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| The next dimension to consider is the coverage of your stock options strategy. | |
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| Who should be granted stock options? | |
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| Should it be granted to everyone or only to a select number of people? | |
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| There are multiple perspectives to consider here. | |
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| First, based on your values and vision, what is the kind of culture you think would be | |
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| right for your company? | |
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| Does that culture envision everyone receiving stock options or only a few people? | |
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| Second, what is your expectation from the team members who are granted stock options? | |
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| Do you expect them to behave differently once they become option holders? | |
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| In that case, you would need to consider if the recipients have the maturity to appreciate | |
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| stock options and the responsibility that they might convey. | |
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| Everyone understands what they mean. | |
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| If you do well, I will become rich, but understanding is not the same as appreciation. | |
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| For instance, you might want to consider if the recipients have the ability to take a big picture view of the organization | |
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| or are they too junior or inexperienced to do that at the moment. | |
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| Third, where do they sit in your compensation framework for the recipients? | |
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| Consider this. | |
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| You pay a salary to someone. | |
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| By virtue of receiving that salary, they are expected to contribute to a certain extent | |
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| or bring about a certain growth rate. | |
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| Salary is usually paid with certain expectations of performance or delivery. | |
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| If stock options sit over and above the cash compensation, what do you expect the recipients to deliver | |
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| beyond what they are to deliver for their salary? | |
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| Or do stock options fill in for the reduction they agreed to take on their salary? | |
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| Fourth, while you might be granting stock options with an expectation to motivate the recipient, | |
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| does the recipient view these options as motivating? | |
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| Sometimes certain people are better motivated through immediate cash rather than a distant long-term reward. | |
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| Fifth, do you have a sufficient stock option spool to grant an adequate number of options to all the recipients? | |
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| This is something we will cover in the next dimension, but as I mentioned, a few dimensions overlap | |
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| and certain forces may act against each other. | |
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| You need to consider these perspectives, balance them according to your values and vision, | |
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| and take your decision accordingly. | |
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| So please consider them one at a time when you design your policy. | |