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What participant data do you need to collect from your equity plan participants and how you can collect it – without increasing your workload!

Participant Data: What information to collect?  

Are you in charge of your Company’s Equity Plans and unsure what information you need to collect from your participants?

This might not be an issue now but it almost certainly it will be at some future point.

You need participant information for compliance and legal purposes, as well as being able to provide your finance, payroll and HR groups with employee specific data for key equity reporting and processing.

The information you require may differ depending on where your people are located and what the plan stipulates.



The following is a list of what is typically needed from participants for a standard equity plan:

Notification from the participant that they are accepting or declining their equity grant offer

If you’re awarding grants to your participants they need to accept those grants and the associated terms and conditions of the grants, or at the very least acknowledge that they are the recipient of a grant. Typically participants will accept their option grants or restricted awards. On rare occasions it may not be tax effective for them to accept a grant and this is where a facility to decline the grant is imperative. More importantly there is the practical nature of communicating the details of a new grant to a participant: the value of the grant, information such as vesting and other important terms. Obtaining confirmation from the participant helps validate the concept of granting equity. It also ensures your participants are engaged and appreciate the benefits their Company’s Share Plan is providing them.


Tax elections for ongoing Equity Transaction Events 

If your Company has numerous Equity Plans and participants hold several Grants and Awards, the chances are that you are going to have multiple transactions going on at any one time. When participants are transacting equity you are going to have a Tax Event. Most plans offer the participants a choice of ways to pay their taxes (tax elections). If participants have an upcoming Restricted Stock Vest and Release, they need to be able to elect if they want to sell or swap shares to cover their tax liability. Otherwise they will have to cover the cost of those taxes.  The same applies with option exercises: Participants can elect which tax payment type to use. Elections may differ from country to country or even might be different by plan but these are standard elections that all companies should be offering to their participants.The calculation of equity compensation taxes has become increasingly complicated due to the range of tax rates, cut-offs and bands in operation. The increased mobility of multinational and multi-state workforces also adds another level of complexity, variation and work for many companies’ tax calculations today.


Ensure you have collected W-8BENs and W-9s forms for your plan participants

When your participants are selling shares from their option exercises and restricted stock releases they typically need to have a W-8BEN (non-US taxpayers) or W-9 (US taxpayers) form on file with the associated brokerage firm before the trade can be processed, to avoid additional tax withholding being taken from the sale proceeds. The responsibility for this form can vary – it can be a brokerage firm, the employing company or the plan administrators, who may be a third party. More often than not it’s a combined effort but ultimately the W-8BEN, W-9 or some other tax validation form will be required as part of the ‘Know Your Client’ process before plan participants can trade.


Annual self-certification is becoming more common place for participants

Participants who give notice of resignation or leave the company voluntarily before part or all of their award vests, may continue to receive their equity. However, if they participate in competitive activity (including accepting an offer of employment with a competitor) they will forfeit their award. Participants typically need to complete and return a Self-Certification Form within a month of giving notice of resignation or voluntary retirement and may also need to make annual Self-Certification declarations that they have not engaged in competitive activity.


Registration or enrollment in Broad Based Equity Plans 

Nowadays more companies are offering ‘Broad Based Purchase Plans’ in which participants must register or enroll to participate in the plan. This involves the participant signing up for the plan. In the case of a purchase plan they must elect how much they want to contribute on an ongoing (or one off basis). Usually the company will have details of all the participants they want to reach, but in some cases they won’t. This tends to happen for large global companies with participants in all corners on the globe. It is always a huge communication challenge to ensure every participant has their applicable plan communicated effectively to them and that all participants have an equal opportunity to participate and invest in their company.

These are just some examples of the standard information components that Companies and Equity Plan Managers need to collect from their participants.

There are however other areas where companies are starting to use technology advances to collect other information from participants. These can range from straight forward data collection to niche information.

Here are further examples:

Bonus Election Distribution 

Many companies allow their participants to dictate how they want to take their bonus i.e. in cash or equity. In some cases there is a further drill down – what type of equity would you like to take i.e., 50% stock option, 50% restricted stock.


AGM / Shareholder and Ad-hoc Voting

Companies have voting decisions that need to be made by their Shareholders. If the Company is offering equity compensation to participants, then those participants become shareholders with various voting rights. Voting matters may range from company resolutions to determining who sits on the board of directors. For Public Companies this is typically handled by the Registrar or Transfer Agent. For Private Companies this has to be done by the team that manages the Equity Compensation Plans, as they have the shareholding data for each Participant and they need to collage how each person wants to vote.


Employee Satisfaction Surveys

Surveys are becoming more popular with Companies as a way to gauge the impact of their equity plans on participants. If you are unsure about any aspect of your Plan, why not get input from your participants by asking them for their feedback?


Share distribution and Subscription offering

Companies – particularly early private ones – will be doing new rounds of investments, share distributions and offerings on a regular basis. This involves communicating with investors and shareholders to determine if they want to invest in the company and the level at which they wish to invest.


Key demographic data – e.g. Residency and Citizenship

Accurate reporting is important in every company and if you have a mobile workforce it is critical that you know the latest data related to your participants to run reports on residency, citizenship or other key demographic fields. Collecting this data from your participants is critical to your reporting success.

Payment preferences

If you are granting equity and cash based awards like CSARs, you will have to pay money out to your participants at some future point. Likewise if your Company pays cash dividends, you will need to pay monies to participant Shareholders. It is critical that you have the shareholders correct payment details and preferences. If it is delivered via wire transfer then you must have valid bank account information for them. Participants may also want their sale proceeds to go to different bank accounts for sale versus cash dividend payments, so it is important to have that flexibility as well.

How to collect information from your participants?

Now that you know everything you may need from your participants, the next question is how do you collect it? To avoid enormous manual administration and large printing and postage workload, you need to collect it electronically, using equity administration software.

The benefits of electronic data collection are multi fold:

  • Lower costs in the long run due to reduced mailing and paper costs, as well as the administrative burden of manually recording responses
  • Higher response rates, as participants are more likely to respond electronically
  • Full audit reports for both the administrator and the employee.
  • The administrator has access to the full employee listings in multi report format functionality.
  • Follow up facility – it’s much more effective to send a reminder via email or SMS than via mail
  • Increased ability to collect data at short notice from the participant.

The list goes on and on, but rather than try and explain it all to you why not have a look at our video below, which lays out all of the benefits of capturing the data you need from your participants electronically.

See for yourself what data you need to collect, and how to collect it efficiently, so that you’re getting more work done without increasing your workload!

Find out more about Equity Automation Software by contacting Global Shares, a market leading global provider of Equity Software, Administration & Financial Reporting Services, working with over 450,000 employees in over 100 countries worldwide.

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