E-PAY
Internet companies rethinking boardroom pay
British internet companies have been left with no option but to restructure executive compensation packages to retain high fliers. Long gone are the days when generous equity grants could be used to supplement low compensation. With new economy stocks sliding, the allure of share options — long regarded as the defining feature of internet-style reward packages — has been tarnished. Instead, salary and bonus compensation has increased substantially. These are the main conclusions to emerge from a new survey by executive recruitment consultancy Futurestep and SCA Consulting.
The average salary of the chief executive of a post-flotation internet company has leapt to £170,000 — a 40% increase on a year ago. British internet executives are now the best paid in Europe and their salaries and bonuses are on a par with their counterparts in the USA.
1. Internet wages only marginally behind traditional businesses
Executive salaries in traditional companies continue to outstrip those in internet businesses. But the gap is closing.
2. High reliance on equity
"Despite major stock re-evaluation, equity still remains a major component of pay," the survey says. "In situations where options are 'underwater' or perceived to be worthless, some companies are considering alternative such as co-investment plans or one-off payments at a lower exercise price."
3. Cash compensation to increase sharply in 2001
Following the surge in internet salaries and bonuses in 2000, cash compensation is forecast to increase by a further 10% this year.
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Title: SCA Consulting and Futurestep e-pay UK study.
Methodology: Online questionnaire covering compensation levels and incentive design for executives in the internet sector. Areas covered by the study include total compensation levels, percentage of equity granted to employees, allocation of equity between employees, option vesting schedules and performance measures.
Sample size: Information for the report was provided by over 200 organisations, covering 2,000 senior executives across nine European countries.
Business sectors: Firms participating in the survey are split equally across pre- and post-IPO internet companies and the internet divisions of large organisations. They are engaged in a variety of internet businesses, including services, retail, search engines, media and ISPs.
Availability: Take a look at some of the key findings of the survey . . .
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