When designing an employee share plan, companies need to first identify the metrics to measure the program’s success.
This helps management determine the data to track and ensures the platform can capture this information to report on results. The way success is measured will differ between an executive plan and a broad-based plan.
ESTABLISH PERFORMANCE MEASURES FOR EXECUTIVE PLANS
Executive plans are often measured on:
Alignment to overall business outcomes
Driving the right executive behaviours and outcomes
Support from shareholders
Shareholders, investors and proxy advisors closely monitor executive compensation, and it is therefore crucial that boards can demonstrate an executive remuneration package that is well aligned to the interests of shareholders.
If the CEO or other senior leaders receive a large number of share grants, the company must report on this. When the compensation can be tied directly to achievement of goals, it is easier to justify to key stakeholders, making the process more objective rather than subjective.
DETERMINE METRICS FOR BROAD-BASED PLANS
Important metrics for broad-based plans include:
Take-up rates
Renewal rates
Employee retention
Voluntary turnover
Your company can track the enrolment rates for new employees and renewals for existing employees. Tracking these additional metrics can show you what is working and what can be improved, for example:
- What are the open and action rates for employee share plan communications?
- How many participants attend webinars or in-person events?
- How many employees are logging in to the employee share plan platform?
- How often are they transacting?
In addition to the quantitative metrics, there are also more qualitative measures plan managers should consider. Are employees talking about the plan? Are they excited about it? The ultimate measure of an effective employee share plan is when it empowers employees to feel invested in the success of company.
Key Takeaways:
Define employee share plan metrics upfrontRelate executive compensation to delivery on business goalsUse quantitative metrics for broad-based plans but pay attention to qualitative as wellWhat do the best employee share plans have in common?
Computershare has put together a best practice guide for a successful employee share plan.
Choose the right employee share plan provider
When you partner with Computershare, you’ll be working with the world’s leading provider of employee share plans, delivering engaging global equity plan solutions that help companies build high-performing cultures.
For assistance in improving your existing employee share plan or launching a new one, contact us today.