Employee Option Planns Best answer on the web
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According to Fenwick & West LLP, the number of shares reserved for employee plans is typically 10 to 20 percent of the outstanding shares.
About Fenwick & West LLP
?Fenwick & West LLP provides comprehensive legal services to high technology and
biotechnology clients of national and international prominence. We have over 250 attorneys and a network of correspondent firms in major cities throughout the world. We have offices in Mountain View and San Francisco, California.?
Here is the relevant excerpt from the publication ?Venture Capital for High Technology Companies? by Fenwick & West LLP:
Employee Stock Plans
?Companies typically establish employee stock option plans to provide equity incentives for employees. Start-up companies are high risk and cash-flow constraints often mean that employees may be asked to accept below-market salaries to conserve cash in the start-up phase. Consequently, equity plans are essential to attract and retain top quality people in a start-up. The number of shares reserved for employee plans is typically 10 to 20 percent of the outstanding shares. It is typical for early stage companies (though not approved by the IRS) to establish a fair market value for common stock for such employee plans within a range of 10 to 20 percent of the most recent value of the preferred stock. This price differential must disappear as you approach a public offering or acquisition of the company or the company may be required to take a ?cheap stock? charge to earnings by the SEC.?
Download the complete publication here:
http://www.fenwick.com/docstore/publications/Corporate/Venture_Cap_2002.pdf
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Bobbie7
I'm glad that I was able to find the precise information that you require.
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Bobbie7
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According to Fenwick & West LLP, the number of shares reserved for
employee plans is typically 10 to 20 percent of the outstanding
shares.
About Fenwick & West LLP
?Fenwick & West LLP provides comprehensive legal services to high technology and biotechnology clients of national and international prominence. We have over 250 attorneys and a network of correspondent firms in major cities throughout the world.?
Here is an relevant excerpt from the publication ?Venture Capital for
High Technology Companies? by Fenwick & West LLP:
Employee Stock Plans
?Companies typically establish employee stock option plans to provide
equity incentives for employees. Start-up companies are high risk and cash-flow constraints often mean that employees may be asked to accept below-market salaries to conserve cash in the start-up phase. Consequently, equity plans are essential to attract and retain top quality people in a start-up. The number of shares reserved for employee plans is typically 10 to 20 percent of the outstanding shares. It is typical for early stage companies (though not approved by the IRS) to establish a fair market value for common stock for such employee plans within a range of 10 to 20 percent of the most recent value of the preferred stock. This price differential must disappear as you approach a public offering or acquisition of the company or the company may be required to take a ?cheap stock? charge to earnings by the SEC.?
Download the complete publication here:
http://www.fenwick.com/docstore/publications/Corporate/Venture_Cap_2002.pdf
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Fifteen of the top 250 corporations in the United States had set aside
over a quarter of all of their outstanding shares as "equity
incentives" for upper management,
Excerpt:
?By 1998, a Standard & Poor's study found that long-term compensation,
namely stock options, made up 80 percent of the average CEO pay
package. Fifteen of the top 250 corporations in the United States had
set aside over a quarter of all of their outstanding shares as "equity
incentives" for upper management, and all of the top 250 now have some
form of stock options for their CEOs. Companies' rationale behind
stock compensation, of course, is that these plans promote efficiency
and productivity. Leaving aside the fact that what is good for
short-term stock prices might not make a company more valuable in the
long run, CEOs with stock have a huge financial incentive to make
decisions that increase shareholder-i.e., their own-value. Richard
Rainwater called this making "key executives honest-to-God owners, not
phony owners.
http://www.findarticles.com/p/articles/mi_qa4053/is_200204/ai_n9060814
===============================================================
?Nevertheless, stock options are growing as a percentage of shares
outstanding at companies. At the nation's largest 200 companies,
options represented 11.8 percent of the shares last year, compared
with 6.9 percent in 1989, according to Pearl Meyer & Partners, an
executive compensation consulting firm.
