| Companies take a hard look at their equity
compensation programs |
Microsoft's decision
to restructure their equity compensation program by
replacing employee stock options with restricted stock
grants has many companies wondering if they should
follow suit. A great source of information on this topic
as well as on both employee stock options and restricted
stock can be found at MyStockOptions.com.
As
part of the process of evaluating equity compensation
benefits, we believe companies should specifically look
at their employee education and assistance programs.
Equity compensation benefits such as employee stock
options and restricted stock grants represent
significant costs to corporations. Even for small
companies, these benefits often cost 10's of millions of
dollars in shareholder dilution and administration
expenses.
The return on investment for equity
compensation is only achieved if this benefit is
successful in motivating key employees to contribute to
the company's long-term profitability. However, this
return is only realized if these employees truly
understand the value and wealth building potential of
their equity compensation and how to capitalize on it.
To assist companies in maximizing the return on
their equity compensation investment, we have developed
a program to educate employees on the true value and
potential of this benefit, and how it can be managed
properly. Our "Corporate Optionee
Services" program provides personal and
continuous employee education and individual planning
services using the following components:
- Personalized Optionee Education: each
participant receives their own "Personal Option Profile©" along with an interactive group education
session to explain stock option valuation, leverage,
risk, monitoring criteria, taxation and strategies
- Periodic Reporting: participants receive a
periodically updated Personal Option Profile© report that includes the monitoring of employee specific decision criteria
- Planning Services: participants can access
comprehensive strategy development, tax optimization,
and tactical analysis from nationally recognized
equity compensation planning specialists
The
cost of providing equity compensation education and
planning services is infinitesimal compared to the
shareholder dilution and the administration costs of an
equity compensation program or the costs to restructure
an existing program. Therefore, providing these services
to employees to help in maximizing the effectiveness of
this benefit will result in a highly leveraged return to
the company and its shareholders.
For an illustration of our education and planning services,
please review these examples of a Personal Option Profile© a Periodic
Update, and an Option
Strategy. The profile reports and education sessions
are customized for a company's equity compensation program
and its financial goals (see The
Profit Challenge Profile as an example of a custom
profile that links earnings with stock option values).
Corporate equity compensation education and planning
services are a very viable opportunity right now given
Microsoft's recent decision. Consequently, if you are
currently working with companies who are taking a hard
look at their employee stock option or restricted stock
benefits, we can work with you to help them to maximize
the return on their equity compensation investment without
costly restructuring. For more information on our "Corporate
Optionee Services" click here or call
Bill Dillhoefer at 541-383-3899.
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