Original analysts gets additional revenue: 20% for 3
years
For each company there is a certain part of revenue that
goes to the original analyst for certain period of time.
"Original analyst" is the analyst that first
puts the company in question to the database and creates
decent background information and comments on the estimates
(and thus provides his/her numbers to other analysts to
be downloaded with DB2Excel-process).
The incentive is currently 20% of all cash-flow related
to that company for the next 3 years. This incentive would
be there no matter whether the original analyst is later
on #1, #2, #3 analysts or something else. The incentive
expires only in such a case that there is no decent analysis
availbale for the company inquestion.
Why this kind of incentive?
The first analyst with each company is a kind of pioneer:
she/he does the great work of bringing a new company into
the database. This increases the value of the system relatively
much more than the second analyst for that same company.
Of course different opinions are also very important
and therefore we like to see also many analysts covering
same companies. However, the work of next analysts is
much easier as the "original analyst" has already
"paved the way:" actually they only have to
take a ready-made excel model for that company (with
DB2Excel), change estimates in few minutes to correspond
their own view, press the update button and insert a few
lines of comments for arguments for the estimates. If
the next analysts would quickly take the position of #1
analyst from the original analysts (as they can easily
do if they have better analysis), then they would also
collect most of the revenues even though the original
analyst has normally done much more work.
One can compare this to an orienteering competition:
the original analyst is the one who draws the map. He/she
does not perhaps run in the competition as fast as other
competitors and thus he/she does not perhaps win the competition
(be the #1 analysts as the rewards are given). She may
also be compelled to interrapt the competition for various
reasons (a freelance analyst must perhaps quit the job
if she takes a full-time that her time so that good estimate
comments are too time-consuming to prepare). Therefore
it is both fair to reward and sensible to bring incentives
to the original analysts so that they would keep up their
good work.
It is in the interests of all analysts that we have incentives
to support bringing new companies into the system. The
faster we get a good company coverage, the faster we can
sell this to end customers and get revenues from the analysis
to all analysts.
Original analyst vs #1 analyst
Original analyst gets his/her share of revenues (e.g.
that current 20%) before the other analysts get their
share. So if there are two analysts, then the revenue
sharing would be: 20% to original analysts, the rest 80%
is allocated to #1 analyst and #2 analyst so that #1 analyst
would get twice as much as second analysts. It would mean
that after #1 analyst would get 53,3% of revenues and
#2 analyst 26.6% (and original analyst 20%). If the #1
analyst would also be original analyst (as often is the
case), then his/her share would be altogether 73% and
if the #2 analyst would also be original analyst, then
his/her share would be althogether 46,6%.
Summa summarum: the incentive of original analyst will
not change the procedure that the #1 will get the most.
This incentive only ensures that the pioneers will get
their share in the long run no matter how difficult it
is to hold the position of #1 analyst.
What is the definition /requirements for "original
analyst" ?
Original analyst is the analyst who first fulfills
the following conditions with a particular company:
- has model of the company in the database
- has enough background information and comments
on the estimates in the database so that she gets minimum
0.5 of admin points
"Enough background information and comments"
might sound a bit vague but in the practise it is very
straightfoward. Currently as we have mainly admin-points
the difference between "adequate" and "in-adequate"
analysis is also clear: every analysis that has currently
more than 0.5 admin points
are qualified. Later on this will most probably be based
on customer points of automatic points. Thereby, if customers
do not give your analysis crushing criticism, then your
analysis will be qualified. The exact minimum customer
points -level will be published later on but it is most
likely that less than 10% of analysts will be below it.
So if you genuinely prepare your estimates and write your
comments - and e.g. not just copy-paste some scrap from
some other company - then you will be qualified.
Original analyst must also take care that other analysts
can access their numbers (and download them to excel-model
with DB2Excel) as long as they they enjoy the cash flow
granted to Original analyst. This means that: original
analyst must update the numbers into the database inside
two weeks after each quarter report. Otherwise the admin-points
will be downgraded and if situation is not quickly fixed,
the original analyst -status will be taken away.
The analyst will be notified by e-mail when he/she has
been accepted to be the original analyst of a certain
company. This is done by a process which every night checks
all the companies that do not yet have original analyst:
it goes through every company and checks whether some
analyst fulfill all the rules and if somebody does, then
the status is given and an e-mail is sent. So if you fullfill
all the rules today, then you should receive a confirmation
for it the next night. In analysts-system in "company
reservation" -page it is also shown which companies
have original analysts, who they are and on what date
the status has been given.
Level of original analyst's incentive
As stated in the beginning, the incentive of original
analyst is currently 20% of all cash-flow related to that
company for the next 3 years.
This level might change in the future but the change
will of course not affect the analysts that have already
gained the status of "original analyst". We
do not make the change so fast that analysts would read
this text, put the company in database after that and
find out thereafter that the rules have changed (e.g.
decreased to 5%/1 year...) during they have prepared their
model. So, we will notify (e.g. on this page) that the
level is going to change about two weeks before we are
going to do the change. That gives the analysts plenty
of time to put their company into the database as the
whole process of learning the system, model, preparing
it etc. should not take many hours.
It is likely that we will decrease the incentive of original
analyst in the future. Currently it is hard to say how
much but this thing will be discussed with analysts at
the analyst forum.
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