The Top 5 Dos and Don’ts of Equity Plan Communications

Hands-on communications are key!

You know that equity compensation is a great tool to reward, retain and recruit a talented workforce. But some companies invest in an equity plan without getting the employee participation and enthusiasm they hope for. Stock plan administrators may rack their brains trying to figure out why – and poor communication is often the culprit.

The dos of equity plan communication

1. Do go beyond the bare minimum – Just as nature abhors a vacuum, employees may try to fill information gaps on their own. There’s a jungle of inaccurate and misleading information about equity plans on the Internet, and your participants can get tangled up in it in no time. Communicate more than just what’s required by law.
2. Do use plenty of examples – Explain how the elements of your plan work by using examples. Participants tend to retain the information better when they understand how it affects them.
3. Do use a variety of communications media – People learn differently and process information in various ways. Take this into consideration and communicate your plan using at least three media. For example, create a video or podcast for auditory learners, make an infographic or PowerPoint presentation for visual learners, and write a comprehensive plan booklet for read-write learners.
4. Do use what you already have – Instead of creating a newsletter or email circular devoted to your equity plan communications, use your company’s existing employee communication outlets. Talk to your marketing and communications departments to find out which media already receive employee attention and place some targeted messages there.
5. Do put some love into your FAQ – A well-thought-out FAQ page housed on your company’s intranet or emailed to participants can save you valuable time. Not sure where to start? Search your “sent” items for answers you’ve already provided to participants via email.

The don’ts of equity plan communication

1. Don’t wait until they’re hired – Employers often forget that an attractive equity plan can help recruit talented employees. Speak with your HR team to ensure that your company’s job interviewers and recruiters mention the plan to interviewees.
2. Don’t be a one-man band – Successful equity plan communications are a team effort. Get input from your employees by conducting a focus group and use their feedback to improve your communication tactics. Consider holding “train-the-trainer” sessions to educate managers about your plan so they are well equipped to answer basic questions from their staff. Or, enlist a third-party consultant to draft a communications strategy for you.
3. Don’t overpromise – Emphasize the benefits of your equity plan but avoid language that promises certain outcomes for the employee. Grant-based awards can deliver exceptional monetary rewards but they can also end up underwater. Be sure to explain the various scenarios and outcomes that employees may experience.
4. Don’t assume financial fluency – Avoid financial jargon, and be sure to define terms that could be easily misunderstood by the general population. Get a colleague outside of your department to edit your communication pieces for clarity and readability.
5. Don’t avoid explaining tax implications – Participants strongly consider the tax implications of certain transactions before performing them. While it may take a little more time to explain the various tax obligations of each transaction, your employees will thank you – and you’ll avoid the inevitable questions in your inbox.

The ultimate “do”– flexibility

Perhaps the most important “do” of all is to be flexible. It’s important to remember that things change. Take stock of new media that can help you reach your employees, such as internal social media networks or video channels. Try different things – a lunch and learn or a knowledge contest. With a strong, adaptable communications strategy, you’ll be well on your way to a highly participatory equity plan.