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So, just what do your employees know about their equity plans?

When I attend benefits exhibitions and speak to employees receiving equity plans, I often find that they don’t have a good grasp of the equity package they are receiving and that’s before we even mention what they can do with it! It’s easy for us in the stock plan industry to forget just how complicated and confusing equity plans can be for employees. Communication is so important for effective participation, let’s take a closer look.

Equity Plans

We need to start by asking some basic questions like what is the best way to communicate the plan, what type of information do your employees need to know?

When an employee first joins a company, the information and on-boarding process can be overwhelming and a booklet outlining the company’s equity compensation plan may find its way under a pile of unread paperwork. At Global Shares, we recommend considering an electronic form of communication and looking for more creative ways to get your message across. Perhaps you could try a series of pre-recorded tutorials explaining the benefits of participation. Or maybe a more general online and printable document of definitions would work – to cover the who, what, when, where and why of the plan.

Of course having these tools is only the start. The accessibility of the plan is just as important. Where should this information be stored and how quickly can the employee get access to it? How will you communicate this to your employees? How will this data be maintained and reviewed for accuracy? All good questions – one point to keep in mind is that accurate and easily understandable information is much better received than a general overview with little or outdated supporting documentation. Whether the plan is designed for retention, growth, or compensation; the success of the plan is measured by the level of employee participation – hence the importance of effective communication and education.

I recently met with one company’s administration team at an industry conference. They mentioned that they had created custom video cartoons to breakdown every step of their stock option plan. They included the grant acceptance, vesting, exercise and the definition of taxes that may be due as well as the sale. What a unique idea! Of course my next question was how long the video is? Surprisingly the video was just two and a half minutes long and really got the point across. Not to mention that it’s a nice quirky and creative techniques to put out there!

My final thought is that we should really take the communication of equity schemes seriously and take the time to consider how best to do this.

Questions? Get in touch today to find out how we can optimize the communication of your share plans to participants!

Denise Scoville-Glackin

 

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