Financial Week - August 14, 2006
Internet firms upping stock options grants: report
By Arundhati Parmar
NEW YORK – While public and private companies have scaled back employee stock options programs in the face of a burgeoning scandal, private Internet companies have taken the opposite route.
A new report by Syzygy Consulting Group found that aggregate employee ownership in privately-held companies fell to 15.1% in 2006 from 17.7% in 2005, but for private Internet/e-commerce companies, ownership jumped to 21% this year from 19.4% in 2005.
The decline among private software companies was the steepest with ownership falling to 12.7% in 2006 from 18.6% a year ago.
Aggregate employee ownership includes stock options as well as restricted stock awards.
“Private Internet companies are offering more stock to recruit executive and entrepreneurial talent, while other industries reduce options grants,” said David Broman, chief executive officer of the Lafayette, Calif.-based Syzygy Consulting, in a news release.
Mr. Broman added that as public companies reduce the number of stock awards because of expensing requirements, investor dilution and the backdating scandals, it has allowed dotcoms to attract top talent using that same incentive.
The 2006 Pre-IPO and Private Company Total Compensation Survey covered 12,000 employees at 207 U.S. private companies.
