The VisionLink Advisory Group

Business owners need to institute pay strategies that can facilitate and support their transition plans, according to Tom Miller, president of VisionLink Advisory Group. This is especially true when it comes to developing long-term incentive plans.

Many businesses struggle with prioritizing their pay strategies. Because compensation represents such a large deployment of a company’s capital, it is critical that companies learn to meet this challenge effectively.

More private companies are turning to phantom stock as a long-term method for allowing key producers to participate in the company growth they help create without diluting equity value for existing shareholders.

The tax increases instituted are prompting businesses to evaluate their approach to compensation, especially for key producers. Companies are searching for ways to minimize income taxes for employees while still protecting/growing shareholder value.

Businesses are realizing that compensation can no longer simply be “managed.” It is one of the largest deployments of capital the business makes and must lead to solutions that will leverage the ability to effectively implement the business model

Compensation of the future will incorporate entrepreneurial attributes that can attract the innovative talent companies will need to fuel growth. This creates a focus on innovation and the need to create pay strategies that will reward it.

Private companies wanting to reward business growth without giving away equity are turning more to phantom stock. Closely-held business owners are seeing this value-sharing approach as an effective strategic tool in their overall pay approach.

Fairness in compensation has been a topic of discussion, especially since the financial crisis of 2008. The economic strain has made companies think beyond fairness to pay systems that will be economically viable for both owners and employees alike.

Two organizations focused on helping CEOs of private companies fuel growth will broadcast a joint webinar on September 18, 2012 entitled, “How High-Growth Companies Pay their Top Producers.”

According to a recent study, since 2007 short-term incentive plan usage in private companies has increased from 79% to 95%. Even more dramatic has been the increase in prevalence of long-term value sharing, rising from 35% to 61%.