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Equity Compensation Services: How to Choose the Right Vendor

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insightsoftware is a global provider of reporting, analytics, and performance management solutions, empowering organizations to unlock business data and transform the way finance and data teams operate.


For small startups in the very early stages of their lifecycle, managing equity compensation doesn’t necessarily pose too much of a challenge. Many companies start out managing simple cap tables in spreadsheets for a few key employees.

It’s usually not too long, though, before significant complexity begins to creep into the process. You bring new hires on board, you issue options, shares eventually vest, and some of your employees leave the company. If you are a global company, or aspire to be one, then opening new locations will complicate things even further. The process of managing equity compensation can quickly become extraordinarily difficult and tedious.

On The Phone Looking At Charts And Graphs

For most organizations, it soon grows very cumbersome to manage the complexities of equity compensation without some kind of outside help. For some, this takes the form of software and systems that assist business leaders within the company to organize information, keep accurate records, and get the right information to the right people on time. Purpose-built software helps to automate and streamline processes, saving time and increasing accuracy.

For others, it often makes more sense to outsource the process altogether, to turn to outside experts to manage equity compensation services on their behalf. Equity administration is often characterized by intensive periods of high-volume activity, making it difficult to manage internally. Whether your organization is facing stock grant refreshes, or experiencing a period of rapid growth; the tasks associated with equity administration can quickly become overwhelming. Outsourcing administration to a team of experts enables companies to do away with all of that complexity.

Choosing the right equity compensation services provider can be confusing, though, and will potentially be time-consuming. There are a spectrum of companies with a wide range of different capabilities and resources. How do you choose the right one? To help you narrow down your options and speed up the process, this short guide explores the key factors you need to consider in selecting the right vendor for equity compensation services.

Look For Capabilities That Can Address the Needs of Global Companies

We live in the midst of a truly global economy. In today’s world, even very small companies frequently carry on operations in multiple countries and regions. It’s not uncommon for businesses with fewer than a dozen employees to have sales offices in four or five cities spread over three continents. That means dealing in multiple currencies, with employees located in different jurisdictions. Effective equity management services and tools must be capable of handling these multiple currencies, languages, and jurisdictions.

There are significant implications here in terms of tax and compliance. Equity compensation service providers must understand the particular requirements of each jurisdiction (including tax compliance and regulatory reporting), and should have experience working with securities traded on multiple exchanges throughout the world.

Looking At A Graph On A Computer Screen

If you choose a provider without this depth of expertise, you might have to change your equity compensation management software or service providers at some point down the road. Making that kind of change midstream could mean having to do so at the very time that your company is expanding geographically, which creates headaches and unnecessary distractions you want to avoid. If your company already does business globally or intends to do so, as most eventually do, then it only makes sense to select a service provider who understands how to deal with the complexities and nuances of geographically distributed organizations.

Ask About Performance Award Management

A performance award is a grant of equity shares or options contingent on an employee’s achievement of specific predetermined performance goals. The resulting shares or options are restricted until the end of a defined performance period. This can provide a powerful incentive to deliver superior results, provided that it is managed effectively.

Equity compensation management services should be capable of handling employees with more than one performance target, and should give employees the ability to track progress within their own accounts. This requires relatively robust capabilities and can be extraordinarily difficult to manage within a spreadsheet.

From the perspective of incentive management, visibility of progress against performance awards is important. When employees have the capability to check their advancement toward meeting their predefined performance objectives, those goals remain top of mind and incentives have greater effect.

Expertise Is Key To Keeping Up With Rapid Change

The modern equity landscape is constantly changing. The technology used to manage equity compensation, likewise, continues to develop rapidly. So, too, do tax requirements, regulatory compliance and reporting, privacy restrictions, and other variables that have a significant impact on equity compensation administration.

When your company begins to grow beyond that early startup stage in which just a few key employees have equity compensation plans, there is a risk that the administrative burdens of going it alone can quickly become overwhelming. Offloading that responsibility to outside experts instills greater confidence and frees up key staff to focus on the things they do best.

Manually administering equity plans, cap tables, and financial disclosures is time-consuming and error-prone. From lack of integration across systems to the lack of audit trails and security constraints for your manual reporting, business leaders must consider the possibility that they are putting their company’s regulatory compliance at risk.

If your organization is growing and the burdens of equity compensation administration are becoming apparent, it is best not to delay finding a solution. Here at insightsoftware, we offer world-class equity management software and administration services for public and private companies. Whether you are looking for software to manage the process, or turnkey equity compensation services, we would love to speak with you. Contact us today for a free demo.