The Changing Face of Executive Compensation in IPO Companies
As part of the introduction to the IPO Pay Reporter™, our improved market-leading IPO compensation data services, we have conducted quite a bit of analysis on trends in executive compensation at companies that have recently gone public. What caught our attention the most was the significant reduction in ownership levels for founder CEOs of IPO companies. Ownership at IPO has been trending down for a number of years, but only in the last few years we've seen the fall off become significant.
While some would point to a small sample size, this argument is really only relevant for 2008 when 16 companies had initial public offerings. In reality the continuous drop in ownership has come over several years when an average of 100 companies per year made an initial public offering. Granted, this is nothing like the 1990s, but this is the reality of the first decade of the 21st century. Fewer companies are going out, and those that do have fundamentally changed from what we were used to seeing in the 1990s.
Newsletters, White Papers and Suggested Reading
Newsletter: Our Winter 2009 newsletter is out and available for download on our website here. This quarter we've dedicated the newsletter primarily to stock option repricings, a topic that has come charging back into the compensation world after a near decade hiatus.
White Papers: We've also recently published a white paper, "The Trouble With Options", that discusses the fundamental disconnect stock options create between executive behavior and shareholder value creation. World@Work subscribers can read an abstract on the World@Work website here. Alternatively, the full paper is available here on our website.
Suggested Reading:
James Surowiecki wrote an interesting article for the New Yorker that discusses, among other things, 'sticky wages', 'talent hoarding', and the productivity of the labor force.
Meanwhile, while the average hourly wage of employees increased by about 3% last year, Merrill Lynch, a company that shed nearly 80% of its shareholder's value, managed to find a way to pay $209 million to ten of its highest paid employees. You can find details in the Wall Street Journal (subscription) or the New York Times.
And finally, the New York Times has an interactive chart that outlines the gaps that continue to exist between women and men in the same job across a number of occupations.
