Maximizing Equity Compensation: The IMPACT of Effective Communication Strategies

Written By: Robyn Shutak, Liz Stoudt

Research shows that effective communication is paramount to the success of equity compensation programs. When done right, it enhances employee engagement, fosters a sense of ownership, and helps employees make informed decisions. Let’s delve into why employees are looking for more education and how a robust communication strategy can positively impact various aspects of equity compensation.

Employees are Looking for More Education & Communication 

Employees want more equity education and it’s clear. Participants don’t know how to understand their benefits or the value it brings. A 2022 Carta survey uncovered that employees are leaving money on the table and not exercising their options. Let’s dig into their findings and what they mean: 

Why Educational Content is Key: 

  • 69% of employees think it’s important for their company to help them understand how their equity works – but only 37% of employees’ companies provide adequate equity education
  • 62% of employees do not understand how to potentially maximize financial benefits from their stock plan benefits. Only 39% of respondents said they understand how taxes might impact their stock plan benefits.
  • 41% of employees don’t know who to talk to to better understand how equity impacts their taxes.

The Importance of Empowering Your Employees: 

  • 57% of companies don’t provide any equity education, and 6% offer insufficient education in the eyes of their employees.
  • 60%+ said they are likely to attend an education session on investing, stock plan benefits, or retirement.

Source: Carta 2022 Employee Stock Options Report – 129 survey respondents from Sept. 2022 – Nov. 2022

Tips for Improving Your Equity Compensation Communication Strategy

Knowing that employees are seeking more education to understand their equity benefits, a proactive approach to your communication strategy not only fosters trust and engagement but also maximizes the value employees derive from their equity. Let’s take a look at five communication tactics that can support your equity compensation strategy and help your employees gain a better understanding of these benefits. 

  1. Provide Transparent Tax Guidance: This approach can demystify complex tax concepts and empower employees to make informed decisions.
  2. Boost ESPP Participation Through Multiple Channels: Opt for engaging communication formats such as interactive workshops, informative videos, or user-friendly guides to address common concerns or explain complex topics.  
  3. Comprehensive Materials for Layoffs or Terminations: Prioritize empathy and provide comprehensive exit materials outlining equity benefits to affected employees, alleviating confusion and fostering goodwill.
  4. Tailored Communications Enhance LTI Understanding: Develop tailored educational resources that Incorporate real-life examples and interactive tools to illustrate the potential value of equity awards over time.
  5. Custom Communications that Clarify Special Transactions: Customize communication materials to address the unique circumstances of special transactions, such as mergers or acquisitions. 

By prioritizing clear, accessible communication and leveraging diverse channels and formats, companies can empower employees to make informed decisions regarding their equity compensation.

Conclusion

As the trend of employees receiving equity as part of their workplace benefits continues to grow, it’s clear that they are seeking guidance to grasp its significance and comprehend its mechanics.

Infinite Equity’s IMPACT program aims to enhance participants’ comprehension of their equity compensation by employing comprehensive education, communication strategies, and cutting-edge technology. Whether your employees prefer training sessions, concise summaries, or in-depth examples, our team excels in crafting visually engaging and informative materials. We ensure your employees gain a thorough understanding and value their equity plans. To learn more, contact us at [email protected]

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