Sep 21, 2023
The specifics of executive compensation packages have major implications for personal wealth building over the long term. In this episode of Off the Wall, guest co-host Emily Harper, CFP® and co-host David B. Armstrong, CFA are joined by Laura Balser, Senior Client Partner, Executive Pay and Compensation at Korn Ferry. Laura has over 20 years of experience consulting with publicly traded, privately held and not-for-profit organizations on executive reward and benefit programs across industries, including health care, distribution, manufacturing, biotechnology, and professional services.
During the conversation, Laura unpacks the current trends in executive compensation based on Korn Ferry's analysis of CEO pay at the top 300 publicly traded companies (by revenue), looking at how the pandemic drove changes in compensation across different industries. She underscores the continued emphasis on variable pay as shareholders demand performance-driven compensation, and how this creates challenges for retaining talent and satisfying shareholders.
Tune in for tips around negotiating executive compensation like seeking advice, anticipating counteroffers, and understanding the tax impact when exercising stock options. Laura also sheds light on emerging, innovative pay structures such as equity signing bonuses and mega grants and discusses the differences between Restricted Stock Units and Performance Stock Units.
"For the first time in probably 12 years, we're seeing more material declines than we've seen in the past. If stock options have been awarded, then they're likely underwater. And if the options don't appreciate enough to warrant exercising them...the individual has lost the ability for wealth creation. This is why having RSUs or time-based units as part of the equity mix is important because at least there’s a floor." – Laura Balser, Senior Client Partner, Executive Pay & Governance
Episode Timeline/Key Highlights:
[01:10] Introducing our guests & the topic of today’s episode.
[03:10] The current state of compensation packages and impacts driven by the Covid-19 pandemic.
[05:10] Industry-specific considerations: Which industries are more conservative vs. more aggressive in terms of pay increases?
[7:18] Innovative executive compensation programs to attract top talent in today’s competitive market, including mega grants, outperformance grants, Restricted Stock Units (RSUs) and Performance Stock Units (PSUs).
[16:50] What drives pay increases at the top of the house. Plus, a deeper look at generational trends in pay transparency at lower levels of the organization.
[19:00] Considerations around wealth creation opportunities and the tax liabilities that come along with stock-based compensation.
[28:10] What levers to pull (or not to pull) when negotiating your executive compensation package.
[35:00] Final thoughts around the future of compensation and shareholder expectations.
Please see important podcast disclosure information at https://monumentwealthmanagement.com/disclosures.
Stock Option Compensation Cheat Sheet: https://monumentwealthmanagement.com/resource/stock-option-compensation-your-cheat-sheet-to-planning/
Connect with Laura Balser on LinkedIn: https://www.linkedin.com/in/laurabalser/
Learn about Korn Ferry: Korn Ferry | Organizational Consulting
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About “Off the Wall”:
OFF THE WALL is a podcast for business professionals and high-net-worth investors who want to build wealth with purpose. A little bit Wall Street, a little bit off-the-wall; it's your go-to for straightforward, unfiltered wealth advice on topics that founders, business owners, and executives care about. Learn more at https://monumentwealthmanagement.com.