Firms Replacing Stock Options with Restricted Shares Face a Tough Sell to Employees

Summary

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David Ayres approaches employee communications like a marketer approaches an advertising campaign. As senior vice president of compensation and benefits at Pepsico, he focuses on getting his audience engaged, keeping the message simple and making sure employees understand what it means to them specifically. So last year when Pepsi changed its compensation program, affecting 80,000 employees, Ayres didn't get bogged down in the minutiae. Often, he says, companies get too focused on explaining the changes they are making to investors and regulators. Rules from the Financial Accounting Standards Board requiring companies to expense the cost of stock option grants are causing an increasing number of firms to switch from granting stock options to restricted stock and performance-based stock units. Given the complexities of such programs, many companies are at a loss about how to effectively communicate the changes.

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Firms Replacing Stock Options with Restricted Shares Face a Tough Sell to Employees

DAVID AYRE APPROACHES employee communications like a marketer approaches an advertising campaign. As senior vice president of compensation and benefits at Pepsico, he focuses on getting his audience engaged, keeping the message simple and making sure employees understand what it means to them specifically.

"Employees and executives are consumers," he says. "It is essential to communicate to them as you would to your...

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