The Advisors' Blog

This recent blog from Zayla Partners discusses the “comprehensive reevaluation of executive compensation” that’s usually necessary in the IPO process to reflect the shift from a private to a public company. It addresses key steps in the process, including the following, all of which need to happen in tandem with the innumerable action items on the broader IPO timeline:

– Establishing your executive compensation philosophy
– Defining the new competitive market for talent
– Creating a go-forward total rewards program
– Considering special pre-IPO equity awards
– Implementing new performance metrics and developing a plan for annual equity spending
– Setting the new director compensation program
– Addressing compensation governance matters (like a clawback policy)

The shift to a public company equity award program can be a particularly bumpy part of this process, and the blog acknowledges some of the challenges companies face on this front:

– Varying ownership levels among executives and employees
– Converting pre-IPO equity interests into a form that is more standard for public companies
– The IPO is often a significant vesting event
– Ensuring special awards have the intended retentive effect
– Shifting to more performance-based program with regular, annual grants
– Uncertainty for executives and the need to manage expectations

The blog tackles each step in more detail. It’s a helpful overview for teams looking to better understand the compensation planning needed for IPO readiness.

– Meredith Ervine