Things that go well together: chocolate and coffee, peanut butter and jelly, funding rounds and exercising events – what’s not to love! Since our founding in 2015, Personio has received six funding rounds, the most recent of which – a Series E2 of $200 million – led us to an overall valuation of $8.5 billion. And with this round, we decided to reward our employees with an exercising opportunity (because, after all, they go so well together!).
It’s important to us that we give our team the opportunity to benefit from Personio’s success – not just in a few years, but right now. This is why our total compensation includes a stock option plan that gives employees a share of ownership in the company they work for and enables them to actively benefit from the success of the company they’re contributing to. It’s these shares that employees can sell during an exercising event.
A primary sale of shares occurs when a company sells an ownership stake in itself to investors, and then uses the proceeds from that sale to operate the business. A secondary sale, however, is not about raising capital to finance the organization. Instead, it’s usually an opportunity for companies to enable existing investors to buy and sell from one another. It can also initiate a chance for an employee share buyback. In this latter event, instead of the company selling shares to outside investors, the company buys shares back from those employees that hold vested stock options.
The benefit of secondary sales like these are two-fold. First, they enable employees to actually make money off of their share options. Start-ups commonly entice top talent on board by promising shares as a significant portion of the benefits package. These shares are meant to offset what can be a higher risk and smaller salary than what a well-established company might offer.
But shares are a long game. At early-stage start-ups, this reward approach can delay an employee’s financial gain for years, depending on when a liquidity event like a sale or IPO happens. Instead, secondary sales offer the opportunity for employees to gain money before one of those liquidity events takes place.
And the secondary sale isn’t just for a company’s original employees; it also benefits people who joined the company at a more mature stage. After all, just because a person didn’t get in on day one doesn’t mean their shares are worthless. For example, an employee who was granted €3,000 worth of shares in 2020 – a full five years after Personio’s inception – now has shares valued at €44,000, courtesy of our latest funding round.
And shares play an important role in Personio’s reward philosophy. While some early-stage companies do use stock to offset lower salaries, we combine ours with competitive market salaries and a significant, long-term growth upside potential. As our people continue to help build and grow our company, the value of their shares grows in tandem.
Ross Seychell, who has led Personio’s People, Workplace, and IT team as Chief People Officer since November 2020, is a big proponent of this sale. “We strongly believe that all employees should benefit, as joint owners and investors, from the long-term success of the company they work at. So it was an easy decision to include shares as part of our overall compensation package.”
It’s a philosophy that stems directly from the top. Co-founder and CEO Hanno Renner says, “It is because [of our employees] that the business is successful, not just the founders. We need an opportunity to make sure everyone who has a positive impact on the business benefits from it.” In addition, stock options create a balanced, far-sighted approach to reward. As Ross puts it, “Our competitive salary offerings provide a ‘right now’ component of compensation, while stock options speak to the longer-term growth potential, alongside the existing value in the equity we grant our people.”
And while it’s easy to talk about this aspect of compensation, making it actually happen takes a lot more work. Given this, it should come as no surprise that this secondary sale was a massive team effort between the CEO Office, People & Workplace, Finance, Legal, and beyond.
Ann-Sophie, Reward Partner based in our Dublin office, was a significant contributor to bringing the sale to life. “We worked on eligibility checks, calculating individual buyback offers, supporting current and former employees with questions, preparing contractual documents, and so much more.”
How did Ann-So and the team ensure a smooth buyback experience for all participants involved? To start, she says, “Planning in enough time for aligning with stakeholders and clarifying all the details was key.” These details ranged from the time frame for the buyback, including taking accounting, payroll and other dependencies into account; to the portion of grant, buyback price, and more about the offer itself; to the tool, compliance, and accounting set-up.
“Next came the hard part! We’d done the planning, now it was time to bring all of it to life. We reviewed all shareholder grants based on eligibility, distinguished the number of shares that could be exercised, calculated the offers based on buyback and strike prices…it’s a long but important list.” But that’s not even the most important aspect, according to Ann-So. “With so many numbers and dependencies to juggle, adding in numerous double checks into our workflow was critical. Our actions throughout the buyback process can have a far-reaching impact on our colleague – now, more than ever, is the time to be extremely diligent.”
With the plan in place, the team started preparing the communication and supporting resources. “We stepped into the mindset of the shareholder, thinking through what they would need from us. What do they need to know? What reminders would be helpful? What questions will they have? Creating a knowledge base for the user to turn to with any questions helped to solve a lot of problems before they even began.” Staying in that mindset, they then tested each step of the buyback process. “This gave us a good feeling for the user experience and helped us double check that everything was in place as planned.”
And then the real fun began! “Once the window opened and shareholders had access, the main focus became supporting any queries, helping with personal consultations, and ensuring compliance – including that agreements were signed within the given timeframe, that all necessary data was available, et cetera.” Part two of that “real fun” was everything that happened after the buyback. This involved consolidating all of the buyback asks and preparing the data in the appropriate manner for the internal teams that would process it, like Payroll and Accounting. According to Ann-So, “Conducting a buyback is definitely not a one-person show! It’s a team effort, and every single Personio involved played a critical role in making ours a success.”
The team effort was just one more example of Personios living out our core values and operating principles of #Teamspirit and #Ownership. And if you’re looking for a company that values its employees and actively works to help them benefit from its success, Personio might be the right place for you! We’re hiring for multiple teams and in all offices, so head to our careers page and apply today.
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