I read an article recently that posed the question: Which is better? An ESOP or Phantom Stock. The author suggested that phantom stock may often be a better alternative for employers because it is more flexible and avoids the complications of share dilution and financial disclosure. I thought I’d weigh in. The reality is that the plans have a common Read More…
Here’s a question I get asked quite a bit from business owners who are looking forward to their business succession: “Can I use phantom stock as a way to facilitate my transition out of the business?” Their intuition is pretty good. Phantom stock and other forms of deferred compensation can be part of the toolkit you should consider—especially if your Read More…
Last time I blogged about the results you can achieve with premier talent vs. average talent. The surprising thing is how easily employers are satisfied with average talent even though premier talent is available. Perhaps employers think they can’t afford premier talent. I claim that premier talent is both available and affordable if you are prepared to commit to the Read More…
Early this week I presented a webinar titled “Is Your Company a Candidate for Phantom Stock.” If you’re interested, the link can be found here. In preparation, I pondered the importance to a company of hiring premier talent. Ask yourself about the level of talent in your organization relative to the bell curve of all the talent available in the Read More…
Here’s a headline that states unequivocally that SAP (the huge business software company located in Germany) saw a drop in profits for 2012 because of its Phantom Stock plan. The article points out that sales rose by 14% but the Plan resulted in a charge to profits of 512 million Euros (combined with other executive pay). The implication of the Read More…
Ok, I borrowed part of the title from this great article in last week’s Wall Street Journal . It’s by Jeff Ubben, head of an activist investment fund. His main point? Corporate America pays its executives to be too cautious. Why? They orient their pay packages to short-term performance factors and they’ve moved away from stock options in favor of Read More…
Here’s a great story at Bloomberg.com. The former chairman of 24 Hour Fitness has sued the company for failure to pay what she claims was owed under a phantom stock award. We’re only talking $23 million here! Seems like reasonable fees for serving six years on the board, don’t you think? Apparently the company alleges that the payment “is not Read More…
I spoke with a business owner today who asked an important question about employee satisfaction with phantom stock: “Do employees value phantom stock as much as they would actual stock?” In my view, nine times out of ten, phantom stock is better for employees than actual stock. This applies particularly for stock options as well. Therefore, explained correctly, employees should Read More…
Have you studied the cost of turnover among executives? How do you measure that cost? Researchers who study this issue estimate the cost of replacing a key executive to be as between two to three times their annual salary. This would translate the loss and replacement of a $200,000 executive to as much as $600,000. Just Google “cost of employee turnover” Read More…
What do shareholders want from a compensation arrangement for management? Align with shareholder interests Tie pay results to value creation Pay large incentives after producing a fair return for shareholders Encourage top talent to join and stay What do employees want from a compensation arrangement? Align with shareholder interests Share in value creation results Receive large incentives after producing a Read More…