June 12, 2009
With another successful proxy season behind us, we are now entering one of the most exciting and innovative times of the year at Equilar. It’s the time when we deliver new products to the marketplace, expand our service offerings, and begin digesting all of the great information that proxy season brings. In sum, now that we’ve all caught our breaths after a whirlwind of compensation data and news, it’s time to take things to the next level.
With that in mind, I am excited to announce the launch of the next generation of ExecutiveInsight. The new ExecutiveInsight (a.k.a. the “New EI,” not to be confused with New Coke) promises to be a game-changer in the world of executive compensation benchmarking and analysis. By fully integrating public proxy information, proprietary survey results, and real-time 8-K and Form 4 data, the new ExecutiveInsight offers our clients unparalleled ease of use and access to the most complete set of Top 25 executive compensation data available.
Revamping and reinventing your flagship product has its own set of unique challenges. Yet, it is precisely because of today’s high-risk environment that the new EI makes sense. In a world where we have a ‘pay czar‘ to monitor and approve compensation arrangements at companies receiving Federal aid, directors, senior executives and compensation professionals need access to the most reliable, accurate, and timely information possible. We strongly believe that the new EI provides our clients with the tools they need to meet today’s challenges head-on.
From a features standpoint, the new ExecutiveInsight is fully loaded. It comes equipped with reporting tools that will allow our clients to generate boardroom-ready presentations in minutes, highly transparent and flexible user-defined methodologies, and the same trusted SureSource™ technology that allows for instant verification of all calculations and data sources. If you’d like to learn more, take a tour of the new ExecutiveInsight by visiting our online tutorial.
I’d like to close this post by thanking the members of our Engineering and Product Development teams who worked tirelessly in recent months and weeks to ensure a successful launch. Although building the new ExecutiveInsight was a company-wide effort, these teams truly excelled.
||Wow. What a rough series with our lovely Philthies this past week. I hate to admit it, but you have to tip your hat to Utley & Co. for once again shaking any confidence the Mets had at the beginning of the week. Watching our Putz-less bullpen blow two leads was too much to bear for June. Can we at least have five good months of baseball before the wheels start to fall off? To the Mets’ credit, given all of their injuries, it’s amazing that they’re only four games behind the Philthies and a half game behind in the wild card chase. But, after treading water in the deep end for the past month with the likes of Wilson Valdez and Ramon Martinez, it certainly feels like bowling balls are being aimed in our direction. First our hated Philthies, now come the Yankees who are looking for blood after getting eaten up by the Sox. Oh no!
Tags: award grants
, equity awards
, Executive Compensation
, executive compensation programs
March 3, 2009
For those following my blog, you may recall that I had written about the Client Advisory Board we formed last year. It’s been a great way for us to get candid feedback and input on our product direction and overall strategy. Last fall, we invited everyone to San Francisco for our annual meeting and had very engaged discussions on the pros and cons of various initiatives under consideration.
During these discussions, we identified an interesting concept which we developed into a new service launched earlier this year. As many of you know, our analysis is regularly cited by the media. Often, a number is provided but with little or no information on how the data was gathered and compiled. As a result, our clients, as executive compensation experts, will often be asked “where did that figure come from?” Well, wouldn’t it be great to have a service that provided detailed answers on how these numbers were calculated? Hence, the birth of Behind the Numbers (BTN), an innovative service designed to provide our clients direct access to the exact data behind the figures and analysis being cited by the media.
I want to thank our Advisory Board members for their input in helping this come together. Our discussions with them at the annual meeting and subsequent follow up calls were critical in making sure we did this right. And since launching the service last month, it’s quickly become one of the most active sections of our website. For example, I’d like to share with everyone an email from one of our clients shortly after our launch.
Just wanted to say I love the behind the numbers tab. I’ve found myself clicking on it a couple times a week to see what companies are doing during this crazy time.
Thanks for sharing!
In addition, I am proud we continue to introduce innovative services to the market. As far as I know, I am not aware of any other information services firm in any industry that offers a similar service. It will be interesting to see if others follow our lead.
Spring Training Update
So whose heart stopped after reading about Johan’s elbow “tenderness”? Thank God we have a defibrillator in the building. I think the odds in Vegas for the Mets winning it this year went haywire when that news broke on that one. The Mets have been less than stellar when it’s come to the disclosure and treatment of “routine” injuries. Ryan Church and back to back concussions? Let’s keep our fingers crossed and hope that Johan gets his 30+ starts this year.
Tags: award grants
, equity awards
, Executive Compensation
, executive compensation professionals
, executive compensation programs
, executive compensation trends
, fortune 100 companies
November 20, 2008
First, my apologies for taking so long since my last post. Needless to say, life has been hectic for me and everyone at Equilar. With the global economy and stock markets in a tailspin, I’m amazed at how the focus on executive compensation continues to intensify each day. For those not familiar with the history of Equilar, we launched our first product, named ExecutiveInsight, in December 2001, the same month that issues at Enron and Andersen came to light. At the time, I thought that we’d have a couple of good years tracking compensation trends, the storm would pass, and then we’d move onto something different. But each year, executive pay remains front-page news. Tyco, Adelphia, Grasso-gate, Sarbanes-Oxley, FAS 123R, 409A, options backdating, and the new SEC disclosure rules are only a handful of the topics that have kept us busy since 2001. Now, with the meltdown of the capital markets and the greatest economic crisis that most of us will face in our lifetimes, I feel like we’re back in December 2001 with gasoline being poured on the fire.
