Given The Risk Profile Of An Emerging Company, What Is The Appropriate Compensation Mix Between Salary, Short-, And Long-Term (Stock) To Attract Talent?

STOCK OPTIONS ARE A PREFERRED WAY TO ATTRACT TALENT that can accept the ambiguity inherent in early-stage drug development. However, over the past year there has been an extraordinary influx of capital into the biotech field, directly into companies as well as into VC funds. As more robustly funded companies “staff up,” the competition for experienced talent has significantly increased. You can anticipate that the willingness to trade salary for stock options will decline due to this increased competition for employees; rather than “instead of” a fully competitive salary, stock options will be “in addition to” that fully competitive salary. A colleague once said, “You can’t eat stock options,” which makes this trade-off decision even more difficult.

KENNETH MOCH has been president and CEO of five life sciences companies, most recently with Cognition Therapeutics.