Equity awards continue to be an important component of employee compensation, and companies invest significant resources into an equity plan. The return on that investment is directly tied to the employee's actual and perceived benefit from the plan. If the employee does not understand the plan benefits or how to participate in the plan, the company will not achieve the maximum return on its investment (ROI). Effective communication leading to employee understanding is essential to achieving the maximum ROI. This publication, part of the GPS (Guidance, Procedures, Systems) series from the Certified Equity Professional Institute, focuses on the strategic and practical issues of participant communication in a variety of types of equity plans: ESPPs, restricted stock units and awards, and options. An in-depth look at the legal implications of communication plans, and an investigation into the use of social media (email, blogs, Twitter, Facebook, etc.) for various types of communication are included. Case studies of a wide range of companies (size, industry, geographic location) are used to illustrate the many issues that organizations face in dealing with the complexity of communication.
Table of Contents
2. Executive Summary
3. Communication Strategy
4. Framework for Communication
5. Information to be Communicated
6. Special Issues
7. Communicating Equity Compensation
8. Case Studies
Appendix A: Acknowledgements
Appendix B: Glossary
A variety of company personnel distribute information regarding stock plans, including Equity Compensation, Human Resources, Legal, and designated managers. The involvement of each group may vary by award type, size of award, or level of award recipient. Equity Compensation may have ownership of the communication plan and may be responsible for general presentations regarding the stock plan and communication regarding employee transactions. Human Resources ensures that the communication is consistent with the Company's overall communication strategy and may have ownership of the communication plan. Human Resources usually provides initial details about the Plan to employees. Local country Human Resources personnel may be involved to facilitate communication with non-US employees. Legal is responsible for the summary of the Plan and educating employees on the Insider Trading Policy. In addition Legal reviews appropriate communications to ensure the Company's legal requirements are met and legal risks are properly addressed. Designated managers may communicate the grant of an Award to an employee or answer general questions regarding the Plan. Managers should be guided regarding what information they are authorized to disseminate to prevent potential misunderstandings. Equity Compensation at CME Group (see subsection 8.2) provides training and talking points to appropriate managers prior to the annual grant process. In most cases managers should not be responsible for communicating critical or legally required information. See Exhibit 3-1 for a summary of roles and responsibilities typical in many companies.