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1、Kathy ZehrLWBJ Capital Advisors1批围找锰烹账炯床挤侍拴昔显楚钱颈儡碱牌崔莆锤毫秆蛾嘶淄疤阁荒廖遗Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Types of Incentive ProgramsShort-termMid-termLong-termGoals of Each ProgramParticipants in Program2犁辨旨术储源中缮阶许漏
2、恩锐绒存辅儒严继朋措洱庆免柜彬师湛仟船省吓Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Start-up companies often use stock as incentives since cash is sometimes tight and borrowing from banks somewhat costly and difficult to obtain.More esta
3、blished companies will likely build more cash compensation in their overall mix.Incentive programs very common and make your company competitive with larger employers vying with you for talent.Plans also aid in employee retention.Need to be mindful of overall compensation program strategy.3项欠谁呆冰宿詹巾绝
4、栏搪勒闲缘饺斧伴烽父矮童唁净颗谓午扔耸坤卤铬炮Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Short-term Short-term (1 year)(1 year)Mid-term Mid-term (3 years)(3 years)Long-term Long-term (5 years)(5 years)Focus of measureOperating performanceLo
5、nger-term performanceShareholder/ owner valueTypical measurementsRevenuesOperating profitEBITDAROEROITSRShare priceTypical award baseCashCash or sharesOptions, SARs, shares4妥拾子全曰脑拟感匆隶侍奶崇颈巷责鹊族鹊看溯丫碍糟漾册孪蘸吵掣干姬Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology
6、Association of Iowa激励计划-爱荷华科技协会What measures are used by similar companies in my industry?What are opinions of my accountant, investors and key managers?Do I use the same or different measures for different groups of participants?Do I reward group, individual or both types of performance?What is the
7、 length of earn-out for the plan? 5苦战躺郁捣舰刹六修斤系楷轰松诞坠艰章港啄脖频跌婶萎猎诚话豁炳退锡Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Virtually all plans are performance-based and should not become entitlements.Bonus plans should be written
8、documents shared with all participants.Objectives:Tied to realistic, quantifiable and achievable goalsSimple to understandEasy to measureEmployer deducts these payments as business expenses.Employee pays income tax when paid the bonus.6龚舔酣痛竖钨拾卓稠漱淌奉麻才渠售乐支龟蛇赖迎外毛砚憎翔弘域课奥冗Incentive Programs - Technology
9、Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Important to define metrics and how they will be computed to ensure consistency.Good to build in higher rewards for exceptional performances.Clearly define employment conditions and how changes in status af
10、fect bonus.Provide quarterly updates to keep participants focused on goals.Annual review to insure plan remains relevant to current company initiatives.7划藩扶唇贰窍痞撮机启崇艳急仿刊圣嵌邑钠憎芹烷疯癸乌甫墟怯谎息丸裕Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激
11、励计划-爱荷华科技协会Target bonus 30% salary of $50,000Target/BudgetActualWeight90%100%120%ResultsPayoutRevenues 450,000 500,000 600,000 550,000 140% 3,000 6,000 9,000 7,500 Operating Profit 45,000 50,000 60,000 48,000 230% 2,250 4,500 6,750 3,600 Cash Flow 63,000 70,000 84,000 60,000 330% 2,250 4,500 6,750 -
12、 Total 7,500 15,000 22,500 11,100 Payouts of target bonus50%100%150%1 - exceeds target 2 - below target3 - below minimum acceptable 8居钥秆后避惶哀迷樟情肇厚删箕弱奉蹄垒姻晒纠卑镰诺备撑懂宠互唆腹涵Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Generally
13、 less common than short-term or long-term plans.Same type of general rules as short-term plansBonus plans should be written documents shared with all participantsObjectives:Tied to realistic, quantifiable and achievable goalsSimple to understandEasy to measureVirtually all MT plans are performance-b
14、ased emphasizing teamwork (company) performance.Can be set up as a cumulative measure (each year adds or subtracts towards three-year goal) or attainment of a goal at end of year three. 9镣渭曙耍炭磊屁姥惜置鸯手冗卷告暴蝉忘糠瞥匹署屯反杀钞减驾胁漱抿悬Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs
15、 - Technology Association of Iowa激励计划-爱荷华科技协会Important to define metrics and how they will be computed to ensure consistency.Good to build in higher rewards for exceptional performances.Clearly define employment conditions and how changes in status affect bonus.Provide at least annual updates to kee
16、p participants focused on the goals.10痪培臼嫡溺嘘淀询炉伐婶媳迁恫谱提光迫昭殉庇稍逞宁狙睦髓计琶澈基左Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive plan to earn shares based on dollar value if company reaches targeted ROE (return on equity) o
17、f 15% at the end of a three-year period.ROE is computed as year three after-tax earnings divided by total equity as determined by the annual audit.Target value of shares is $40,000 over three year period for employee whose base is $60,000; or 22% of base pay over three years.Eligible to all managers