?At 23 of those companies, including Morgan Stanley, Travelers,
Warner-Lambert and Microsoft, more than 20 percent of all shares were
set aside for stock-related incentives.?
http://www.smeal.psu.edu/faculty/huddart/InTheNews/ACA2.shtml
===============================================================
?America's top 200 corporations have allocated over 15% of shares
outstanding for management and employee incentives. At the same time,
among the Top 100 dot.coms more than one-third of corporate shares
have been reserved for stock-based incentives, according to a new
study of equity use as reported in 1999-2000 proxies, now available
from executive compensation consultants Pearl Meyer & Partners, a
Clark Consulting company.
Allocations among the top 200 companies averaged only 6.9% when Pearl
Meyer & Partners began its study of employee and management equity
incentives in 1989. That number steadily increased over the following
decade as the stock market soared, reaching a record 15.2% of
outstanding stock set aside for pay in the 1999/2000 fiscal year. That
represents an 11% increase over the prior year's allocation and, in
absolute terms, the largest ever single-year increase. In a separate
study, Pearl Meyer & Partners found that the 100 leading Internet/tech
companies on average set aside an astonishing 37.3% of outstanding
shares for employee equity incentive plans during the same period,
reflecting those companies' heavy reliance on stock options.?
?Overall, fully 21% of the Internet/techs studied allocated more than
half of their outstanding shares for incentives.!
http://www.clarkconsulting.com/newsandevents/mediaroom/2001/20010406.shtml
Is this the kind of information you need?
Thanks, Bobbie7
Fifteen of the top 250 corporations in the United States had set aside over a quarter of all of their outstanding shares as "equity incentives" for upper management,
Excerpt:
?By 1998, a Standard & Poor's study found that long-term compensation, namely stock options, made up 80 percent of the average CEO pay package. Fifteen of the top 250 corporations in the United States had set aside over a quarter of all of their outstanding shares as "equity incentives" for upper management, and all of the top 250 now have some form of stock options for their CEOs. Companies' rationale behind stock compensation, of course, is that these plans promote efficiency and productivity. Leaving aside the fact that what is good for short-term stock prices might not make a company more valuable in the long run, CEOs with stock have a huge financial incentive to make decisions that increase shareholder-i.e., their own-value. Richard Rainwater called this making "key executives honest-to-God owners, not phony owners. http://www.findarticles.com/p/articles/mi_qa4053/is_200204/ai_n9060814
?Nevertheless, stock options are growing as a percentage of shares outstanding at companies. At the nation's largest 200 companies, options represented 11.8 percent of the shares last year, compared with 6.9 percent in 1989, according to Pearl Meyer & Partners, an executive compensation consulting firm.
?At 23 of those companies, including Morgan Stanley, Travelers, Warner-Lambert and Microsoft, more than 20 percent of all shares were set aside for stock-related incentives.? http://www.smeal.psu.edu/faculty/huddart/InTheNews/ACA2.shtml
?America's top 200 corporations have allocated over 15% of shares outstanding for management and employee incentives. At the same time, among the Top 100 dot.coms more than one-third of corporate shares have been reserved for stock-based incentives, according to a new study of equity use as reported in 1999-2000 proxies, now available from executive compensation consultants Pearl Meyer & Partners, a Clark Consulting company.
Allocations among the top 200 companies averaged only 6.9% when Pearl Meyer & Partners began its study of employee and management equity incentives in 1989. That number steadily increased over the following decade as the stock market soared, reaching a record 15.2% of outstanding stock set aside for pay in the 1999/2000 fiscal year. That represents an 11% increase over the prior year's allocation and, in absolute terms, the largest ever single-year increase. In a separate study, Pearl Meyer & Partners found that the 100 leading Internet/tech companies on average set aside an astonishing 37.3% of outstanding shares for employee equity incentive plans during the same period, reflecting those companies' heavy reliance on stock options.?
?Overall, fully 21% of the Internet/techs studied allocated more than half of their outstanding shares for incentives.!
http://www.clarkconsulting.com/newsandevents/mediaroom/2001/20010406.shtml
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