Silicon Valley/San Jose Business Times / San Francisco Business Times / East Bay Business Times - August 9, 2004
Boards get tough with CEOs on salaries
Larger grants of stock compensation are being used to reward employees at private companies as 2004 mergers, acquisitions and initial public offerings jump beyond 2003 levels, according to a survey by Syzygy Consulting Group, of Lafayette, a human resources consulting company which specializes in compensation and related areas.
It reports a 29 percent increase in aggregate employee ownership "just as the technology sector shows a little deja vu of the dot-com days."
Private companies are satisfying investors with bigger payoffs in IPOs and acquisitions this year while also richly rewarding and retaining key talent - especially key executive talent, according to Syzygy's 2004 survey. The report also shows that employee stock option grants increased from 14 percent to 18 percent of company ownership. If company founders are included, ownership jumps to 27 percent.
CEO ownership nearly doubled from 5 to 9 percent of the company in 2004. CEO cash compensation also increased from a median of $238,600 to $301,700, a 26 percent jump, the survey says.
"We are seeing a direct correlation in increased stock compensation and the success that companies have in attracting outside buyers and investors," says David Broman, Syzygy's CEO. "The data show that stock options are key to making a private company thrive and create jobs."
Conducted since 1999, Syzygy's annual compensation survey provides data on how private technology companies attract and retain key talent.
The survey was in the field between April and the end of June. According to Mr. Broman, responses were received from 122 companies with an aggregate employment of more than 5,300. He says about 43 percent of the companies are in the Bay Area with the remainder scattered across the U.S.
