At Origin, we’ve seen that equity compensation is one of the topics that our users struggle with the most. In fact, half of all Origin users reach out to our CFP® professionals with questions about the value of their equity, the logistics of exercising their stock options, and the tax implications of their compensation.
Without access to this type of knowledge, your employees can’t make intelligent decisions about their equity portfolio. Thankfully, this is an area where HR teams can step in and provide support. We’ll review four effective strategies you can use to help your employees understand, manage, and maximize the value of their equity compensation.
4 ways to help your employees understand their equity compensation
1. Provide guidance during salary negotiations
During salary negotiations, many employees blindly accept equity as part of their compensation without understanding their value. This isn’t beneficial to your new hires, as they likely won’t know how to maximize their equity or, worse, may get hit with a surprise tax bill down the line.
Instead, your team should use this checkpoint as an opportunity to educate your employees about the equity you’re offering. Take the time to explain the vesting schedule, exercising options, and tax implications—and give them the chance to ask questions. This will help your employees make informed decisions, rather than just accepting what’s being handed to them.
2. Create a library of resources
While every employee’s financial situation will be slightly different, there are general questions the majority of your workforce will have regarding the topic of equity. It may be helpful to create a library of resources to educate employees on the basics of equity compensation and address their common concerns proactively. This library can include things like:
- A one-pager that covers frequently asked questions
- A glossary sheet with equity-related terminology
- Recorded video sessions with a financial or legal expert
- A list of more in-depth resources employees can access
3. Hire a specialist
If you find yourself overwhelmed from handling employee questions about stock options, you may want to consider hiring an equity compensation or stock compensation specialist. This team member can help you manage employee questions and serve as the ‘expert’ in the HR department, freeing up more resources for you while still supporting your employees.
4. Partner with Origin
You may also want to introduce a financial wellness benefit like Origin to help your employees navigate their equity compensation. Origin’s Equity Manager contains a suite of tools that allows your employees to get a comprehensive overview of their equity, educate themselves, and even simulate the value of their compensation over time.
Our product, paired with personalized guidance from our network of CFP® professionals, will empower your workforce to make the most informed and confident decisions possible around their equity compensation.
If you want to learn more about the world of equity compensation but aren’t sure where to start, download our ebook. We put together a comprehensive but easy-to-understand guide that covers everything you need to know about the most common types of equity—including information about the logistics of exercising, vesting schedules, and paying taxes.