Business Lessons From a Titan - Page 4 of 4 - Black Enterprise

Business Lessons From a Titan

Lesson N0.6
Reward top talent with a piece of the action.

We have a completely different structure than Wall Street generally. The general structure on Wall Street is you have a very small base salary. I started believing that principle of offering people a piece of the action, not giving but offering people the opportunity to purchase equity over time so we started a stock purchase plan many years ago. [Brown Capital was an] S corporation owning 76%. Other investment and marketing professionals and our chief administrator officer owned the remainder. They initially purchased [shares] and then I bonused enough extra money for them to purchase equity from me. As of year-end 2010, we basically froze the S corporation and established an L.L.C. [limited liability corporation].

When you establish an L.L.C., the member interest would be like a partnership. So I’m now a 50% owner of the new entity and then collectively the other folks own the other 50% and parcel that out based on a lot of different factors. From the beginning of 2011 forward, I’m voluntarily lowering my participation. [The employees] are incentivized like hell to make this firm grow because now they’re all putting a dollar of their own money, participation, ownership, member interest in the future of the firm. So, everybody is excited. I’m more concerned about keeping this exceptional talent that we have attracted and keeping the firm growing and focused, than I am about another few million dollars personally.