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The Value of Equity Education and Mentorship in Equity Administration

Over the years, equity has become a powerful tool for attracting and retaining employees at both public and private companies. For an employee, who is often trying to juggle personal and professional development, equity is seemingly all about upside, as that individual ponders: “how is my organization helping me achieve upward mobility and demonstrating value beyond my base salary?”

Yet, only 50% of eligible employees are actively participating in their equity plan, according to the results of Shareworks by Morgan Stanley’s latest study, “Transparency 2021: Addressing Gaps in Equity Compensation.” 1

While the majority (96%) of employees that did participate in their company’s equity plan were in fact moderately to very engaged, that 50% did not participate at all concerning. 2

One explanation, according to the executives that we surveyed, is a lack of understanding about equity among their employees.3 Despite the prevalence of equity compensation, some employees still don’t fully understand the equity being awarded to them. 4

To address this issue, stock plan administrators might consider incorporating more employee education into their equity administration. Concepts like award acceptance, exercise activity and taxation can be complicated. Not taking the time to explain those concepts may not only inhibit plan participation but also may create administration problems down the road.

Consider offering routine seminars, education articles, content and workshops that break down the value of equity (such as how options will vest and how value appreciation might affect them), the purpose equity plays in the company and the many ways employees can access and understand their various holdings.

How Often Should Equity Education be Communicated?

While schools of thought may vary, equity education should start as soon as you hire a new employee and continue throughout his or her employment.

When it comes to plan participation, communication frequency and employee engagement appear to be correlated. According to our “2020 State of Private Equity Compensation Report” organizations saw greater plan engagement the more frequently they communicated with employees:

Shareworks by Morgan Stanley (2020). The State of Equity Plan Administration at [33]

Create a Feedback Loop Through Ongoing Mentorship

If you really want to take plan engagement a step further, you may consider establishing mentorship programs intended to help employees understand how their equity holdings will change as they grow in their careers. One-off equity education and training often may not be enough to fully-communicate the intricacies of equity ownership. Providing mentorship and targeted communications is one way to show your participants that you understand their unique issues and concerns and are addressing them through your plan’s policies.


From Outcome to Opportunity through Equity Education

While greater plan participation and engagement is certainly a worthwhile outcome in itself, increased equity education can also help to foster a more inclusive and equitable workforce. Ensuring that every employee has access to, and fully recognizes the value of, his or her equity holdings can help to ensure that your equity plan aligns with the growth of your business and removes barriers to advancement for all of your employees.

Discover our Transparency 2021: Addressing Gaps in Equity Compensation” report to learn more strategies for improving your equity compensation strategy. And if you’d like to learn more about any of the equity management tools that Shareworks offers, please contact us!


1 Shareworks by Morgan Stanley (2021). Transparency 2021: Addressing Gaps in Equity Compensation  at [22]

2. Transparency 2021 Report at [22]

3. Transparency 2021 Report at [22]

3. Transparency 2021 Report at [22]

CRC 3636134 (06/21)