Effectively Educate Your Stock Plan Participants

By Josh Feldman. Equity compensation is a recruitment and retention tool, but a complicated one at that. Regardless of the equity vehicle used, the intent of the program is to offer highly motivating incentives that drive appropriate employee behavior. The trouble comes with properly and effectively educating a wide range of plan participants; something much easier said than done. In the first installment of our two part series on effective equity plan communication, the focus will be on educating plan participants, why education is so important and a few tips to strengthen your organization’s equity education plan.

Before jumping in, let’s take a step back and think of the big picture. What is the purpose of an equity compensation plan? The answer – to attract and motivate employees and drive appropriate behavior. It is important to think long and hard about ways to properly educate and communicate with plan participants, as both components lay essential groundwork for a compelling equity plan. Two questions should always be in the back of your mind: Do the participants understand the intrinsic value of the awards and do they have a handle on the implications of possible scenarios?

Unlike stock plan professionals who speak equity as a second language, for the average plan participant, even the most basic equity award can appear complex. Fundamental key terms and elements of the plan should be defined and shared with employees. At a minimum, it is helpful to provide the basics on terminations, taxation, vesting, how to initiate/complete transactions and tips for interacting with a broker.

 When designing education materials, it’s key to ensure they are tailored to meet the needs of different groups of employees. Considering the different levels within an organization, your strategy must be broad enough to move across such groups, while focused enough to be a worthwhile resource. Participant-friendly educational pieces such as how-to guides, cheat-sheets or maybe even a glossary of essential items can be very effective. No need to reinvent the wheel – tap into vendor resources and share content like videos and webinars. Use your online participant portal, a trusted, regularly consulted resource for your employees, to provide instant access these important documents.

Be sure to coordinate the flow of information carefully. Especially for novices, the onslaught of documents, notices and educational materials can be daunting, and the concept of “too much, too soon” can be overwhelming. Large annual or semi-annual meetings are great opportunities for basic training, especially for major revisions or orientations – not to mention an occasion to offer employees a free lunch! Stay in touch between these sessions with a few informative alerts that nurture participant engagement.

Remember that education plays an instrumental role in the success of your equity plan. Take a closer look at how your organization engages participants from the ground up. Are your participants properly educated and informed? Do they understand the greater goal of the program and are they fully engaged? Is your organization doing everything they can to foster participant learning? Be sure to have a concrete plan of attack to address the questions above. Stay tuned for our next installment on methods to provide clear, meaningful communication and don’t forget to check out our complete guide, 4 Steps to Elevating Stock Plan Communications.

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