Usage of Eight Forms of Equity-Based Compensation in the San Diego Life Sciences Industry

Abstract

The objective of this article is to report the usage of eight different forms of equity-based compensation (specifically, ownership among employees) in the life sciences industry of San Diego. We gathered data from 103 out of 420 companies in San Diego. Of the eight forms of employee ownership, the most widely used is 401(k). Among the four employee ownership practices pertaining to stocks, quite a few companies in the life sciences industry have adopted stock options (67%) and stock grants (31%). The practices least used are stock appreciation rights (2%) and employee stock ownership plans (4%). Qualified employee stock purchase plans were adopted by 11% of the companies. The two cash-based practices (profit sharing and gain sharing or a monetary incentive for efficiency gains) were used by almost 20% of the companies. We discussed these results as they relate to the need for alternative business models to sustain the life sciences industry.