Stock/Equity Compensation

The Tom Sawyer Approach to Equity Compensation

Stickman-tom sawyer fence-20211026Most of us have read Mark Twain’s classic “Tom Sawyer” at some point in our lives. At one point Tom is punished and told to whitewash the fence at his Aunt Polly’s place. It was hard and boring work, but Tom was an entrepreneur with a great knack for marketing.

When approached by a friend to go swimming, Tom explained that whitewashing the fence really isn’t work.

“Like it? Well, I don’t see why I oughtn’t like it. Does a boy get a chance to whitewash a fence every day?”

And with that, Tom convinced his first co-worker to trade an apple for the incredible chance to help whitewash the fence.

And at that moment Tom founded the newest startup accepted by the best accelerator.

Later another kid walks by.

“Yes, she’s (Aunt Polly) is awful particular about this fence, it’s got to be done very careful. I reckon there ain’t one boy in a thousand, maybe two thousand, that can do it the way it’s got to be done.”

As stated in its job postings: “We only hire the very best, the most talented, the most skilled, and the most passionate people to help us in our world-changing mission of improving the world with more beautiful and functional fences. Do you think you’re good enough?”

“Tom gave up the brush with reluctance in his face but alacrity in his heart.”

And with that, FencePaint.Club granted its first stock options and began the process that would turn them into the next trillion-dollar company.

“Tom said to himself that it was not such a hollow world after all.” He had discovered a great law of human action…Work consists of whatever a body is obliged to do, and Play consists of whatever a body is not obliged to do.”

And this, Founders, HR, and Compensation professionals is the secret to startup equity compensation. The most effective programs are structured and communicated to make the receiver of equity feel as though they have gotten a great opportunity to do something that others only wish they could do.

This is your challenge. Review your equity compensation program(s). Take a close look at your communications. Be honest about what your talent acquisition team and managers are telling prospects and employees about their awards. Are you Tom Sawyer getting people to whitewash a fence or just one more employer looking to put another cog in the machine?

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”“Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or follow him on Twitter at @DanFutureSense.