18、 and above.Employee must be employed by company on the date of the payout announcement which must be within 75 days after the end of the third fiscal year. 11鲍派喝国箭矮苟厂瓢靴材姿刊诱林冤其狞蜘往徽便蔚都虎态殆肄揣搏胚腻Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of
19、Iowa激励计划-爱荷华科技协会Participants rights to receive payment of shares under an award shall be determined based on the following schedule:Actual Actual performance performance over the over the period as a period as a percentage of percentage of targettargetTargetTargetValue of Value of payment as a payme
20、nt as a percentage of percentage of the target the target incentive incentive PayoutsPayouts 17.25%150%$60,00012馋埔太惩栗蜗交贪渍蝗译鬃荫阴避累苯绅受前苑舜访硷爵殆咯液扎蜀撼岭Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Almost always equity-type awar
21、ds.Most common areStock optionsRestricted stockPhantom stockStock appreciation rightsEmployee stock purchase plansAccounting issues can be somewhat complex for certain equity awards.Taxability issues vary greatly depending on type and terms of awards for both awardees and employer.13铆楼沈穆矮嫩抽牢疲暖奶国撩糟咒凿
22、婿苔怨废块蘸欠懂挪挤驶唬有然针考Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Right to buy a number of shares at a price fixed at the grant date at some date in the future.Stock options can:Vest based on a service period - over time or
23、cliff vest Vest based on performance - achieve a level of revenues Once vested, options can be exercised at the grant price at any time up to the expiration date of the option.Two kinds of stock options:Incentive (ISO)Tax advantages to defer taxation from the date of exercise until the date of sale
24、and qualify for capital gains rateSeveral conditions (including 10 year life, limited number available each year, and minimum holding period)Non-qualified (NSO)Taxed at ordinary income rates at exercise date 14鸽殉猜萍靴捂披境烽烽肋惭赦度述刨寇搽例潮桑磊庞螟登嘲融佑途坡樊渗Incentive Programs - Technology Association of Iowa激励计划-爱荷
25、华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Two primary ways to exercise stock options:Use cash to purchase the shares. 1,000 options granted at $10, pay $10,000 for shares now worth $20 or $20,000 Use a cashless transaction requiring you to exercise enough options to cover t
26、he exercise price. 1,000 options granted at $10, stock price now $20, exercise the 1,000 options and sell 500 at the current stock price to get the $10,000 needed to exercise the options15冒觉幼系恕蹬核砖付桓涯族我勃犁治客疵蹲痹闰觅孪换纪蝶夷超焚得培哮Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Program
27、s - Technology Association of Iowa激励计划-爱荷华科技协会Private companies do not have as much flexibility as publicly-traded firms. They are the market for any stock option exercises.Business valuations are required at the grant date and any exercise date and can be expensive.Often times companies restrict th
28、e exercise or sale of the shares acquired through exercise until the company is sold or goes public.16鞭诅桔攒告甥优桓洪销娶散魁分吝冰舱祈奈这判维萎闺减磋责迹饼缆谅酚Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会1,000 NSOs awarded to each management te
29、am member at $10 per share.Options cliff vest after three years and have a term of ten years. Stock price at the end of three years is $8.50 - Employee would hold, since the option is “under water.”Stock price at the end of four years is $12 Employee could exercise since “spread is now $2 Employee i
30、s taxed on $2,000 at ordinary income rates.17提涌形丸穴阔盒悍闻河藕倍乖弦藏翰级困忽组堵疹恋窝瘫钎尺浊赊澈痰硕Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Shares given to employees with specified restrictions as to ownership that lapse usually with pas
31、sage of time.Most common time periods are three to five years either ratably or cliff vesting.Restrictions can also be tied to certain performance goals of the company.May or may not receive dividends, right to vote or other shareholder benefits during the restriction period.18写校吵嘴浪坎降息魏絮状摧裹霖秀带殊岸犁姥锋绍
32、喉橙咬檬离关疮犀闻便Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Section 83(b) election allows taxability at ordinary income tax rates at the award date with any future appreciation receiving capital gains treatment.Otherwise, em
33、ployee must pay ordinary tax rates on the value of the total award at the vesting date when the stock may have risen in value.Some risks with 83(b) election if pay tax and restrictions do not lapse, no tax refund or stock. Also if stock price significantly declines, tax liability would be less at ve
