3 Equity Comp Processes You Need to Document Today

By Donna Bell. The myriad of day-to-day responsibilities associated with stock plan management can make it impossible for administrators to put aside time to document processes and procedures. But, providing clear direction and eliminating any ambiguity within your equity program is invaluable to the success of your plan.  Beyond providing your auditor with assurance that appropriate controls are in place, documenting procedures will also facilitate easier training of new team members, improve efficiency and productivity and serve as a resource if there is an extended leave of absence on your team.

The first thing you should put into writing is the pre-clearance and trading window process. Be sure you have outlined a clear pre-clearance process in conjunction with your company’s legal Procedure Process Concept For Work Instructiondepartment.  Each company has different level of controls, so be clear on whether this process pertains to executives and Section 16 officers only or for company-wide award exercises and other activity.  Documenting the procedures surrounding pre-clearance and trading window policies is critical to minimizing risk.

Clarifying each step of the equity grant processes is another key element to consider. There are many crucial elements of an equity grant that can affect the successful implementation of the right grant process. Documenting it can eliminate any doubt. From recommendation of the grant to final approval, include each step of the way such as authorizing the shares, securing board approval, and determining timely communication of the award.  Spelling out the steps will ensure consistent workflow for each grant.

Documenting your communication strategy and plan for delivering critical and timely information to your participants is another crucial workflow to specify. It will be helpful to brainstorm events that pertain to your particular equity plan (i.e. – exercise windows, blackout dates) and determine when information surrounding events should be delivered. Also, document a plan for method of delivery.  If there is an important action that participants need to be aware of, will you email them, post to your company’s intranet, use social media or other resources? Putting the plan in writing will solidify the procedure and also provide your participants with consistent messaging.

Documenting certain processes and procedures within your company’s equity process should be an integral part of your plan design. If this step has gotten away from you, you’re not alone, but set aside some time to proactively dive in and start putting pen to paper. By doing so you will create continuity in your workflows for your team members and your participants. Read 4 Steps to Elevating Stock Plan Communications to learn how effective communication can help you motivate and reward your employees.

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