NORTH AMERICA CHAPTER

In today's rapidly evolving business landscape, strategic alliances are no longer optional—they're essential for navigating complexity and fostering innovation. Companies that embrace collaborative ecosystems are better positioned to unlock new opportunities, mitigate risks, and achieve sustainable growth in the competitive equity management space.

With their combined decades of experience in the equity compensation landscape, Hannah McCullough, Justin James, and Dan Mullen from insightsoftware offered valuable insights and practical strategies for companies striving to amplify their equity programs and stay ahead in a dynamic regulatory environment.

The equity management ecosystem: key players

Successful equity management relies on a collaborative network of service providers, each offering specialist expertise:

• Software providers: Companies like insightsoftware deliver technology for reporting, data management, and automation. Certent Equity Management from insightsoftware simplifies equity administration and enhances accuracy.
• Administrative service providers: handle day-to-day operations like grant administration and stock settlements.
• Brokerage and participant servicing providers: facilitate transactions and provide employee education and support.
• HR partners: manage employee data and integrate equity compensation into broader benefits programs.
• Transfer agents: maintain stock ownership records and ensure compliance.
• Tax support providers: offer expertise in navigating complex tax regulations.

The challenge is two-fold: firstly, selecting the right vendors for each of these roles, and secondly, ensuring these players work seamlessly together to share data and coordinate processes. As Dan Mullen noted, issuers should consider "best in breed, best in class solutions" that integrate and deliver seamless experiences.

Key challenges for issuing companies

Managing equity plans is a high-stakes responsibility for issuers. They must coordinate multiple providers, each with their own systems, processes, and data formats. The main challenges include:

1. Compliance and regulatory complexity
2. Employee education and engagement
3. Managing global equity plans
4. Data accuracy, privacy, and record-keeping.

Actionable steps to successful strategic partnership integration

The webcast highlighted that overcoming these challenges requires issuers to embrace technology and cultivate strategic partnerships. Cutting-edge solutions, built for automation and seamless integration across the entire equity management ecosystem, are crucial.

When solutions work in harmony, they enable more efficient transactions and user experiences, ultimately driving optimal outcomes for both issuers and their employees.

Here’s how to identify and maintain successful partnerships:

• Define clear goals from the outset: outline specific objectives for equity management.
• Assess current capabilities: identify gaps that partnerships can address.
• Research potential partners: look for proven companies with strong reputations.
• Evaluate integration capabilities: ensure seamless integration with existing systems (insightsoftware’s Certent Equity Management is designed to do just this).
• Establish clear communication: foster open communication and regular check-ins.
• Monitor performance and provide feedback: continuously assess and adjust for the best outcomes.

Embracing partnership for equity management success

Modern equity management is inherently complex, making strategic partnerships essential in overcoming its challenges. By leveraging integrated solutions like Certent Equity Management, and fostering strong relationships with key service providers, issuer companies can streamline equity plan administration, ensure compliance, enhance employee engagement, and enjoy the impact of equity compensation as a tool for attracting, retaining, and motivating talent.

The key takeaway is clear: a collaborative, integrated approach is no longer a luxury—it is a necessity for success in today’s dynamic equity management landscape. For more information or to arrange a demo of Certent Equity Management, contact Justin James, Hannah McCullough, or Dan Mullen directly.

Watch a recording of the webcast on GEOlearn: HERE.

In 2025, employee ownership (EO) is expected to expand globally, with the United Nations declaring it the International Year of Cooperatives, emphasizing the role of worker cooperatives in sustainable development. Government policies at the local and national levels will increasingly support EO as a strategy for economic resilience, with new legislation and funding mechanisms promoting transitions to employee-owned businesses. Additionally, private equity, diversified capital providers, and rising trust conversions will contribute to a broader adoption of EO models, helping workers build wealth, preserve business legacies, and strengthen local economies.

Employee equity compensation is expanding beyond executives to include employees at all levels, with companies offering more flexible equity options such as performance units and restricted stock. However, increased regulatory complexity, particularly around 10b5-1 trading plans and SEC rules, requires careful planning and compliance. As equity compensation evolves, companies are encouraged to seek external expertise to navigate these changes effectively.

Companies must furnish annual information statements to employees who exercised incentive stock options (ISOs) or transferred employee stock purchase plan (ESPP) shares by January 31, 2025, and file IRS returns (Forms 3921 and 3922) by February 28, 2025 (paper) or March 31, 2025 (electronic), with potential penalties for non-compliance. Electronic filing is required for companies submitting 10 or more ISO or ESPP returns, and they must obtain a Transmitter Control Code (TCC) to use the IRS FIRE system. Additional reporting obligations include disqualifying dispositions of ISO and ESPP shares, which must be reported on employees' Form W-2, with failure to do so potentially leading to financial penalties and loss of tax deductions.