Unique ways to educate employees about equity plans

Jill,

A friend and colleague of mine, Margaret O'Hanlon at ReThink Consulting, specializes in compensation communications.  She is incredibly knowledgeable and helpful in strategizing and executing communications. I would recommend send her an email.

Starbucks and Intel are also well known for their effective and innovative communications. 

Lastly, perhaps Danyle Anderson of GEO can get you in touch with some of the recent GEO Award winners for communications.  (Danyle is an ECE member, you can send her a message through the site.

Hi Jill,

Combining equity compensation education (e.g. workshop or webinar) with personalized information is the best way to make sure recipients understand what they are getting.  This is because employees can relate the education to their own grants.  Here's a sample of an "Equity Compensation Benefit Statement" http://blog.stockopter.com/files/2012/04/Sample-StockOpter-Equity-Comp-Benefit-Statement.pdf.  It contains unique information that maximizes motivation and retention and it can be customized to include plan details.  More information on stock plan participant education and decision support can be found http://blog.stockopter.com.

Jill,

You mentioned use of Podcasts as method. On myStockOptions.com we have Podcasts on various topics as an example of a format for them to consider. See link and listen to them at: http://www.mystockoptions.com/podcasts/

These can be further customized to fit your plan or customize produced.

I suggest a mix of methods for your communications program, print, online (articles/FAQs), podcasts, videos, quizzes, and in-person group and individual meetings. You can also see some of these types of materials on www.myStockOptions.com.

Dear Jill, Dan, Bill and Bruce:

Its seems to me that the most important communications from the Company about equity compensation plans to employees and executives are the following.

The nature of the grants, the value of the grants, the expectations of the grantees receiving a value from the grant,  and the proper management of those grants once received.

Grants of Restricted stock and RSU are most simple since the nature, the value and expectations of receiving that value can be reasonably calculated. Efficiently managing them is generally to hold to vesting day and the soon afterwards sell most or all of the now unrestricted stock.

Grants of employee stock options and SARs are more complicated as their nature and value is determined by reference to the grant contract documents and to the stocks value, volatility, dividends and expected risk free interest rates.

The probability of the grantee receiving substantial value and the probability of getting nothing, when all is said and done, is not that easy to calculate with ESOs or SARs.

And the proper management of those ESOs and SARs to maximize value and efficiently reduce risk to the grantee is not a simple matter. In fact this area is almost never discussed in detail because advisers to the companies know that efficiently managing grants of ESOs and SARs raise the costs to the company.

Advisers to the grantees know that also and understand their Fiduciary Duties to their clients, but are afraid of being perceived by the companies as giving advice with raises costs to the companies, especially when the wealth managers are investment bankers to such companies.

If you call any of the large or small wealth managers, they will tell you that they do not advise management of ESOs prior to exercise, but will suggest "diversification" after exercise, which eliminates alignment 100%.

And certainly the companies will not communicate efficient strategies to manage your ESOs or SARs nor will they hire others to do so.

John Olagues