Compensation Strategies for Early and Pre-IPO Companies

The early stage and pre-IPO company often faces financial constraints related to cash flow and funding while requiring the ability to attract top notch talent for management and key employee positions. Venture capitalist know that developing the proper infrastructure in a pre-IPO company must include a good compensation strategy for management and other key employees. Without this, the company may face difficulty in attracting and retaining talent. In addition, executive compensation is an important part of the picture which is presented to the investment community in the company’s public offering prospectus. The lack of thoughtful compensation strategy which has an appropriate relationship to competitive pay practice, executive responsibilities, and company performance can be a detractor from the company’s valuation.

This presentation covers the following topics:

• The relationship between stage of business maturity and the design of compensation elements.
• Identifying and compiling appropriate market data comparisons.
• How to structure base pay, bonuses, and stock options for the early stage and pre-IPO company.
• The various roles of the Compensation Committee of the Board, the CEO, the HR executive, and the consultant in designing the executive compensation package.