five critical lessons i’ve learned in equity compensation plan management

I’ve had the opportunity to work a lot with companies working on their equity compensation plans and rollouts. My company, CompIntelligence, specializes in helping companies both launch and manage their stock administration plans. We’ve helped dozens of organizations of all shapes and sizes, and in that time I’ve picked up some key lessons that transcend all of them. Here’s some lessons (more like mantras, really) that I outline with my partners nearly every week.

Lesson #1: No one regrets automating their processes.

I’ve basically never seen a company not save time, money, and reduce risk by overhauling their manual processes. I have seen clients drastically reduce processing times for different events. For example, we helped a large biotech company reduce their pre-release audit timing from several days to a matter of minutes. Even they were shocked at how much we cut down their process.

Of course, at the outset of this type of project, some teams are a little nervous that their processes can be properly automated. Sometimes they are complicated. But in my experience, even if a team can’t fully automate their plan management, even automating half of it could equal major wins.

Lesson #2: Always think about scale.

It’s easy to underestimate small things when they’re not happening at scale. Simple tasks that require a person may only take a minute or two. But what happens when that task needs to be done many times, all at once? Or, has to happen several hundred times over the course of a month?

Scalability in managing equity programs is a challenge for many companies, both with growing companies and well-established Fortune 500 companies. Many organizations continue to do things the way they have always been done, regardless of growth and number of employees. This leads to an extremely time-consuming, manual process for simple tasks like updating year-to-date tax and income information. Companies need to ask themselves what a simple process looks like if it comes under immense pressure and volume. When you do that, the bottlenecks will become apparent.

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Lesson #3: There has to be one version of everything.

Because we live in a world of spreadsheets, often being shared on email, it leads to a major problem of version control. I’m talking about spreadsheets being sent, edited, resend, and saved on various people’s office machines. It all leads to many versions of a spreadsheet or document being mistaken for “the one.” This is more than an annoyance, it could be a costly mistake.

I have seen companies struggle with version control and efficiency in their grant process. One client that comes to mind was using a spreadsheet for the grant recommendation process. They would send a separate sheet to each manager with the recommended grant information and need verification and feedback from the manager before issuing the grants. This led to dozens of different spreadsheets, with some managers modifying the format. It also led to a lot of time spent tracking down each sheet and reminding the managers to provide their feedback.

We were able to solve this by providing an application for all managers to access only their direct-report employee grant information. This allowed all managers to access the information at the same time and automatically kept only one master version of the sheet. This eliminated the manual work involved in compiling the multiple versions and dramatically cut down their grant issuance timeline.

Lessons #4: When you automate, your employee engagement will go up.

There’s nothing worse than making a huge investment in equity compensation, only to have a low employee engagement. Developing a great communication plan is something we work really hard at. When possible, you don’t want to have “gatekeepers” of critical information, make it accessible for everyone at all times on something like your company intranet, OneDrive, or Google Drive.

A couple examples of this would be: Providing a centralized location for plan documents and FAQs, as well as pre-recorded educational sessions, rather than sending information via email (or paper letters) and trusting that employees would have it handy when they had a question.

Another example would be through more accurate information in their brokerage accounts. Automating as much of the stock plan process as possible has proved to eliminate errors and thus increase the accuracy (and trust) of the data employees see in their brokerage accounts. This helps to reduce confusion and improve satisfaction.

Lesson #5: Give your leadership real-time access to reports.

According to Grant Thornton's "CFO Outlook 2023: Leading through instability," CFOs are focusing on smart technology investments to enhance efficiency and customer experiences. Executives get frustrated when they can’t get the high level information they need without having to rely on a team to put together.  And admins don’t like having to drop everything to put together unexpected reports. Building automations and dashboards for your CFO might be a little bit of up-front work, but it’ll be worth it in the long run.

I think this is more about the “right” people having access to the information when they need it. Getting a CFO a report could require pulling data from multiple systems and include work from several employees. Allowing that CFO to click a button, or just get that report automatically emailed on a set cadence is very impactful. This allows for a greater deal of analysis to be done on the data. It can also help to stem any data issues before they get out of hand.

Get it right the first time. But also, don’t eat the whale.

Okay, this isn’t a lesson so much as a warning: companies sometimes love the idea of offering equity compensation so much, they don’t think through the task of implementing or managing such a program. I’ve seen many organizations rush their rollouts with poor communication and planning. Eighteen months later, they are struggling to keep up with workflows, or worse, they are faced with low participation from a team that isn’t educated on the benefits.

It’s worth getting it right the first time. But also, I often advise companies that optimizing everything takes time and feedback. At launch, you will probably have some manual processes that could be automated. It’s okay to “chip away” at these over time, so long as the potential “business stoppers” are worked out.

If you’re planning on rolling out an equity compensation plan, feel free to get in touch with me and my team for a free consultation. We can help review your roadmap and strategy, or we can build one with you.