As a stock plan administrator, you play a crucial role in making sure your company’s stock plans perform to their full potential. With so much responsibility, we decided to narrow down the list of your highest priorities to focus on five key areas.
By zeroing in on these priorities, you’ll not only minimize risks but also create a winning stock plan that keeps your employees engaged and your organization thriving.
1. Compliance: Prioritizing Compliance to Mitigate Risks
Stock plans are subject to various regulations, including tax, securities, and corporate governance laws. Failing to comply with these regulations can lead to severe penalties for both your company and its employees.
To minimize risk, compliance should be at the forefront of every equity administrator’s agenda. Companies must ensure accurate and up-to-date data, and routinely validate and reconcile records to prevent discrepancies. Administrators must prioritize compliance by staying abreast of changes in accounting standards, tax codes, and any disclosure requirements that may impact their plan. They should also seek professional advice when needed and ensure that their stock plans adhere to all applicable laws.
2. Equity: Ensuring Fairness and Inclusivity for All Employees
One of your primary responsibilities as an equity administrator is to design and implement stock plans that are fair and equitable to all employees. Regardless of job title, location, or tenure, every employee should have an equal opportunity to participate in the plan.
Evaluate the structure of your stock plans. Do they provide meaningful participation for employees at all levels? Do they foster a sense of ownership and motivation throughout the organization? If not, one way to improve in this area is by designing a consistent communications strategy for your equity plan.
3. Communication: Empower Employees Through Effective Communication
Keeping participants educated and engaged is vital to the success of any stock plan. As an equity administrator, you need to communicate with employees clearly and transparently, providing them with accurate information about the terms, conditions, and benefits of the stock plan.
To really get employees excited about their equity plans, you need an effective communication strategy that boosts engagement. A solid strategy should include personalized messaging that meets employees where they are in their award cycle, provide access to digital and in-person educational resources, and delivers timely digestible messaging that won’t overwhelm them. Well-informed and engaged employees are more likely to participate and find value in their stock plan.
4. Administration: Streamline Your Stock Plan Administration Processes
Administering stock plans, can often be complex and time-consuming so it’s important for equity administrators to have the necessary resources, tools, and expertise to manage these plans efficiently.
Administrators should streamline processes and be sure to utilize the right technology solutions so they can get trusted data and real-time reporting. For example, implementing the right software can simplify record-keeping, streamline transactions, and generate comprehensive reports with just a few clicks.
Having the right resources to administer your plan is critical too. If you have the resources in-house that are well-versed in how to implement a culture of ownership and in-depth knowledge of the systems and processes, you can manage your stock plan in-house. On the other hand, many companies find that outsourcing equity administration is the better option. It frees up time and staff in-house and also ensures that your equity compensation program and reporting are optimized to their full potential.
5. Accounting: Ensuring Accurate Financial Reporting
Your stock plans have a significant impact on your company’s financial statements. That’s why as an equity administrator, it’s essential to ensure proper accounting for the stock plan in accordance with Generally Accepted Accounting Principles (GAAP).
Work closely with your finance and accounting teams to accurately record and report the impact of stock plans on financial statements. Compliance with accounting standards will instill confidence in stakeholders and ensure transparency in financial reporting.
As an equity administrator, your proactive focus on plan design, administration, communication, and accounting and compliance is critical for the success of your company’s stock plans. By addressing these areas effectively, you can mitigate risks, enhance employee satisfaction, and contribute to the long-term success of your organization.
If you need assistance evaluating your current equity administration practices, reach out to us at Infinite Equity. We’re here to support you in creating a robust and rewarding stock plan experience for your employees.