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Equity Compensation Trends in 2022

Equity Compensation Trends in 2022

September 07, 2022

The effects of The Great Resignation, which began in early 2021, are still being felt today. That especially holds true in the world of equity compensation. Current and future employees’ expectations and attitudes about their employment have changed and companies need to adapt new strategies when it comes to their workforce. It’s equally important to attract new talent as well as retain the talent of a company’s current workforce. This idea has shaped equity compensation trends in 2002.

Flexible and Fair Pay

Some companies are adjusting pay for their employees to address internal equity. Employees that are below the benchmark are seeing an increase in compensation. Retention bonuses are being offered as well as more personalized rewards packages — such as a split between fixed and variable compensations, one-to-one compensation, bonuses, gift cards, perks, discounts and even time-off rewards.

Tying Pay to Performance

The use of performance-based incentives is a major key for companies looking to retain their current talent while also attracting new talent. These incentives could be based on both short-term and long-term goals. Executives that have their compensation tied to company performance are likely to increase productivity with their work, as well as the teams of people they oversee. Investors are more likely to reward executives when their improved performance drives up the share price of the company.

Save Costs. Boost Engagement.

This strategy is bolstered by expanding the use of equity and long-term incentives like stock options to, again, attract and retain talent beyond the executive ranks. A company is only as strong as its corporate infrastructure and tethering their value to the company’s long-term performance creates a pride of ownership. Employees are more likely to remain with their current employer if they have a stake in the game. This policy also lessens the pressure on leadership to provide higher cash compensation for employees. And it’s a great tool to retain high-demand, high-potential members of their workforce.

Understanding Total Compensation

With all these different forms of compensation, it can be confusing for employees to keep track of their pay. There’s a real movement to have all compensation types — salary, bonuses, commission, equity, perks and non-rewards — listed under one heading, providing a complete picture for any department, team or employee. This is a major tool for employers as the more moving parts in an employee’s compensation package, the more importance is given to clear communication on these updates.

Increase Compensation Maturity

The business-as-usual model for managing compensation no longer works. Many companies have a person, or a team solely dedicated to compensation. The need to deliver flexible and strategic rewards packages demands a high level of attention. Human capital in today’s work environment is valuable and organizations are adjusting their thinking and optimizing their pay practices.

If your employer is offering any type of equity compensation and you have concerns or you simply have more questions, feel to reach out to me through the contact form on the page, my email or by phone.