During IncreMental Advantage's Structuring Private Equity Transactions Conference there was some debate about the merits of companies compensating their employees with stock options.
One the one hand, the advantages of compensating employees with stock include - cash is tight at small companies and lots of money can be made through exercising stock options at successful companies.
On the other hand, the disadvantages of compensating employees with stock options include:
- Rank and file employees are skeptical of the value of stocks that fluctuate significantly;
- Private equity investors believe that they are giving away too much value;
- Employees spend too much time monitoring the price of the stock; and,
- When the stock price falls, employees become discouraged.
These are some of the issues that are discussed at IncreMental Advantage's Mergers and Acquisitions Due Diligence and Private Equity Conferences.