Resource Library Insights

Private companies and private equity- or venture capital-backed pre-initial public offering (IPO) companies fall at one end of the governance and compensation spectrum.

Going public means adding structure and formality to many areas of a company. Part of that structure includes forming a compensation committee with a clear charter, delineated responsibilities, and a calendar of actions.

In an evolving governance environment, expressions of strong corporate character — exemplary corporate governance, responsible stewardship of the environment and positive contributions to society — are no longer nice-to-haves. They are increasingly becoming explicit expectations.

The rapid global spread of COVID-19 has had incalculable impacts on society, taking both a serious economic and human toll. Many companies are faced with balancing competing responsibilities to various stakeholders.

Across all industries, technology has become a key driver of growth and profitability for many organizations.

A financial services firm with revenues in excess of $1 billion utilized a price-vested options approach with rigorous goals to align with the company's high-growth strategy.

The oil environment over the past 18 months has raised a stiff challenge to energy-company compensation committees. In 2015, typical industry pay plans that were neatly crafted to reward executives for increased production and exploration paid off when executives delivered on their promises. But the payoff was often misaligned with share price performance, which fell dramatically across the industry.

Today, compensation committees seem to have fewer tools in their arsenal to directly incentivize a company's stock price growth. Increasingly since 2007, stock options have been replaced by various performance-based vehicles. As a result, long-term incentive plans (LTIPs) may be paying for achievement of operational or financial performance goals while shareholders fail to benefit from a similar growth in share value.

Is your company's IPO on the horizon? Among many things you'll have to think about, one is pay program design and equity usage as you go public. If you're wondering what best practice is, the results from recent research give some general guidelines to follow.