Bloomberg – Billion-Dollar Award Made a CEO Uneasy. Now He’s Fixing It
December 21, 2018
By Anders Melin
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The prospect of a billion-dollar windfall left Rick Smith uneasy.
It crept up on the chief executive officer in February, while he was telling employees about an audacious goal to grow Taser-maker Axon Enterprise Inc., the firm he founded in 1993, by more than fivefold over the next decade. If they could pull it off, shareholders would see handsome returns and Smith would pocket about $1.3 billion through a radical compensation plan.
There was just one problem: The plan didn’t include his roughly 1,000 workers.
“It was really exciting, but there was this awkward moment when I was standing there talking to everyone about my compensation,” Smith, 48, said in an interview. “The next day, I began working with the board on how to get everyone aligned.”
On Wednesday, Smith revealed a companywide incentive program that’s an extension of his own moonshot plan. If shareholders approve, all Axon employees will receive special equity grants tied to the growth goals. If they’re achieved, the company estimates that payouts will range from about $17,000 for the lowest earners to several million dollars for others.
Smith’s desire to share the fruits of any future success comes as the U.S. grapples with growing income inequality. Executive compensation has soared about 1,000 percent since 1978, while real wages for most Americans rose just 11 percent, according to the Economic Policy Institute.
To hear Smith tell it, CEOs generally are overcompensated, at least in relation to how their companies perform. And while a $1.3 billion payday would put him ahead of almost everyone, nothing is guaranteed — zero salary or bonuses. If Scottsdale, Arizona-based Axon fails to meet its lofty targets, he’ll have worked for free for a decade.
“I’m one of these optimistic capitalists — when you do it right, you should divvy up gains between your customers, shareholders and employees,” Smith said.