After establishing the legal framework and obtaining all necessary approvals, the company can begin issuing the options. This process is more easily done on a specialised platform, which enables participants to sign and view their agreements directly. Additionally, careful consideration should be given to how this information is communicated in a simple and clear manner.

Choose a platform or other tool

Companies can start out by using only Excel to keep track of the options issued, but it is not recommended as it can easily result in human or calculation errors. Special care should be taken so that the options that return to the pool after employees leave are properly tracked. The employee options information should be regularly updated, and only very few people should have access to editing the file. With an Excel or Google sheet file, there is also the downside that employees will not have a good visual overview of their options vesting.

Using a specialised platform to manage your grants can help:

  • streamline the process
  • reduce errors
  • increase transparency and employee engagement
  • keep the information in one secure place

[fs-toc-h2]What to look for when choosing an employee stock option plan management platform?

  • Functionality.
    Is the platform a good fit for your company’s size? E.g. some platforms are meant for bigger companies. They offer a lot of functions which can be overwhelming for a smaller company and cost a lot of money to use. On the other hand, platforms meant for more early-stage companies might have too few functions and possibilities to customise the user journey if the company already has hundreds or even thousands of people.
  • Extra support.
    Is the platform just a tool you can use, or will the provider also be able to help you with any additional questions you might have about stock option plans and their management? Usually, one of the first option plan management tools is Excel. The next step from that is already a whole variety of different platforms where it is possible to either manage employee stock option plan data or also include employees in the process. The best providers offer extra help in the format of either legal or educational support.
  • Pricing.
    Consider the pricing structure as well as the implementation cost. Some platforms have high fees for implementation alone with every additional request adding more charges.
  • Ease of use.
    Not all platforms are intuitive or easy to use. Some are cluttered with legal jargon, others look outdated and difficult to use.
  • Security.
    Employee stock option plans include personal and financial data. If several people in your company need access to the system, check if there are adequate access controls. For the employee side, see if there is a 2-factor verification.
  • Integration capabilities.
    For bigger companies, any possibility of streamlining complicated and bulky processes is a huge win. Integration possibilities with an HRIS can save a lot of time when options are issued in bulk.
  • Scalability.
    If a company is growing at a very fast pace, it is important the platform will able to keep up with the pace of added participants and the increasing complexity of option plans.

In addition to all the aforementioned considerations, you could get valuable insights by asking to talk to one of the provider’s existing users. It is not always possible to arrange, as not all users are willing to spend their time giving feedback, but it is worth asking.

Create a communication plan

[fs-toc-h2]Define your goals e.g. educating employees on the benefits of the plan

When you’re first launching your incentive plan, you will have to find a good ‘why’. Why is the company offering this benefit? What can the company and employees expect to gain? What is the purpose of it? Once you have the why, find a way to weave a compelling story around it so it would be more easy for everyone to understand something that can often come across as boring legal text. E.g. you can emphasise how everyone will be able to feel as if they are also owners of the company and take responsibility for making sure the company thrives.

[fs-toc-h2]Identify your audience e.g. employees, recruiters, team leads

It’s always good to divide your communication between different groups to make it more useful and easily digestible. Employees will need to know information pertaining to them, team leads will need to know the information about their team and how to handle their questions, and recruiters need to know the best way to sell the incentive plan to candidates and have enough knowledge to answer all their questions.

[fs-toc-h2]Choose your channels such as email, in-person meetings, webinars, or videos.

Each of these categories has their own advantage. An all-company-wide webinar allows for asking questions in a collective setting, and an ‘only leads’ session is better for explaining how to deal with difficult questions e.g. why is my teammate getting more options than I am?

[fs-toc-h2]Craft your messages

Develop clear and concise messages that explain the plan's purpose, benefits, and eligibility requirements. Use simple, jargon-free language and focus on the key information that employees need to know.

[fs-toc-h2]Create grant agreements for signing

Each time options are given out, you need to make sure you are using the correct documents and that they are filled in with the correct information in regard to the participants.

[fs-toc-h2]Decide whether to do this digitally or on paper

In some countries, there can be additional conditions that have to be fulfilled when choosing one or the other. For example, in Estonia, if the grant agreements are not signed digitally, there is an obligation on the company to notify the Tax and Customs Board of issuing the options. It’s worth checking if in your country there are any such requirements.

[fs-toc-h2]Have a plan on where to store the information securely

Whether it is paper contracts in a locked cupboard or digitally signed documents on an options management platform, make sure you think about where and how you store the information for both security reasons as well as easy access.

[fs-toc-h2]Formalise the grant documents and give out the grants

Before giving out the first set of grants, you have to know what needs to happen legally so the process would be correct, meaning that although you have previously acquired corporate approvals for the plan, each grant might also require approval from the board before signing the grant agreements.

This process differs from country to country and can also differ from company to company in one country. But to give you an idea – one possible sequence of events can be seen below in bullet points.

This sequence can only happen once the employee stock option plan or other incentive plan has already been approved for use by the company. You have created an option pool and have the necessary legal documents to complete the process.

  • Gather the information needed to give out the grant: e.g. name, address, amount of options, vesting start date, length of the vesting schedule, whether vesting has a cliff or not, any performance conditions, etc.
  • Create the necessary board approval documents - a document that can be signed or otherwise approved by the board that holds all the information about the grants you want to issue.
  • Have the grant agreements ready to be signed by the employee and the company (fill them in with appropriate information).
  • Have the board approve the issuing of the options to the listed employees.
  • Give or send out the grant agreements to the employees and the company representative(s) for signing.
Pro Tip
In some countries, the date when both parties have signed the grant agreement can be an important date for a tax advantage (e.g. in the UK and Estonia). The tax advantage can take effect more quickly if you issue the grants to new employees as soon as possible.
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Guide was carefully crafted by Kaisa Luht, former rewards lead at Wise
Kaisa Luht
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