PracticeConsultingTech execs want cash, not stock

Tech execs want cash, not stock

Forget stock options - US dotcom executives now want more cash and less of a gamble, according to a survey published this week.

While internet companies are still granting options to top executives, the amount of cash given as compensation has increased 13 per cent on last year, according to a US survey of the top three positions – chief executive, chief operating officer and chief financial officer – among 123 public internet companies by PricewaterhouseCoopers’ human resources arm, the Unifi Network.

Edward Speidel, a director in Unifi’s executive compensation practice, said: ‘These results evidence a continuing maturation process by internet companies that has them acting and feeling more like traditional bricks and mortar firms.’

According to Carl Weinberg, a principal at Unifi, the volatility of the stock market has made executives want more guaranteed money. ‘Executives are perceiving that there is greater risk to taking stock options and not as much upside. They want more money up front. There’s still tons of venture capitalist money in the sector, so there is an ability to pay.’

Pressure from shareholders has also contributed to the change, said Weinberg. ‘From the shareholder point of view, they’re more interested in controlling dilution. Also, they want to see real results and they’re willing to pay cash to get them,’ he said.

The survey also found that the way in which companies grant executives both stock options and cash is changing.

Because of the instability of the market, many companies are granting options quarterly instead of annually. Speidel noted that granting stock options periodically allows companies to average the strike prices over the year.

  • The chief executive of International Power has opted for all-share remuneration, according to the Financial Times. Peter Giller has agreed the deal with his employer National Power that shortly is to split into UK and international arms – the latter being listed. The chief executive’s only guaranteed income will be £1,100 a week to cover his London accommodation.

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