Insights from helping thousands of companies with their equity plan management.

September 9, 2020 LJ Jones

For more than 20 years, we’ve been helping startups and thousands of other companies like Uber, Stripe and Atlassian with equity plan management. Here’s a list of helpful insights from our experience over the years.


Educating Employees on Equity Compensation

We’ve seen many companies make the mistake of waiting to educate employees about the value of equity compensation.  They often wait for a large event, like an IPO or other liquidity event.  This is a missed opportunity.  Equity compensation can help with employee retention and hiring.  But only if the employee understands the value of the equity plan. Educating employees about an equity compensation plan gives employers an opportunity to incentivize employees and may improve tenure and company culture.


Using Old School Methods Instead of Going Digital

While public companies have essentially done away with paper stock certificates, some private companies still use them.  Creating paper stock certificates is often time consuming and may be a costly process to manually create each one.  Furthermore, when a company prepares for an IPO, all of the paper certificates need to be collected.  This may also be a costly and difficult process.


A modern equity plan management solution like Shareworks can help automate these processes and allow companies to issue electronic stock certificates. Once our clients have used a digital equity management solution, they often wonder why they ever used paper certificates or other manual processes.


Our manual process was inefficient and not user friendly. Now the user experience is completely different, so far beyond what we had been able to offer previously. From an admin and reporting perspective it’s so much easier, our Group Financial Controller has found it really simple to pull information for projects like the Annual Report. It’s immensely helpful. To add that, it’s the team at Shareworks that are there when we need them, helpful, well-informed, and ensuring that it all goes well.”  - OFX Chief Legal Officer and Company Secretary Freya Smith


Administration Costs

Over the years, we’ve seen many methods for administering and managing an equity compensation plan.  The chosen method may affect the cost of administering the plan.  As we mentioned before, the manual process of creating paper documents may be time consuming and costly.  Companies who manage the day to day task may save money over companies who rely on a law firm to do things like updating the cap table, exercising and processing grant agreements, terminations and calculating expenses for stock options issued.  


We’ve also seen cases where competitors require their new clients to re-issue existing grant agreements using the competitor’s legal language as part of the on-boarding process.  This may be costly if the client has to involve their legal team to re-issue the agreements.  With Shareworks, you can use existing grant agreements and are not required to issue new ones.


Avoiding Complex Employee Performance Rules

When a company is small with only a few employees or shareholders, they may decide create individual performance rules.  As they grow and add more employees, we’ve seen it become very cumbersome to manage multiple individual and other complicated performance rules.  We’ve seen better success and an easier process when companies structure and standardize their performance rules.  This may also be enhanced with performance rule tracking to help with stock compensation expensing.


Communication with Equity Management Team

It’s important that different departments within a company communicate with the team who manages the equity plan.  These departments may include HR, Finance, Benefits, Payroll and others. There are major events that take place at a company that may greatly affect the equity plan.  Keeping the equity team in the dark may cause complications. 


For example, imagine a company going through a round of layoffs.  The reason for termination may affect vesting schedules and ultimately the employee’s equity compensation. It would be important for HR to prepare with the equity team to ensure that employees leaving the company receive correct termination status and a correct update to their equity compensation.


Here are a few more examples of events that may affect the equity at a company.

  • Upcoming 409a valuations
  • Preparing for a funding round
  • Prepare for an IPO or tender offer
  • Updating personal tax rates
  • Mobile and remote employees
  • Layoffs, terminations and employment status
  • Movement of cost centers/departments
  • Year-to-date tax contributions


Shareworks Equity Plan Management 

Shareworks by Morgan Stanley has helped thousands of companies with their stock option and equity plan management.  Our clients include startups, emerging companies and global public companies, such as Uber, Dropbox and Atlassian. We welcome the opportunity to show you how Shareworks can solve your equity plan management challenges. 


Want to learn more about the benefits of an equity management platform? Receive a demo of Shareworks’ platform here.

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