Equity Compensation can be a powerful tool for attracting and retaining top talent, but it can also be complex and challenging to develop and implement. The challenge isn't just about the timing of an employee's entry or their grasp on the concept of equity; it's the art of crafting a strategy that's both fair and motivating.
In the run-up to our upcoming LinkedIn Live event, “Navigating Equity and Employee Rewards in Pre-IPO Companies,” we spoke with Marisa Peters, the Chief People Officer at VideoAmp — a trailblazer in the ad-tech space, revolutionizing how advertising reaches audiences across multiple devices. In this interview, Marisa delves into the critical elements of Equity Compensation programs, sharing insights that could be the deciding factor between a program’s success or failure.
Marisa, we are looking forward to diving into the details of building successful Equity Compensation programs with you during our LinkedIn Live on November 17. Without giving too much away before the event, in your experience, what is the biggest challenge of developing an equity strategy for employees?
Alignment is the biggest challenge in a private setting as the Board, Founders, and Workforce have different levels of individual interests, motivation, and understanding of equity as a part of total compensation. There are lots of voices involved in increasing a unified approach. For us, awarding equity in a fair, equitable, and consistent way has been the biggest challenge given all the variables of start dates, roles, levels, impact, and ultimately the risk tolerance people have as they consider their financial portfolios.
You joined VideoAmp when it had two hundred employees and the company more than doubled in size since. Can you tell us how VideoAmp’s equity strategy has evolved over time?
Since we developed our compensation philosophy, we have made it a priority to reward people as owners to motivate an entrepreneurial mindset. When we win for the business, we win by growing shareholder value. We use equity to motivate and retain long-term and recognize short-term performance — Equity Compensation is high-risk, high-reward, and part of the benefit of working at an early-stage company.
What aspect of Equity Compensation do you find the most fascinating?
Methodology, benchmarking, and communication frameworks. I'm personally still learning so much about equity compensation but these are the top areas that pique my curiosity.
What is one thing that HR leaders often get wrong about Equity Compensation?
Communication & education. Equity compensation in a private company is complex and difficult for people to understand. From navigating company valuations, strike prices, tax implications, and how to value the equity as it relates to individual total compensation, it overwhelms many. Instead of expecting that everyone "gets it" we have to continue to go back to basic principles, model with examples, and be open to answering questions in an authentic and transparent way.
What’s one thing that employees often misunderstand about Equity Compensation?
Tax implications and valuation. Getting more equity that is not worth a lot is not the goal; the goal is to have equity that is worth the most, and of course, having a lot of it, is what will make a meaningful difference in the trajectory of people's financial well-being.
What would be your piece of advice for someone who’s in the midst of reviewing employee equity strategy in a pre-IPO company?
Have a fantastic compensation partner that helps you develop a strategy that is best for your organization (for the size, scale, and stage) and then benchmark with the appropriate companies. Share this work openly and transparently in a way to earn the trust of your partners and end users that is best for your business stage. It is a one-way door (data you cannot un-see or un-share) so take time to methodically set up a foundation that allows the business to be true to its values.
Join Marisa Peters, as well as Ryan Hammond (Datavant), Gerry Murphy (Nua Group), and James Seechurn (Nua Group) at our LinkedIn Live event “Navigating Equity and Employee Rewards in Pre-IPO Companies” on November 17, 2023 at 9:30 am PT.
The event is free to attend. Simply save your spot here and join the live discussion on LinkedIn!