What is the Employee Stock Ownership System that Succeeds in Silicon Valley IT Companies?


It is a major base of IT companies in the state of California, USASilicon ValleyA new company is born one after another every year, and some companies develop at an astonishing speed. In Silicon Valley where such a very speedy business is carried out, let employees hold company sharesEmployee Stock Ownership PlanIt seems that the development of companies is supported by utilization.

The Right Way to Grant Equity to Your Employees

Andy Lacref, a lecturer at Stanford University Business School, a representative of Wealthfront, a consulting company with Silicon Valley IT company as a customer, has been involved with Silicon Valley IT firms from experience of looking at a number of IT companies We list the existence of the "Employee Stock Ownership System" as being significantly different from general corporations. "Silicon Valley IT companies have a practice of distributing stocks to their employees, and this traditional corporate culture is much more equitarian than corporate culture in other fields."

Mr. Rakulef points out that the company thoroughly transfers and distributes shares to employees as a common point seen in IT companies in which employees hardly leave their jobs I will. According to Mr. Rakulef, these companies are giving exciting and challenging work environments to talented and talented employees, while at the same time, for excellent achievementsstock optionThe company's shares are held through such as.

Mr. Rakuref lists three reasons why Silicon Valley IT companies adopt the employee stock ownership system and have employees hold shares. First of all, it should be a fair return to the risk of employees "betting" to companies that do not know whether to succeed, secondly because it is the best way to respond to long-term contributions of employees , Third, it is effective for employees to think about how the company will succeed.

As a result of consulting experience with Silicon Valley IT companies, Wealthfront has devised what type of employee stock ownership system is effective for sustainable development of a company, and as a result of the above four cases, It is preferable to distribute it.

1: When joining the company


Mr. Rakulev recommends that stocks be granted according to his / her ability at the time the company hires employees. From this, all employees can become shareholders of the company. Naturally, if you want an employee to "have a manager's / owner's point of view", you should distribute shares.

2: During promotion


Although it is common to raise salary with promotion, Mr. Rakulef recommends distributing shares along with it or instead.

3: A wonderful achievement


Mr. Rakulef says that when summarizing over a year, stocks should be given to employees who have made remarkable achievement. The grant of shares to this achievement every year, it should target the top 10 to 20% of the employees excluding officials and other executives.

4: Every year for everyone

ByRichard foster

Mr. Rakulev thinks that employees should be given stocks that are equal to 25% of the "market value" necessary for employment at that time, once a year from two and a half years of service. Mr. Rakulef calls this stock "Evergreen" and emphasizes particular importance among the four cases. According to Mr. Rakuref, employees can avoid unexpected financial distress by consistently distributing shares every year, and companies are said to be able to avoid outstanding technician leaks. In addition, employees can continue to have hopes for companies over a long span by Evergreen shares, while at the same time they will contribute to the company over the long term, Mr. Rakulef says.

According to the calculation of Wealthfront Inc., companies distribute new shares in the range of 3.5 to 5% annually to distribute the above shares, provided that senior employees with high salaries are not frequently head hunted Although it is necessary, this figure is an appropriate plan that will fit within a reasonable range considering that most Silicon Valley IT companies are issuing an average of 4 to 5% annual stock a year.

For Silicon Valley IT companies that how to secure excellent talent greatly depends on the development of the company, the skillfully designed employee stock system allows business owners to carry out excellent technicians It can secure, and employees can contribute to the company's development from a long-term perspectiveWin-WinA relationship can be built, Mr. Rakulef says.

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