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Breaking up is easy to do: a guide to switching employee equity compensation plan providers

Content Team January 24, 2025 mins read

About the team

J.P. Morgan Workplace Solutions’ Content Team comprises a dynamic and talented team of writers and experienced professionals who strive to deliver useful equity insights and simplify complex equity information, all with the aim of helping you to better understand equity management.

Breaking up is easy to do: a guide to switching employee equity compensation plan providers

Switching who you use to manage your employee share plan management can feel daunting, but making the leap after you’ve found the right provider can make such a difference – for you and your employees.

Choosing the right provider can really help reduce the administration burden for you, helping with reporting, tax and compliance considerations. And for your participant, the right technology can really help them understand the value of their awards, boosting engagement rates and helping you with retention.

To choose the right partner, asking the right questions will ensure that your new platform and service provider can meet your needs today and as you grow. However, before you put together a list of questions, there are a few things you should think about as they will be at the core of the switching process.

A few things to consider beforehand:

  1. Limitations of your current provider – can they cater for all your needs, including regional considerations for you and your participants?
  2. What do you need help with? Are there specific pain points that you have today? Any equity management requirements (e.g. reporting, API connection, global stock plan, employee communications, participant support) you need today and in the future?
  3. Type of equity plan admin solutions you are looking for (fully or partially outsourced?)
  4. What about other stakeholders across HR, Finance, Legal, Tax teams? Do you need their buy in when it comes to choosing a solution and have you captured their pain points too?
  5. Budget and onboarding timeline concerns

Now, take a look at these 10 key questions to guide your evaluation:

1. How can they support you as a stock plan admin?

You deal with many admin tasks on a daily basis from setting up an equity plan to issuing grants, tracking activities and managing reporting.

Ask how the equity management platform can support and simplify these. For example:

  • Can the software manage all the existing award and plan types?
  • Any features to save you time such as automated notifications and bulk import?

Also let the vendor know your equity plan’s needs (e.g. are there many equity types, complicated vesting rules or tens of thousands of participants?), business stage (e.g. public or planning to go IPO), and plans for the future (e.g. aim to expand globally?), so they can arrange a tailored product demo to demonstrate how their tool can fit your requirements.

2. How can the vendor support your employees?

Employee experience is just as important as admin efficiency.

Look for a platform providing an online participant portal where employees can monitor their equity, track vesting schedules, download contracts and documents and make transactions.

It’s also good to know if the vendor provides a service deck to answer your employees’ enquiries about their equity holdings. This will significantly save you time and effort.

3. Does the vendor provide the functionalities that your internal teams need?

Beyond the stock plan admin, your HR, legal and finance teams will interact with the software.

Involve your other stakeholders in the RFP (request for proposal) process to gather all their questions, needs and concerns. This allows you to select the most ideal, all-around platform to accommodate your team’s needs such as segregated access levels, different types of reports, local compliance and the ability to track performance-based awards.

4. Is it easy to integrate into your existing systems?

Seamless integration into your current HR and payroll, accounting and tax software can improve operational efficiency without the need to switch platforms constantly or copy and paste data.

Tell the software supplier the current software you are using and the way that you want your data to be blended into the software. Also, ask if that would need your team’s input.

5. What are their reporting capabilities like?

Equity compensation comes with extensive financial reporting. If the equity management software offers you pre-built, audit-ready reports, it will save you and your team significant time.

Does the equity platform support the accounting standards such as ASC 718 (US GAAP), IFRS 2, ASPE and JGAAP you need? How many types of financial reports does it come with? Does it also support custom-built reports? Are they real-time?

Your finance and accounting team would be able to help you refine these questions.

6. Are they capable to scale with you as you grow?

As your company expands, so will your equity needs. Will the software accommodate the growth whether that means more employees and jurisdictions, complex equity structures or even going public?

There are multiple occasions where clients came to us and said their provider couldn’t scale with them as they were going public.

It’s worth noting that an equity compensation structure can be very different between a privately held and publicly traded company. For example, when you plan to go IPO, you may intend to offer more equity awards with complex vesting rules, and require a robust reporting suite and seamless trading solutions for employees.

Choose a provider that can grow with you to avoid the hassle of switching providers down the line.

7. How does the vendor help you stay compliant in each jurisdiction where you operate?

Any company operating a global share plan must comply with global legal and tax requirements. For example, there will be securities, foreign exchange and employment laws to consider, as well as tax regulations to understand in each country. These regulations may differ depending on the type of plan operated. There can be filings required or local approvals which must be obtained before a plan can be used. In some cases a company may need to amend how a plan is operated or use a different plan entirely.

If a company uses a tax advantaged plan, it may need to monitor how that plan is operated in order to obtain the tax benefits, e.g. in the US, Incentive Stock Options (ISOs) have a $100k limit per employee per year, whereas a Section 423 ESPP has a $25k contribution limit per employee per year.

Some providers have widened their remit to provide support to their clients and their employees regarding legal and tax issues. It is important to check if the provider can offer that support to help you stay compliant and what methods they will use.

Ask the supplier how they keep you aware of any updates in each jurisdiction. Regulations can change in any jurisdiction from time to time. Companies need to stay aware of those changes, or else they may inadvertently fail to comply with local requirements.

It is important to note that a failure to understand global regulations can lead to a number of problems including but not limited to fines and penalties, administrative errors, costly time consuming oversights, damaging relations with employees and reputational damage.

8. Your employee and equity data is important – how do they secure them?

Data security should be a top priority when onboarding an equity management platform as it holds a wealth of sensitive data about your employees and business.

Some questions that should be answered include:

  • What’s their data infrastructure like?
  • How is the data stored and protected?
  • Any mechanisms to protect your admin account against stolen passwords?

9. What’s the equity plan migration process like? How long does it take?

Migrating your equity plans to a new provider can be a complex process where involves extensive file gathering, data import and reconciliation and testing.

  • What support does the provider offer for data migration?
  • Do they need internal team’s input?
  • How do they ensure accuracy and minimize data loss?

Understanding the process and timeline will help you minimize disruptions during the transition. Professional vendors like J.P. Morgan Workplace Solutions would have a systematic workflow set up and share the project timeline with itemized tasks to improve transparency.

10. Who can you reach out to if you need help at any stage?

Instead of being assigned with a ticket ID and repeating yourself every time, you need someone who knows your name and equity plan needs.

Having a dedicated account manager together with a robust team of stock plan analysts can help you ensure peace of mind as you adopt the new system. A large portion of the queries we’re getting from companies is about having this type of support available and on hand.

Contact J.P. Morgan Workplace Solutions

At J.P. Morgan Workplace Solutions, we have extensive, hands-on experience helping companies onboard their equity plans onto our equity management platform.

We’ll first discuss your equity plans, current and future needs and input required from your end. Then, we’ll share a project plan that provides every step that needs to be completed, so that you’ll understand the process overview, where you stand and what the timeline is like.

Regardless of the industry you’re in or the company stage you’re at, if you would like to find out more, then get in touch.

This publication contains general information only and J.P. Morgan Workplace Solutions is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. J.P. Morgan Workplace Solutions’ Insights is not a substitute for professional advice and should not be used as such. J.P. Morgan Workplace Solutions does not assume any liability for reliance on the information provided herein.