But for Equilar, the great news in 2008 is that even more people know about us and what we offer. With my Fall presentation and travel schedule winding down, I’d like to highlight an area in which we’ve already seen a tremendous amount of activity and expect to see even greater interest as proxy season approaches– addressing underwater stock options. With markets down over 40%, it shouldn’t come as a surprise that this is a problem facing virtually every company. I’ve had the fortunate opportunity to present to an interesting cross-section of constituencies (ORC’s EC Forum, The Council of Institutional Investors, and board members at Bank Director’s Annual Conference, to name a few) in the past several weeks, and this topic has generated the widest range of emotions.
So what are companies doing to address this issue? In 2008, we’ve already identified over 50 companies that have either re-priced or exchanged options. We expect this number to grow substantially in the upcoming months as many companies seek shareholder approval for their exchange plans. It’s important to keep in mind that all remedies are not created equal. Issuers and investors have a number of factors to consider: differentiating between a re-pricing and an exchange, director and executive officer eligibility, the impact on overhang rates, and shareholder value transfer, to name a few.
Another item to consider is the potential impact on companies that choose NOT to do anything. What will happen when these companies seek approval for a new equity incentive plan and suddenly find that overhang rates for their industry are substantially lower because a number of their peers “cleaned up” their capital structure?
With the markets and economy where they are, and a new administration waiting in the wings, it’s never a dull moment at Equilar. We’re looking forward to still more changes on the executive compensation landscape in the new year.
To learn more about Equilar’s Option Exchange Tracker service, please click here.
OK, let’s cut to the chase. Part of the reason I was less than inspired to post was that our team’s softball performance tracked the stock markets in September. After suffering a tough loss to SuccessFactors, we went into a tailspin and couldn’t rebound. While we valiantly showed up each week, our offense and defense went on strike. The good news is that we ended on a high note with a win in our last game and could walk off the field with dignity and pride.
All in all, it was a fun season, and the good news is that no one got hurt. Expect us to be active at this year’s Winter Meetings as we look to build for 2009. Perhaps I’ll drive over to Oakland one day to see if Billy Beane wouldn’t mind calling Mike Piazza for us. We could use a right-handed power hitter just as much as my poor Mets. Where’s Yogi Berra when you need him?
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August 26, 2008
Last week, we launched our newest product, OfficerInsight (a.k.a., OI). The release of OI is significant for several reasons. First and foremost, this product addresses a major pain point for our clients—access to high quality pay data for their entire group of senior executives. While pay data is available in proxies for the Top 5, accessing reliable information for executives beyond the Top 5 is a different story. Additionally, the creation of OI helped us to expand the functionality of our online products. It’s not everyday that one gets excited about executive pay data, but I think we’ve built a very capable and cool product.
As a company, we discovered many lessons from our first foray into the survey business. Most importantly, we learned through our own work and the cautionary tales of others, that building a high quality survey is not an insignificant task (translation: “good luck”). Clearly, the biggest challenge is building trust with companies so that they will provide you with their data. It requires some of their time, a scarce resource, and also a lot of faith in the entity that is collecting the information. Obviously, you can’t have a survey without data. For a survey to be meaningful, you need a critical mass of companies to provide their data. A classic game theory exercise—”I’m not moving until someone else goes first”. Even if you have an All-Star technical team and an infinite amount of resources and capital, this does not guarantee that the survey you’re planning to build will be of value.
At the outset, I was fortunate to talk with several of our clients and friends who have had extensive experience in the survey business. Needless to say, their advice was invaluable. One suggestion was to form a client advisory board. Given that this was the first time we set out to build one, I was not sure what to expect. What I discovered was that we have a number of clients who are passionate about our services and were very excited that we were FINALLY setting up an advisory board.
I like to consider myself a somewhat humble person, but I have to share one statistic that I think is pretty impressive. The 26 companies on our advisory board have an aggregate market capitalization of over $1.6 trillion dollars. Yes, that is not a typo. I did not mean to say millions or billions. To put this into perspective, $1.6 trillion is larger than the GDPs of Russia, Spain, Canada and Brazil. The average market cap of our advisory board companies was $62 billion and, for those statisticians at home, the median market cap was $28 billion.
As you can see, this influential group works closely with executive teams and board members at America’s largest companies. When it comes to executive compensation, they are living and breathing it every day and know the subject matter better than I ever will. As we were designing OI, their feedback on what works well and doesn’t work well with existing executive compensation surveys was immensely valuable. With their candid feedback, they helped guide us down the right path and kept us focused on what our clients need.
