Private Companies Not Scared Away From Stock Options

August 15, 2005 (PLANSPONSOR.com) - In spite of the new accounting standards for stock options, private companies are offering more stock compensation to more of their employees than public companies, according to Syzygy Consulting Group's 2005 Pre-IPO and Private Company Total Compensation Survey.

In a company press release, Syzygy’s CEO David Broman said, “The data show that stock options are still key to competing in the private company labor market and private companies are offering more stock to recruit talent – executive, entrepreneurial and technical talent – right from under the noses of public companies.”

Results of the survey included:

  • Aggregate employee ownership percentages increased slightly from 17.5 to 17.7%.
  • Stock option plans are being used at 97% of companies, while 41% 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%.
  • Cash compensation increased with a CEO now earning $334,906, an 18% jump.
  • Cash and stock compensation for technical and sales jobs showed the most significant increase.

The recent Federal Accounting Standards Board statement, FAS123 , requiring companies to report costs of stock compensation has resulted in many public companies reducing the number of stock options granted, especially to lower level employees (See Stock Options Cut in Response to FAS123 ).

The complete survey can be found here .

The Public Company Total Compensation Survey and more about Syzygy Consulting Group can be found at www.syzygyconsulting.com .

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