Is there a cost effective software for stock plan administration? We are a small start-up company looking to set up an ESOP.
Anonymous (Controller)
| Nov 30, 2011- Home
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Company: Global Shares
There are several software platforms in the market that address the needs of small and mid size companies, both private and public. This requires that you sign up for a license fee and learn how to use the software yourself to manage your equity compensation. This may not be as easy as it sounds and we have found that a better solution for many companies is to outsource this function to an expert in this field. This reduces your legal risk, and allows your internal staff to focus on more strategic or operational demands of your business. At Global Shares we can provide you with either option. If you want a self-service model that includes some excellent software, we have solution we call Stock in a Box. If you desire a full outsource solution, we can provide that as well.
Company: Starbucks Corporation
We here at Stabucks used Equity Edge software for years before moving our administration to SAP and Fidelity. We still use Equity Edge as a stand alone stock admin. tool for our International partners. From my experience with our Stock business client (I am a functional analyst on the SAP support team) the tool is easily managed by uploading spreadsheets, inporting data using custom interfaces, etc. Here is the link to the web page to tell you a little more about the technical pieces to consider.
https://content.etrade.com/etrade/corpservices/datasheet_EE7.pdf
Kind Regards,
starbucks [dot] com
Annette Van Dervort
systems analyst II
Starbucks Coffee Company
avanderv
Company: Stock & Option Solutions
I'd just like to point out that that link about Equity Edge is to an older version of the software. The current software version is 8.1 and there is also an Equity Edge Online version available now.
Company: National Center for Employee Ownership
There are numerous administration solutions available but which is "cost effective" will really depend upon a company's needs. That is true even if you're only looking at the administration aspect of the program. Each company's needs vary and the functionality of different systems varies widely. The key to getting what's most cost effective for your company's needs is to clearly define those needs first and then do a thorough vendor comparison across the available systems that appear to meet those needs. I've created a comprehensive vendor comparison form that I'd be happy to share with you. I've also designed an equity administration co-sourcing delegation checklist that provides a good understanding of the types of activities involved in managing an equity compensation plan and allows you to get clear about which activities are best to outsource and which activities you want to keep in-house. Send me a private message with your email address if you'd like me to send you either of these templates.
Company: The Bensman Group
Congratulations on establishing an ESOP. As I'm sure you're aware, studies have shown that ESOPs motivate employees to higher levels of productivity and profitability.
I assume you've already completed the feasibility study and are in the process of structuring the ESOP.
This is a departure from your question and forgive me for being opportunistic here. In the course of establishing your ESOP, be sure to complete a repurchase liability study ("RLS"). And, as a result, establish a plan to FUND that liability.
The purpose of an RLS is to project the emerging liability resulting from the company's legal obligation to repurchase stock distributed to ESOP participants due to death, disability, retirement, termination, or as a result of diversification as required by law and permitted under the terms of the ESOP.
The repurchase obligation is the liability a company incurs as a result of the requirement that it repurchase shares of stock distributed by the ESOP subject to the "put options" required by law. The ESOP can also satisfy this repurchase obligation through cash distributions. The ESOP repurchase obligation represents a claim on future cash flows of the company. Just like other claims on future cash, the ESOP repurchase obligation needs to be quantified and included as part of the company's cash projections. This is one of the leading reasons for failed ESOPs.
In the interest of full disclosure, I do not perform repurchase liability studies. However, I do work with ESOP advisors to design solutions to fund those liabilities.
Are you aware if an RLS has been completed yet?
Company: National Center for Employee Ownership
Hi, Anonymous. This question occurred to me when I crafted my response to you, but it arises again in reading the latest response to your question. When you say ESOP are you meaning an employee stock option plan? Or do you mean the federally regulated Employee Stock Ownership Plan?
The acronym ESOP is often used casually by people from outside of the United States and people new to equity compensation to refer to employee option plans. However, ESOP is the codified reference to Employee Stock Ownership Plans which are federally regulated under ERISA.
I assumed by your question saying "We are a small start-up company" to mean that you were simply referring to an employee stock option plan and responded from that perspective. As demonstrated by Robert Jevens' response above, ESOP plans are very expensive to implement and are generally not feasible for a small start-up company. In order to ensure that you get the advice you're really seeking, you may want to keep this tip in mind when researching and vetting consultants to assist you with establishing your equity compensation plans - if you're talking about an employee option plan call it an "option plan", if you're talking about the federally regulated retirement plan then you can call it an ESOP.
Company: National Center for Employee Ownership
Oh, and if you are looking to establish a formal ESOP, then I'd invite you to become a member of the National Center for Employee Ownership (www.nceo.org). The NCEO was established 30 years ago to provide specialized education to companies and their employees about ESOPs and has a great bank of educational webinars, publications, and consultant referral lists. DISCLAIMER: I am the product manager for equity compensation products (the non-ESOP programs) at the NCEO.
Company: The Bensman Group
Achaessa, excellent point. That should have been the first question.
Company: LogLogic
We (late-stage startup, venture funded) use CapMx (owned by www.svb.com) to manage our equity and it works very well and is affordable for a small to medium/start-up companies. We migrated from a system that was mananged by our lawyers. The only negative is that it's not setup for public companies...so we would need to migrate should we go public.