Computershare offers plan administration to help clients manage increased complexity
This article was created in partnership with Computershare. For more information on helping your clients IPO intelligently, please visit Computershare’s website.
Mallory Hendry of Canadian Lawyer sat down with Sean Davis, Sr. Solutions Specialist – Plan Managers at Computershare, to discuss the value of employee equity plans.
Facing the momentous event of an IPO, it can be a challenge for companies to keep all the necessary balls in the air. One that a newly public company definitely wants to keep their eye on – ensuring they have competitive employee equity plans lined up for their employees.
“Employee share purchase plans, stock option plans and long-term award incentive plans are key components in attracting and retaining quality employees and should be part of any company’s strategy post-IPO,” says Sean Davis, Sr. Solutions Specialist – Plan Managers at Computershare. “The logic is if an employee is a partial owner of the company, they’re more invested: the better the company does, the better their shares do and the better off the employee is. An employee who’s a shareholder will typically be a better performer.”
One of Computershare’s key differentiators is that it’s a transfer agent, an administrative agent, and a trustee for plan types such as Employee Benefit Plans (EBPs), Employee Profit Sharing Plans (EPSPs), Registered Retirement Savings Plans (RRSPs), Tax Free Savings Accounts (TFSAs), etc., and can perform those roles simultaneously in “a one-stop-shop environment.” Acting in the various capacities for companies that are going public and post-IPO creates greater synergies by bringing “a deeper understanding of each party’s responsibilities, how the interaction should work and the implications of changes in the processes,” Davis says, adding it's not unusual for a client to engage Computershare first as a transfer agent, then again to administer their employee share purchase plans once they go public.
Many pre-IPO companies offer some sort of award plan and manage it in-house, as administration is relatively straightforward. But post-IPO, employees have more exercise/redemption alternatives such as selling shares on the market, electronically transferring them to external brokerage accounts or contributing the shares more easily to a registered retirement savings plan or a tax free savings account. And where shares are being sold, additional tax reporting obligations arise, requiring more involvement – and expertise – from the plan sponsor. Facilitating employee enrollment in a newly launched employee share purchase plan and recordkeeping of the frequent payroll deductions and corresponding share purchases or allocations is administratively complex and burdensome, and that’s where Computershare can assist.
“It’s beneficial for the client to establish a new award plan (or amend the existing plan) which contemplates the broader spectrum of events that can happen with the shares,” Davis says. “By outsourcing to us, they can focus on the core priorities of running and building the company and not on the day-to-day administration of the plan.”
With experienced Computershare Plan Managers at the helm, employee share purchase plans are soon up and running. Crucial to the success of a plan is employee engagement, and Computershare provides support in this regard through its ENGAGE product. An add-on service for clients who don’t have the internal resources available to manage employee communications on their own, ENGAGE is a comprehensive package that communicates plan design and enrollment instructions, and can include an interactive PowerPoint, a microsite of plan information, email blasts, letters from the CEO, post cards, banners, posters, etc. – clients can choose what components they feel are appropriate, and leave the execution to Computershare.
Computershare also brings to the table an employee portal where participants can see all their employee share plan and award plan holdings in a single place, allows employees to transact on their awards and long shares (often without having to involve the plan sponsor), run period statements and retrieve tax slips, as well as access support via its call centre. This greater visibility is valued by clients, as it means employees can easily see the benefits of the awards they’ve received or shares they’ve purchased.
Ultimately, clients have the comfort of knowing that employees are aware of what’s available to them, have a knowledgeable point of contact for questions or concerns and most importantly, that the plan is being administered properly and not in an Excel spreadsheet, Davis says, noting they encourage clients to involve Computershare as soon as possible to provide critical plan design feedback.
Davis recalls situations where they partner with a client later in the process and the plan text they’ve developed meets internal goals and objectives, was approved by the board of directors and even other external parties, but is drafted in such a way that administratively there’s no system out there that can manage it. Computershare, a presence in the Canadian plans administration space since 1995, knows what works and what doesn’t administratively and can provide insight into how different types of plans have rolled out, to the benefit of all parties.
“We can highlight potential challenges and allow the company to make required modifications before they go get their various approvals,” Davis says. “For employee share purchase plans, once they’ve identified their plan’s key characteristics, we pull a plan text from our library that closely aligns with that plan design and use it as a starting point. It saves a lot of time for them, and it’s quite commonly used and appreciated by our clients.”
With unmatched knowledge of the market and a thorough grasp of best practices, Computershare prides itself on offering holistic support and effective services every step of the way as clients transition to public companies. If a company is contemplating what its employee equity plan will look like post-IPO – and how it will be managed – Computershare’s powerhouse Plan Managers can keep that ball in the air during a chaotic time, Davis notes, adding “there’s a true depth of expertise in all the services we offer.”
Sean Davis is a Senior Solutions Specialist for Employee Plans at Computershare. Sean has been with Computershare for more than 30 years in various capacities, 25 of those years in Employee Plans. In his current role, Sean focuses on agreement negotiations and solutioning employee plan administrative and system requirements. In his prior roles, Sean has worked as a manager of New Business Implementation and as a Product Specialist. Connect with Sean on LinkedIn.