Does One Size Fit All? Getting the Most Out of Your Equity Plans

In this episode of the Equity Expert podcast, we are joined by Stepan Kzrtian a former corporate lawyer with over a decade of experience helping founders navigate the legal journey across all stages of the startup lifecycle.

The key points of this episode include:

• Understanding the 83(b) Election
  
  
• Issuing Founder Stock
  
  
• Cap Table Management
  
  
• Should You Grant Equity as a Percentage

Additional Resources:

83(b) Election: The Multi-Million-Dollar Ticking Time Bomb

What is the 83(b) election?

Kathy Son on the key moments that helped her career in equity compensation and tactics that can help you grow your own career. 

Episode Notes:

• Kathy’s start in equity compensation (1:06)
• When she realized she wanted to pursue this profession (3:14)
• Key moments in getting to her current role (5:33)
• Strategies to advance yourself in equity comp (8:06)
• Advice to her younger self (10:52)
• Advice for advocating for yourself (14:54)
• Current goals (18:27)

Learn how to prepare for T+1 and how the shortened settlement cycle will change stock plan administration from a day-to-day and strategic perspective.

Episode Notes:

•  Effect of T+1 on day-to-day operations (0:11)
•  Impact of T+1 on strategy for stock plans (3:32)
• Trading windows and T+1 (6:50)
• Risks created by a shorter settlement period (8:58)
• Working with internal and external partners to ensure a smooth transition (10:35)
• How T+1 will change the future of stock plan administration (14:34)

Complying with SAFE, Circular 35, and other complexities of offering equity awards in China.

Episode Notes:

• SAFE registration for options and awards (1:52)
• SAFE registration for ESPPs (5:10)
• Establishing a foreign exchange bank account (7:42)
• Taxation of equity awards in China (10:06)
• Possible elimination of preferential tax treatment (14:57)
• Where to hold shares for Chinese nationals (21:22)
• Mandatory cashless or same-day-sale programs (22:28)
• Current events (25:15)
• Best practices (27:31)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends

Additional Podcasts in This Series:

• Trends in Mobility Compliance
• Tax Withholding Practices for Equity Awards

Data on how companies manage on-time tax deposits, determine tax withholding rates, respond to employee requests for additional withholding on equity plan transactions and more.

Episode Notes:

• Complying with IRS deposit deadlines (1:36)
• Tips for depositing taxes on time (3:45)
• Pre-funding tax deposits (5:25)
• Defining FMV as the prior day’s closing price (6:59)
• Allowing employees to request additional withholding on equity plan transactions (8:35)
• Determining tax withholding rates for non-US employees (14:00)
• Frequency of reviews for global tax compliance (21:06)
• Methods of staying informed of global developments affecting equity plans (22:37)
• Working with local in-country personnel to stay informed (24:49)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends
• Podcast: Trends in Mobility Compliance

How companies track mobile employees and manage tax compliance for their equity awards.

Episode Notes:

• Global vs. Us domestic mobility (1:44)
• Business travelers (10:19)
• Remote workers (14:30)
• Getting budget for mobility compliance (21:06)
• Tracking employee locations (22:37)
• Use of third-party advisors to assist with tax calculations (26:51)
• How to approach mobility compliance (29:55)
• Tracking mobility employees is important even with no other compliance (36:44)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends

Why stock price volatility is a problem when it comes to sizing grants and how using a multiday average and other approaches can help you manage your burn rate.

Episode Notes:

• How companies typically determine grant sizes (0:58)
• The effect of declining stock prices on grant sizes (2:15)
• Pay equity considerations (4:19)
• Using a multiday average to denominate grants (7:14)
• What averaging period to use (10:09)
• Disadvantages of a multiday average approach (14:15)
• Other approaches to manage share usage (15:47)
• Restricting award eligibility to control burn rates (18:38)

Resources Mentioned in This Episode:

• Sizing Grants During Periods of Market Volatility
• 2 Reasons Multiday Averages Make Sense for Grant Sizing

Galahad Dong on how his experience in the military helps him lead HRIS and Total Rewards (and equity compensation) at Simpson Strong-Tie.

Episode Notes:

• Galahad’s origin story (0:36)
• His current role as director of HRIS and Total Rewards (2:06)
• How military experience helps in managing stock plans (3:49)
• Background on Simpson Strong-Tie (4:53)
• How Simpson-Strong-Tie uses equity (6:21)
• DEI programs at Simpson Strong-Tie (8:52)
• Diversity at the NASPP and Galahad’s role on the DEI Task Force (11:53)
• Advice on growing your career in compensation (13:35)

Resources Mentioned in This Episode:

• The NASPP’s DEI Initiative

Additional Podcasts in This Series:

• Conversation with Christine Zwerling
• Conversation with Paz Dizon
• Conversation with Dana Hall

Episode Notes:

• A note on this episode (1:34)
• Section 423 qualified vs. nonqualified plans (2:13)
• Fractional vs. whole share purchases (9:21)
• Cashless funding vs. limiting funding to payroll contributions (17:14)
• Lookback pricing vs. purchase date only pricing (28:04)

Resources Mentioned in This Episode:

• Four Ideas to Make Your ESPP More Equitable
• Could Fractional Shares Benefit Your Stock Plan Participants?
• Overlooked and Underrated: Why Fractional Shares Matter
• Should You Consider a Cashless ESPP?
• 2020 NASPP Deloitte Domestic Stock Plan Administration Survey

Additional Podcasts in This Series:

• Half Empty, Half Full: A Closer Look at TSR Awards
• Half Empty, Half Full: Thoughts on the SEC's Rule 10b5-1 Proposal
• Half Empty, Half Full: Our Thoughts on Four Stock Plan Topics

Episode Notes:

• What are cashless ESPPs and how do they work? (3:50)
• Outset Medical’s path to a cashless ESPP (9:08)
• Features of Outset Medical’s new cashless ESPP (11:44)
• Employee reaction to Outset Medical’s new ESPP (13:31)
• Common concerns about cashless ESPPs (15:01)
• Current interest in cashless ESPPs (17:56)

Resources Mentioned in this Episode

• The Problem with ESPPs
• Should You Consider a Cashless ESPP?
• Four Ideas to Make Your ESPP More Equitable
• Are You Overvaluing Your ESPP?