Companies Turn to Software for Compensation Help

BOSTON (05/09/2000) - As companies increasingly offer stock options and other nonsalary incentives to attract and retain skilled employees, they're faced with the complex task of distributing the options and managing diverse benefits packages. Now, some users are counting on software to help get them through that process.

For example, Marc Ketzel, vice president of global human resources at At Home Corp., recently began using TotalComp Manager from Kadiri Inc. in Burlingame, California, to manage employee salary and stock plans. Ketzel and other managers at Redwood City, California-based At Home have access to the software under an application service provider deal.

Because it's making five to 10 acquisitions each year, At Home - which provides broadband online services to consumers and businesses under the brand name Excite@Home - found that it needed an application more sophisticated than a spreadsheet to manage compensation for both new and existing employees, Ketzel said.

With spreadsheets, At Home had to send compensation reports via diskettes or e-mail to geographically dispersed business managers, making it difficult to maintain a consistent report format, Ketzel said. Using a Web-based application should make it easier for the company's managers to enter salary or stock-option recommendations for employees, he said.

By receiving data feeds from At Home's stock administration database and its PeopleSoft-based human resources system, TotalComp Manager lets users at the company determine which stock options have been granted to an employee, the price at which they were granted and the percentage that has been vested.

The software also graphically depicts how a pay increase would affect a manager's budget and can be used to compare, say, an engineer's salary to his peers' at the company or elsewhere within the industry, Ketzel said.

Until recently, companies that offered stock options typically made them available to executives who could afford the services of a tax or financial adviser, said Jerry Inglert, vice president of human resources at E.spire Communications Inc., an information technology services firm in Herndon, Virginia, that offers stock options to every employee.

But as more companies distribute options to wider groups of employees, managers are left with the task of explaining to employees when their options will vest and what kind of tax implications they will face, Inglert said.

E.spire plans to be a beta-test site for OptionWealth, an application from Rockville, Maryland-based OptionWealth Inc. The application is expected to save time for E.spire's managers by answering basic questions about the company's stock option plan, Inglert said.

According to the American Compensation Association in Scottsdale, Arizona, 47% of employers offered stock programs to salaried employees last year, up from 39% in 1998. In addition, many companies also are now offering such incentives as bonuses, performance-based merit awards and extra vacation time.

Most companies manage between 50 and 70 compensation plans, and some have to deal with hundreds of different plans, said Katherine Jones, an analyst at Boston-based Aberdeen Group Inc.