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November 8th, 2006
Consider “Phantom Stock”
Smaller PR firms usually don't offer stock to employees because this raises complicated tax issues and minority ownership protection issues. It can also be costly to set up such a program. Also, PR firms may have to repurchase their own equity at a later date and take a financial hit. An alternative is "phantom stock" which lets employees share in the growth of a firm but eliminates the complications of actual stock.
"Phantom" shares are distributed to key employees as a material part of their overall compensation packages. In fact, a firm may be able to show salary increases and bonus increases (and thereby increasing current profits) because of the Phantom Equity grant. The key to such an arrangement is that the employee earns the right to a cut of the proceeds should the firm be sold sometime in the future. This can be a relatively painless way to hold onto talent which might otherwise be lured away by entities of publicly-held firms that can offer options and restricted stock. Phantom equity can help to keep or lure key talent to a firm; increase current profits, and obtain specific restrictions from employees that block them from leaving with the firm's clients (if such restrictions are not already in place). Owners of small and medium-sized firms should take up this concept with their legal and tax advisers to see whether it would benefit the firm and help to retain valued employees.
Bonuses Help to Retain Staff
Another device to help firms get through difficult economic periods is a bonus plan that rewards employees when firm income is high but which can be cut back or eliminated when business declines.
Bonuses that are paid late in the year or in the following year encourage employees to stay longer than they might have.
Employees with bonus incentives feel they have "skin in the game," further motivating performance and aligning the interests of management and the staff.
Introduce 'Stars' to Prospective Employees
Firms should considering bringing their "star employees" into the hiring process. They can articulate the long-term vision of the company to prospective employees and therefore help to attract the right talent.
Employees are interested not only in initial salary but also in the long-term goals. Our clients hired employees without paying premium rates because they have convinced them of the firm's vision and prospects.
Small and medium-sized firms should emphasize their particular cultures, pointing out the benefits of being independent. Candidates today want a good working environment.
A concise job description that spells out duties as well as opportunities will result in an increase in the percentage of good hires.
As a law firm that handles employee issues for the marketing industry, we see many common recruiting errors and missed opportunities.
We see an increased interest in PR careers these days because PR pros are becoming involved in a wide range of communications techniques up to and including advertising.
Such books at The Fall of Advertising and the Rise of PR, which was written by Al Ries, are making PR a more attractive career path.
Author: Gavin McElroy
This article was first published in O'Dwyer's PR newsletter on November 8, 2006.
Other Published Articles
If Editorial Content Includes Affiliate Links, Is It An Ad?
Law360 shared Terri Seligman’s article “If Editorial Content Includes Affiliate Links, Is It An Ad?” in their expert analysis section. The article, about a recent NAD decision involving BuzzFeed’s shopping guide, highlights the importance of distinguishing editorial content and advertising for compliance purposes. (Behind paywall)
September 25 2018
Case Against Lightbulb Marketers Shines A Light on FTC Enforcement
Law360 published Terri Seligman’s article “LED Bulb Case Shines Light On FTC Enforcement.” The article summarizes a false advertising case brought by the FTC against Lights of America arising from the company’s claims about the life expectancy of its bulbs. (Behind paywall)
September 13 2018
The Business of Show – Put a [Trade]Mark Where Your Dance Is
The Jerome Robbins Foundation newsletter features Kimberly M. Maynard’s article “The Business of Show – Put a [Trade]Mark Where Your Dance Is.” The article summarizes trademark use and discusses the benefits to dance professionals of having a trademark.
August 23 2018