Business Insider"

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Everything You Need To Know About Stock Options - The Business Insider


This article was written by a VC guy.  Please take a read and then let's discuss how much of "everything" was missed and how much was right or wrong...


This is the kind of information that our participants are collecting before talking to us.  How does it incorrectly inform them?  What;s types of problems does this cause.  (example: Does YOUR company give 4-8% of its shares to the CEO?)


Dan


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One of the issues with the article is that everything is relative.  4-8% to the CEO of a pre-IPO is not far off.  4-8% to the CEO of a Fortune 500 company is unrealistic.  Given the article is written by a VC guy, I think he is writing assuming his audience is from the same set.

I think the Compensation arena is being approached more and more by people with very diverse backgrounds - not surprisingly, as there is big business there....  This sometimes leads to misinterpretations by not completely informed decision makers and Finance and HR practitioners. A VC person, such as this one, will tend to focus on the 'negotiation' aspects of a deal / MBO / etc., a tax specialist will possibly talk mostly about IRS implications and optimization, an actuary will say that mid- and long-term "compensation" is basicly pension plans, and so forth.  It is only natural, as the respective fields of expertise are not really compensation in itself.


In my very humble opinion, the most solid compensation professional is the one who is capable of combining know-how of the above with 1) deep understanding of corporate governance, the business and its metrics, 2) ability to integrate the programme within the broader HR and compensation strategies, 3) capacity to structure an robust design, 4) capacity to crank the numbers and communicate them skillfully, 5) ability to execute till the end, 6) strong ethics.  Not wanting to be over-critic, but in my experience, some of these characteristics are sometimes notably lacking in some so called "compensation experts".

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