How to Educate Employees About Your Equity Plan

If your company offers an employee equity compensation plan, chances are you provide some education about the plan as part of your employee onboarding process. After all, you likely created the plan to provide your staff with an opportunity to participate in your company’s long-term success—making it not only an attractive recruitment and engagement tool but also an important element of your employee retention strategy. 

However, conveying the value of equity plans, both during onboarding and over time, may be harder than you think. In some cases, employees may not fully understand the ins and outs of equity ownership, particularly in a private company context. Or perhaps they do not fully grasp how the plan works or how much their equity may be worth over time. Plus, equity-based compensation jargon can quickly get confusing. Mention restricted stock units (RSUs) and non-qualified stock options (NQSOs), and more than a few questions may arise. Start talking vesting and valuation, and eyes may get glassy. By the time you’re ready to chat about tax consequences, your employees may be thinking that participation in your equity plan may be more effort than it’s worth. 


And that would be a shame, not only because you’ve invested in making the plan a success, but because you may risk missing the potential benefits of active plan participation—such as increased employee loyalty and fostering a culture of ownership. 


The good news is that there may be ways to promote equity plan participation among both your new hires and longer-term employees. It just takes a couple of sound approaches when communicating equity plans and equity participation agreements. 

Start With the “Who”

By creating a unique equity communication strategy for different groups within your company, you may be able to engage a larger swath of your workforce. Your audience could be executives, younger employees or those nearing retirement, or perhaps global employees or new hires. Regardless of how you define your various target audiences, keep in mind that some employees may be unfamiliar with equity as compensation, while others may have a full grasp on it. As such, it may make sense to offer different levels of education. Consider creating a tiered communication program, where novices receive the most detailed training and extra support, and experienced equity plan participants can opt for just the highlights. You may also consider taking steps to ensure each employee understands their equity participation agreement, which may include information about vesting schedules, cliff periods and non-compete language. 



Keep it Simple 

No matter how well your employees understand equity-based compensation, no one wants to wade through dense documents full of technical terms. To potentially boost plan participation, consider using accessible language in your communications. Using concepts your employees understand may make equity compensation more approachable. 


It may also be helpful to align your equity program communications with your existing corporate brand. Morgan Stanley at Work can support you in these efforts by allowing you to customize your equity administration platform to reflect your brand identity. Additionally, you may be able to personalize your participants’ experience by allowing them to select the currency and language of their choice when viewing the platform, which may help your employees around the world to feel at home.

Use concepts your employees understand to make equity compensation more approachable and potentially boost plan participation.

Communicate Across Channels 

Learning styles differ, which is why communication across various channels may heighten the odds of reaching the most people possible. While some of your employees may review your entire plan booklet, others may prefer shorter articles shared over your company’s intranet. Similarly, some may prefer face-to-face interactions, while others may learn best through reading. To increase the odds of reaching them all, consider implementing a multi-channel communication strategy that uses emails, videos, webinars, print, text messages, events and more. You may also want to consider ways to make the education interactive, such as through online learning modules or gamification. 


Seize Every Opportunity

While a lot of equity plan education may take place during onboarding, you may not want to stop there. In fact, it may make sense to provide ongoing access to your educational materials through an easy-to-navigate centralized portal. A good equity plan management platform makes this possible by providing you with videos and other educational resources directly on the platform. It can also help you schedule communications on an ongoing basis. Talking to your employees about equity throughout the year may help them better understand the value of participation. Potential milestones you can use to discuss your equity plan include not only the plan launch date, but also new enrollment windows, new grant issues, vesting schedules, during proxy season and even during employee performance reviews or at offsite training events.


Talking to your employees about equity throughout the year may help them better understand the value of plan participation.

Set Participants up to Succeed 

Employees who don’t fully understand their equity compensation may fear making a mistake or hesitate to become active plan participants. To help simplify the process, Morgan Stanley at Work allows participants to review their award agreements, accept grants and receive automated notifications about upcoming award-related events directly through the system. Through a single sign-on, participants can gain a clear, consolidated picture of their equity awards and savings. The platform’s full functionality is also available through a mobile app, empowering participants to conduct portfolio forecasts, check balances, track vesting events, exercise their options and sell or transfer shares no matter where they are.  


Measure Your Results and Refine Your Strategy

To encourage ongoing participation in your equity plan, it may make sense to tailor your communication messages to achieve specific goals. For instance, if your aim is to increase plan enrollment, you may want to focus your communications on the potential costs of missing out. If you hope to increase participant engagement, it may be helpful to track activity completion and proactively reach out before critical dates to encourage account activation or remind employees of your annual vesting schedule. And if you are trying to foster employee retention, consider making a connection between your company’s equity plan, its culture and an employee’s total compensation.


If you’re looking for more communication ideas, whether you’re onboarding or as part of an ongoing educational campaign, then please contact us.

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