Options And Suchlike

And after that mention of CEO pay, this sounds like a good time to link to this article from Nature Biotechnology. If you've ever been curious about why different companies pay out in stock options and/or restricted stock, this will satisfy your curiosity and more. A big part of the answer, you will not be surprised to hear, is the tax code, and if you're someone getting these kinds of compensation, you need to know some tax angles from your end, too.

And, of course, the type of award that works out best for the company doesn't always work out best for the grantee. Likewise, not every grantee will be best served by a single kind of award - it all depends on what you're trying to reward:

Although stock options continue to be a popular employee incentive device, in the past few years their advantages have been diminished through accounting and tax law changes, whereas their shortcomings have become more apparent in the biotech sector—in which a consistently growing stock price is far from assured, or even likely. As a consequence, biotech firms are moving away from an exclusive reliance on stock options and instead are using a mix of equity-based incentives, most commonly a combination of stock options and performance-based stock units.

From the perspective of a founder or other employee, the shift to a combination of stock options and some form of restricted stock or stock units should be welcome, making it less likely that the employee's awards will have no value at all....

Source: In the Pipeline - August 23, 2013 Category: Chemists Tags: Business and Markets Source Type: blogs