DOT.COMP – Pay Policies Growing Up

The Internet Compensation Survey 2000 found that while executive pay at online companies continues to rise impressively, compensation packages are beginning to pay more attention to the bottom line impact. 

Last year the top three positions (CEO, CFO and COO) were paid total cash compensation packages that increased more than 13% from a year earlier, with base pay rising at least 9% and bonuses up at least 28%.

Performance Options

More companies are granting stock options more frequently than once a year, in response to market volatility, which can quickly put the value of options “under water.” 

Granting stock options periodically throughout the year allows companies to average the strike prices over the year. 

Internet companies have increasingly adopted short-term incentives and bonus plans tied to more traditional business performance metrics  – such as increased revenue or nearing profitability – than in the past year, according to the survey. 

Year-end performance bonuses increased an average of 15.5% from last year’s findings. 

Moving On Up

Founders, who were more likely to have held positions as company CEOs, are increasingly relinquishing day-to-day responsibilities to outside talent. 

“More founders are taking on the role of chairman and assuming more strategic duties.  In doing so, they are leaving the top operations spots of CEO and COO open for more experienced operational leaders,” said Carl Weinberg, a principal with Unifi Network’s Executive Compensation Division.

“This year’s survey saw a 12% increase in founders becoming chairmen of the board and an increased prevalence in COOs,” he said.

“Companies are now operating on a global scale and as a result they are forced to look for more sophisticated and more operationally focused people to manage their global expansion,” said Edward Speidel, a director in Unifi’s Executive Compensation practice. “That explains why the top two fastest growing positions covered in this study were the top divisional and the top international positions: the number of companies who reported that they had these positions nearly doubled.”

The survey was drawn from the experience of 123 public Internet companies, with over half (58%) going public in the past three years. 

Most were headquartered in the western section of the US, followed by the northeastern and then southeastern sections of the country.