Press Release - August 15, 2005
Lafayette, CA — August 15, 2005 — Syzygy Consulting Group’s 2005 Pre-IPO and Private Company Total Compensation Survey shows that private companies offer more stock compensation to more of their employees than their public company counterparts, despite pending expensing requirements and investor dilution concerns.
“The data show that stock options are still key to competing in the private company labor market,” said David Broman, Syzygy’s CEO, “and private companies are offering more stock to recruit talent — executive, entrepreneurial and technical talent — right from under the noses of public companies.”
“Public companies are scaling back stock awards to all but their executives,” Broman added, “creating a two-class system in corporate America. Private companies are more egalitarian by offering ownership to all employees — not just executives — believing a one-class system will ultimately produce better results for shareholders.”
Syzygy’s annual survey is the best source for executive and employee compensation in private companies. It is conducted in association with leading law firms including Cooley Godward; DLA Piper Rudnick Gray Cary; Fenwick & West; GCA Law Partners; Heller Ehrman; Manatt, Phelps & Phillips; Morgan Lewis; Orrick Herrington & Sutcliffe; Pillsbury Winthrop Shaw Pittman; and Simpson, Thacher & Bartlett.
“Syzygy has collected six years of data on private company pay,” says Broman, “with 2005’s results covering 8,650 employees at 160 companies across America.”
The 2005 survey results showed:
- Aggregate employee ownership percentages increased slightly from 17.5 to 17.7 percent.
- Stock option plans are being used at 97 percent of companies, while 41 percent provide performance-based stock option grants.
- There was no increase in the use of restricted stock grants, but some companies have implemented stock-settled stock appreciation rights.
- CEO ownership increased slightly from 9.2 to 9.4 percent.
- A CFO now earns 1.7 percent and the top HR job 0.5 percent.
- Cash compensation increased with a CEO now earning $334,906, an 18 percent jump.
- Cash and stock compensation for technical and sales jobs showed the most significant increase.
While public companies intend to reduce expenses by cutting stock option grants to all but their executives, private companies’ stock option plans are less geared to the top brass. “Private companies measure financial health on how efficiently they use cash. Using stock options to find and keep talent makes good business sense,” observed Broman, “and the data proves there are valuable lessons to be learned from private companies on effectively using broad-based employee stock options.”
Visit www.syzygyconsulting.com or contact a Syzygy compensation consultant at 925-284-3669 to learn more about the private company compensation survey results.
Syzygy Consulting Group, established experts in high technology compensation practices, serves clients ranging from the largest multinational corporations to small private companies. Founded in 1995, Syzygy’s customized consulting services help clients define and implement compensation programs to retain key talent, link compensation to performance and improve the effectiveness of overall compensation programs. Syzygy is a registered trademark of Syzygy Consulting Group.
Contact: Brandon Butler
925-284-3669
925-284-0858 Fax
info@syzgyconsulting.com
http://www.syzygyconsulting.com
