Failure to Communicate? Equity Plan Communications Best Practices Dee Crosby, Certified Equity Professional Institute (CEPI) Denise Scoville-Glackin, Equity Administration Solutions, Robyn Shutak, CEP, Global Equity Organization November 4, 2014 State of Employee Communication The Facts What are the Participants looking for? Best Practices 2 1
State of Employee Communication The Facts 2
Communication is key to a successful implementation of LTIP and ESPP, but needs to be more on the corporate radar screen Understanding, satisfaction, and participation increase with higher communication efforts Employees and employers are only moderately satisfied with communication, but the least portion of budget is spent on communication 5 3
Moderate satisfaction with communication, even though it is crucial for company success and employee satisfaction Moderate overall satisfaction as well as moderate satisfaction with tax treatment and risk profile Communication & plan design drive employees satisfaction, with communication having the bigger impact Communication is main driver of employees understanding of LTIP and thus their satisfaction 7 Unconventional communication measures are rarely used, but work best Traditional communication measures are still predominant Unconventional and innovative communication methods Have a positive impact on employee satisfaction Rarely used until now 8 4
http://www.ragan.com/internalcommunications/articles/survey_internal_communicators_dissatisfied_with_me_48321.aspx 9 9 What are participants looking for? New Employees / Plan Participants Ongoing/Mature Participants Different Demographic Groups 5
Age Culture Technology comfort zone Equity compensation experience Group Equity Compensation Human Resources Local Country Human Resources Legal Managers Recruiters Owns communication plan X X Provides initial details about the Plan to employees X X Makes general presentations on the Plan X X X Communicates information regarding employee transactions Ensures communication consistent with Company s overall communication strategy X X Provides Plan summary X X Educates employees on Insider Trading Policy X X Reviews communication to ensure the Company s legal responsibilities are met and legal risks addressed X Communicates Awards to employees X X X X Answers general questions regarding the Plan X X X X X Facilitates communication with non-us employees X Source: CEPI GPS: Participant Education and Communication. Used with permission 6
Best Practices Communication mediums How to deliver communications creatively! Dos and Don ts How to Deliver Communications An effective communication strategy needs to include a number of integrated tactics: Collateral Posters, offer sheets, and emails are just a few examples of collateral that can be used to communicate your message. Service Providing employees with different ways to access assistance can help drive engagement. 7
How Do You Deliver Communications To Your Employees? So many choices!!! 8
INFORMATION TO BE COMMUNICATED WRITTEN/ HARD COPY EMAIL VERBAL ONLINE Award Agreement 24% 22% 1% 85% Plan Prospectus 15% 18% 0% 96% Exercise procedures for stock options 20% 35% 28% 89% Tax withholding process 21% 44% 25% 72% Types of communications the employee will receive for tax filing purposes 43% 47% 20% 60% Procedures for opening a stock plan brokerage account and working with a company-designated broker or third- party administrator Details regarding payments of dividends and dividend equivalents Statement summarizing the exercise of options and the release of shares for restricted stock and RSUs When employees can expect to receive the stock and where the shares will be deposited 17% 65% 20% 80% 35% 44% 14% 75% 40% 47% 1% 77% 18% 67% 23% 53% Impact of change in status 45% 42% 24% 45% Notification of expiring options 27% 73% 19% 48% How employees can benefit from equity awards 25% 43% 38% 67% Advantages and disadvantages of 83(b) elections 19% 38% 29% 52% Guide to How-to to-read Read-a-Statement 26% 32% 8% 84% Impact of market fluctuation during the processing of the award vest/release/exercise 22% 33% 29% 49% Information regarding subsequent stock sales 39% 35% 15% 74% Source: CEPI GPS: Participant Education and Communication. Used with permission Retail chain Communicated ESPP open enrollment via scrolling text on the cash registers Videos Can be FREE (or very low cost) websites Production companies abound 3921 example video1.mp4 18 9
GlaxoSmith Kline Minisite with interactive education 19 19 Videos can also be created using PowerPoint! Posters! Coffee mugs! Tchotchkes! 20 20 10
Gilead Hands out scratcher tickets in new hire orientation at the end of stock plans session Provides a business card with contact info for stock plan services 21 Starbucks All partners get awards called Bean Stock Uses Facebook to communicate deadlines, announcements, etc.. Contest to see how many brokerage accounts could be opened in a specific amount of time 22 22 11
Top 10 Best Practices 1. Use multiple channels 2. Use the train-the-trainer approach 3. Segment communications based on plan, participant profile, location and also financial literacy of your employees 4. Be careful with new and creative communication measures 5. Keep a consistent message and branding 6. Localize, localize, localize 7. Establish clearly defined success measures 8. Center communications on the overall participant experience and address the desired action you want taken 9. Time communications with plan or life events 10. Solicit feedback on communications specifically 23 Section 16 Officer and Executives can be even worse Scott Griffith, CEO of Zipcar January 2, 2013 Avis agrees to buy Zipcarfor $500 million. Requires shareholder approval January 4, 2013 Twitter post @bostonglobeweighs in on the revolution we started at @zipcar http://b.globe.com/130ybzw January 4, 2013 Zipcarlegal department scrambles and files an 8-K to disclose the Twitter post 24 24 12
White Papers / Guidebooks On-Demand Recordings www.easiadmin.com http://www.scu.edu/business/cepi/gps_published_res earch.cfm http://www.globalequity.org/geo/ http://www.stockandoptionsolutions.com/screens/sos -Solutions/SOS-Aspirations-Conference-2014.aspx 26 13
Dee Crosby Title: Executive Director, CEP Institute Address: 500 El Camino Real Santa Clara, California 95053 Bus: 408-554-5305 Email: dcrosby@scu.edu Denise Scoville-Glackin Title: Implementation Manager Address: 4683 Chabot Drive, Suite 260, Pleasanton, CA 94583 Bus: (925) 475-4382 Email: Denise.Scoville-Glackin@easiadmin.com Robyn Shutak, CEP Title: Senior Director, Programs and Member Services Address:1442 E. Lincoln Ave. #487, Orange CA 92865 Bus: 714-630-2908 #103 Email: robyn.shutak@globalequity.org 28 14
15