In addition, through their introductions and support, we were able to successfully get a number of their peer companies to participate. Do you remember the shampoo commercial from the 70s where the person says “I told two friends and then they told two friends and then they told two friends and so on and so on…” (It’s amazing what is seared in one’s brain from childhood. Quick quiz—which shampoo was it? We all remember the commercial but we weren’t able to figure out the brand of shampoo.) While we aren’t quite selling shampoo, I couldn’t help but keep thinking of that commercial as we were building out the participation list. We wouldn’t have made it without their help in our own viral marketing campaign.
Equilar Advisory Board Members, thank you! We look forward to seeing all of you in September at our first ever Advisory Board Annual Meeting and celebrating our success. No need to worry. No withhold votes at our annual meeting. See you soon!
Softball Update – Yes, it’s that favorite time of the year at Equilar. The season started just over a month ago and we’re off to a “solid” start. Let’s just say that we’re at the 50th percentile. Right where you’d expect Equilar—at the median. This year, we have the pleasure of playing in the San Mateo Industrial D2 League. Since when has executive compensation research been considered “industrial”? What this means is that we have an “eclectic” mix of teams with a wide range of talent, everyone from players who would be on the Giants if it weren’t for drug testing (where’s Senator Mitchell when you need him?) to others who would have a hard time making my son’s kindergarten T-ball team. You know you’re going to have a challenging season when teams that you’re playing don’t even bother to have a website. They clearly don’t have a Web 2.0 strategy, let alone URL.
Here at Equilar, while we enjoy our softball, we hire for brains and cultural fit which makes for an interesting team. If athleticism is part of the package, that’s a huge plus. Occasionally, the softball gods will look down upon us and bless us with a former Cal baseball player (thanks Michael for saving our butts) but those are few and far between. Actually, he’s the only one. But we’re 2 – 2 and having a great time. Btw, big showdown with SuccessFactors this Wednesday. The only other team in our league where college degrees outnumber tattoos. More updates to come shortly.
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May 28, 2008
I just returned from WorldatWork’s annual conference in Philadelphia. For those not familiar with WorldatWork (formerly known as The American Compensation Association), they are the world’s largest association for compensation and benefits professionals with over 25,000 members. We first exhibited at WorldatWork in 2002 and have been attending ever since. Ironically, at our first conference in 2002, we were a last minute addition and were given Arthur Andersen’s booth since they no longer had a need for it. (There is MUCH more to that story, but I’ll leave that for a future post.)
Given that this was our seventh year at the conference, it was interesting to see how the exhibit floor has evolved since we first started attending. As WorldatWork’s mission has transformed from “Compensation and Benefits” to one focused on “Total Rewards”, you have an interesting mix of companies seeking to reach out to their members. Everything from gift cards from “Tar-zhay” (a.k.a. Target) to literally dozens of companies offering talent management solutions, a software category that didn’t even exist seven years ago.
As one would imagine, a number of exhibitors offer services related to compensation surveys. As I looked around, I saw aisles and aisles of companies who offer compensation surveys. Think of your local Safeway but Super Sized. So, if the world already has so many surveys, what makes ours different?
Over the past several years, many of our clients have shared their survey frustrations with us and have asked us to develop a solution that helps address their needs. I see our survey as unique in three important areas:
- Flexibility; and
- Ease of use.
Transparency – Given that a substantial amount of data for our survey is already publicly available, we can readily display this information. How valuable is this feature? Think of surveys that you’ve used and then wondered how they came up with these numbers. Most surveys give you a number without any backup to support the data. This has to be one of the most frustrating experiences for an end-user. Good luck explaining this to the chair of your comp committee. By displaying the source data, when it’s available, this helps remove any discrepancies or ambiguities and gives our users much greater confidence in the decision making process.
Flexibility – A number of current surveys rely on proprietary methodologies. Over the past year, there has been a movement among compensation professionals and associations (in particular, both WorldatWork and GEO) to get survey providers to move to a common standard. Without a common standard, we feel that this is holding back the profession. Over time, what drives innovation in any industry is the adoption of a common standard. Think of VHS vs. Betamax, and for the younger crowd, Blueray v. HD DVD. By moving away from proprietary standards, this removes confusion and uncertainty in the marketplace and leads to much greater customer acceptance and adoption. With our client-driven valuation tools, we believe that we are moving the profession forward with an open platform approach by giving our clients the tools they need.
Ease of Use – Given that we started with a clean slate, we were able to incorporate a number of client suggestions into the design of our survey product, starting from the entry process to accessing the actual survey results. By pre-populating certain information, we drastically reduce the amount of time it takes to complete a survey. In addition, we’re excited about some of the functionality that we designed for the reporting tool to allow our clients to access the information that they’re looking for.
By addressing the critical needs of many of our clients, we’re excited about the impact that we’re having on the industry and the profession. We certainly helped change things back in 2002 with our first product (ExecutiveInsight, our Top 5 proxy database) and see the same opportunity with our survey solution. Given that we already have over 130 companies that have agreed to participate, it certainly feels like we’re onto something.
I’d love to hear your thoughts and questions. Thanks in advance for your input and thanks to our many clients who stopped by our booth at WorldatWork. It is always great to see both new and old faces.
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