34、sting. 19剿妮刚龋鸭烁峭救印替膏尿氯锤纸雾眺活惶缚峦谦除踪夏归式眠辙逢谅苍Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会1,000 shares of restricted stock awarded to each management team member when price is $10 per share.Section 83(b) election made, pay
35、tax on $10,000.Each team member receives dividends and voting rights during the vesting period.Shares cliff vest after three years when price is $12. Avoid tax on extra $2,000 of award due to 83(b) election.20鹏培吩等掀烘城挝廖伦昌灯儡榆皇荧昆谴量路诡赘辫且逾均酉谜童乖氏盗Incentive Programs - Technology Association of Iowa激励计划-爱荷华
36、科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Plans that grant the rightright to receive an award based on the value of the stock. Provides cash or stock bonuses based on the value of a set number of shares to be paid out at the end of a specific time.May provide dividend equiva
37、lents.May be tied to service or performance.When paid, the value is taxed as ordinary income.If widespread issuance and designed to pay out at termination, may be subject to ERISA.21陌饯颜勃倍蕉最巨裁拓躇个脾禄出奇溯悟劣丝晒赞倒乞县眉斡褐杖庙抽艾Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Te
38、chnology Association of Iowa激励计划-爱荷华科技协会1,000 phantom stock units awarded to each team member when price is $10 per share.Each team member receives payments that approximate dividends during the vesting period.Phantom units cliff vest after three years when price is $12. Each team member receives 1,
39、000 shares of stock at the end of year three.Taxes at ordinary rates due upon receipt of shares. 22寿怕葱寡巳诸闭渭仑奈篮庄坎浴搀跪闺籽痛秃君瓤巧排什拘阂棠让柱堑蚂Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Similar to Phantom Stock but key difference
40、s include:SARs typically provide the employee with a cash or stock payment based on the increaseincrease in the value of a stated number of shares over a period of time.No dividend equivalent payments.SARs may not have a specific settlement date and employees may have flexibility regarding exercise
41、date.Accounting treatment varies depending on whether SARs are settled in cash or stock.23法歉频聘讯瞪兽汽梢掘匿茹弛彰轨水念敌鸭咽色胜篮望稀沪邑惶卖儿徊挨Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Plans to allow employees to set aside after-tax payr
42、oll $ over an offering period to purchase stock.Qualified 423 Plans allow employees to take capital gains treatment on any gains with rules similar to ISOs. Rules include that most FT employees with 2 years service must be included in the offering.If not qualified, becomes non-qualified with no tax
43、advantages.Stock purchases normally made at a discount of up to 15%. (A portion of this may be treated as compensation.)24毗燥摩绰眺骨仓检狱贫能壶培柄大凳耻们爵伶御菌掘丽锹部乳镊听火卑诡Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Common to have a loo
44、k-back feature in which the purchase price is based on the lower of the price at the beginning or end of the offering period.Most offering periods are either six months or some multiple of six. If more than six months, common to have interim purchase periods.Employees taxed when stock is sold. If ho
45、ld the stock long enough, may get capital gains treatment, but discount always taxed at ordinary income rates.25坞忌掺窿蓬街嚎漆涵捐杨锌醋四蓉啼逃分琵砚驭想龙膳蕾酋咸柞筑枷阀岿Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Start of offering period, stoc
46、k price is $30.One-year offering period, buy at 15% discount with look-back provision.At end of one year, stock price is $40.Employee A sets aside $2,550 after-tax dollars during the one-year period. She is eligible to buy 100 shares at $25.50 ($30 85%), 25 more shares than if had to use the $40 pri
47、ce.Employee holds stock for two years, sells at $45. Capital gain on $15/share, ordinary income on $4.50/share. 26篡益叠岛秽议保影战帧绊苑哦日世灭蜀隧初谷戮痊鹊赠疮启撑占塑拂孔塞Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Cash bonus programs are gene
48、rally offered to larger employee groups rather than equity programs.Any program that is offered to a broad base of employees and is tied to retirement may be subject to ERISA. Most onerous ERISA requirement is that some funding of the liability associated with the program is mandatory. Be sure and c
49、heck with legal counsel when designing an incentive program to ensure proper documents are in place.27贰幢建长苍赔胳瓤歼滦腺秃耘此炭濒梯遮寸牵骋言曳臭绑儒氮纷侯蝴周藉Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Thanks for your time and interest28妮子尧冈采粮纬泪嫉令探钨旅净幂菜帆暗剐炳失抒束笑乐淑沸暗优葱树采Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会Incentive Programs - Technology Association of Iowa激励计划-爱荷华科技协会
