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Andcor’s Basis for Evaluating Top Management Compensation — In the Emerging Market

Andcor’s Basis for Evaluating Top Management Compensation — In the Emerging Market

 

Areas to consider in evaluating individual pay

Past accomplishments as CEO and/or Functional Leader of the company

Relevant, prior professional experience and track record

Skills, behaviors, attributes, and presentation

Compensation history

‘Keep the lights on’ cash needs

Compensation in the form of equity (i.e., stock grants, stock options, etc.)

Our executive compensation philosophy for emerging companies

Top management, especially CEOs, should be paid heavily in incentive compensation – a mix of longer term and short term incentive compensation

Lower base salary with the opportunity to achieve and exceed market pay in total compensation by meeting and exceeding goals and objectives

Goals should be aligned with investor/public expectations (if possible)

Objectives should be aligned with strategic initiatives

Compared to top management of ”comparable companies”

Size and revenue growth goals/history

Geographic location

Growth stage and liquidity horizon

We consider the background and successes of top management in comparable companies before making a comparative analysis

 

For example, many CEOs of emerging companies are also the founders of those companies.

This often makes a difference in the pay structure for that person as they often hold larger equity stakes.

Many of CEOs and top management of emerging companies have track records of success with other hyper‐growth organizations, many do not.

Obviously, it is important to consider this as CEOs and top management who have “been there and done that” command a higher compensation than those who are demonstrating their executive/top management talents for the first time.