Taxand USA provides a five-step process to develop an effective executive compensation IPO strategy that will ensure a pre-IPO company’s executive pay programs don’t get lost or stranded along the path to becoming public.
Preparing for an initial public offering (IPO) involves many facets of an organisation’s business including legal, regulatory, financial and operational considerations. Public companies face additional regulations and greater disclosure requirements than private companies, particularly regarding the transparency of a company’s executive compensation program. Because of the additional requirements, executive compensation has become a relatively complex aspect of preparing for an IPO.
By forming an IPO compensation roadmap, however, a company can ensure that its executive compensation program and policies are:
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The time leading up to an IPO can be exciting and represents an important milestone in a company’s history. However, there are several pitfalls and roadblocks that can present themselves throughout the process. Dynamic business strategies, changing regulations and the need to keep executive teams intact may contribute to companies not realising their full potential post-IPO. Along the way, boards, and specifically the compensation committee, want to be perceived not as providing excessive compensation packages to executives, but rather as appropriately incentivising and retaining key executives while at the same time maximising shareholder value.
