Finding Leaders for Internet Health Care

Grant: Given recent gyrations in the market, where does compensation stand?

Greene: Before we went public a year ago, the big question that everyone would ask was, “What are my options?” The focus of the conversation would always be options. Since the market correction on the tech nology side (particularly in ehealth) that occurred in March and April 2000, that has decreased somewhat. There is more discussion now of cash compensation than we had before. The focus was really on options, but now people want both options and cash.

Givens: I would concur with that. I think that not only CEOs, but senior managers as well, are looking for both. This is unlike the old days. They are looking for big, combined packages, as they never did before. The difference seen over the past several months is that, in the past, the value of the options was taken for granted (at face value). Today, there is a lot more scrutiny of how we arrive at the future value and what kind of integrity is associated with future compensation.

Graham: One of our challenges, as a nonprofit organization, is to figure out how to keep people who are normally paid by the hour (whether they are secretaries or physicians) from going across the street and working for dot-coms where they get a 50% compensation addition by having stock options. We are working, through the Overlake Venture Center, to invent legal ways of creating opportunities for nonprofit workers to participate. They might be able, as inventors or founders, to invest directly; they might also be able to receive some kind of long-term benefit. For example, for one product, we are exploring whether we can have 10% to 20% of profits go into a specific employee-retention fund of some kind (distributed either as salary or as long-term benefit programs).

Yowe: It may be obvious now, but we are beginning to see, among candidates, a bit of aversion to risk with respect to companies that previously had such high valuations. Now, we are seeing that the exit strategies for many of these companies are not as much initial public offerings as corporate development activities resulting in mergers or acquisitions. The vesting of options is becoming as important as how many options are available, in terms of how they get some liquidity from that.