Axon's New Compensation Plan Lets Employees Bet On Taser Maker's Future

Rick Smith, CEO of Taser manufacturer Axon Enterprise Inc AAXN, is changing the way his employees are compensated.

What Happened

Axon last month launced the eXponential Stock Performance Plan, which is designed to boost the interest employees have in growing the company. 

The plan essentially lets employees bet a portion of their compensation on Axon's achievements. 

Employees opt in by committing a fixed portion of their annual on-target earnings, or OTE, according to Axon. They can earn eXponential stock units, or XSUs, under the XSPP — a performance-based, restricted stock unit — upon achieving milestones, delivering shareholder returns and realizing stretch operating performance goals, the company said. 

Why It’s Important

“I thought it was demotivating to employees to help the richest guy in the room become even more richer,” Smith said in an interview with Benzinga.

The plan started with Smith, but the company decided to roll it out to the rest of the employees, he said. Axon employees committed $75 million toward the plan.

It has become increasingly hard for companies to recruit talent because they’re looking for a situation with more risk and higher returns, Smith said, adding that Axon's new compensation plan addresses that need.  

“This is a game changer for the company because we will have the ability to keep employees longer and recruit different types of talent." 

If all milestones are met, a large number of Axon employees will become millionaires, Smith said. And the anticipated increase in long-term thinking and employee morale could potentially bring the company to new peaks. 

What’s Next

Smith said he's excited to see how the company he co-founded will change under the eXponential Stock Performance Plan.

The CEO said he wans employees to see themselves as someone who can that can alter the company in a positive manner and collectively make a substantial enough change to hit the milestones laid out under the plan.

Related Links: 

Why Axon Shares Got A Shock After The Q3 Print 

Raymond James: Axon Still Underappreciated After 170% Pop 

Photo courtesy of Axon.