I’m curious about what might have gone into a compensation committee’s decision in the following case. I honestly don’t know what significance the difference might indicate.
Two professionals, who work together on the same projects, and are very close in compensation to begin with, get two different compensation adjustments. A gets a small raise, a $25K bonus and options on 1100 shares of company stock. B gets a small raise that is exactly twice A’s (we’re only talkin’ a few thousand dollars here), a $35K bonus and options on 700 shares of stock.
At the time, the difference in stock options just about exactly evened out the compensation adjustments. Obviously, in the short term, B did a bit better, but the company is healthy and the stock is appreciating quite nicely, so A will ultimately likely do a bit better in the long run, should he exercise the options and the company continues to increase in value. But B has another $10K on hand now to possibly invest.
At the starting line, though, they’re even, but different. The what and the why may be painfully obvious to all of y’all, but it’s not to me.
FWIW, they’re exactly the same age, exactly the same gender, have similar (20+ years) experience, have both been with the company about the same length of time (in a slightly convoluted way) and work on pretty much the same stuff, so their success rate is comparable.
Are they the same status re: marriage & kids? This could have led to a real or perceived preference to minimize risk. Note: this is not the type of factor that should guide compensation, but you’re asking for possible explanations.
Is one perceived as more likely to leave? Putting more in options would generally be intended to motivate the person to stay and invest himself in the job.
Were the decisions made by the same people at the same time? It sounds like yes, but if not that opens up other possibilities.
If one of the people is you, you can try asking about the rationale for how your comp was determined, and what you would need to do to get more cash or stock, whichever you prefer, in the future. It’d be rude, obviously, to ask how the other person’s comp was determined.
A is married and has kids, B is single and has no kids.
Not that I can tell, although B was CEO of another company he had started when hired away by this company, so I suppose he might be seen as more of a “flight risk,” if that’s even taken into consideration.
Yes.
It’d be termination, although probably not with that as the stated reason.
It may be something as stupid as the compensation committee doing the work over two days and believing they did the same thing for both (but not going back to check). Or them having odd rules to work with (only so much stock to give, raises need to be given out in even percentage), so ending up with similar, but different packages due to the rules. Sometimes these things are also figured on the review parameters. i.e. a good score in “adding value to the company” might get you more bonus, a good score in “delivery of goals” more options. I know when I managed, good performance in some categories resulted in bonus, other categories in raise, and still other categories got you a nice smile from your boss (practices the values outlined in our Cultural Diversity policy)
I’m prone to believe that they thought B did a slightly better job and therefore gave him a better immediate reward (a twice as big raise and a bigger bonus). But they feel A still did a fine job so gave him additional options - encouragement to do an even better job long term.