Companies with ESOPs face special challenges when determining executive compensation. It can be a difficult balancing act. The desire to attract and maintain highly driven executives must be achieved while safeguarding the financial interests of all the employee shareholders. And, while this is a challenge for any business, companies with ESOPs have unique strategic goals and constraints in determining executive compensation. Boards must decide how to align to those goals, while addressing the individual goals of the executive.
Ultimately, ESOP companies must set compensation rates for their management team that are fair to everyone. And fairness, in most cases, is based on the wider marketplace. Specifically, it is based on what are other, similarly situated companies paying their executives.
But how do you know what other companies are paying, and thus what makes sense for your company to pay? Executive compensation packages commonly include a combination of salary, cash bonus, and equity-based compensation. How do you figure out what is right?
The good news is the Beyster Institute can help. With access to propriety compensation databases, we can determine the prevailing market compensation range for just about any management position at an ESOP company. This information will enable a company’s board of directors to achieve the goal of attracting key people who will grow a business.
The Beyster Institute can provide an executive compensation study for any ESOP company. The purpose of these studies is to provide the board information it needs to make informed, appropriate decisions regarding executive compensation. Our consultants provide up-to-date figures and key strategies to attract and retain executive talent while being fair to the shareholders. Please feel free to contact the Beyster Institute for further information. We will help you make the call about giving your executives a raise – or telling them there will be no Christmas bonus this year!