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Ensuring a Smooth Move to the Cloud for Equity Implementation

November 24, 2014

When you're moving an equity plan to the cloud, there are often unexpected data variances that can cause issues during the implementation process. These variances frequently impede the process and can require the implementation to be reworked. This can add headaches and may lead to out-of-scope work or budget impacts.

Getting to know the many preventable data issues before they arise can save time and money. Here is a useful checklist for troubleshooting data issues during the planning stage of an equity implementation.

Ensuring proper implementation of grant and award parameters is essential for accurate accounting. Be sure to completely understand option and award agreements, especially any unusual or one-off agreements, before processing. If any unusual clauses and amendments are missed, they will need to be reworked in the system for accurate accounting and, ultimately, expense.

  1. Run a test on the grant date versus the termination and hire dates to discover awards that were granted before a hire date or after a termination. This will allow for troubleshooting before data upload. The implementation team can determine whether a mismatch resulted in an award granted after termination. For example, this will help you discover if a post-termination award was granted due to the mismatch of a board decision and HR update. Once the test is run, you can determine next steps for treatment in the software system.
  2. Review exercise dates to confirm there are no issues with an option or award expiration. If issues are discovered, look into why the exercise was allowed. For instance, did the post-termination exercise period lapse before exercise?
  3. Are enough shares vested when exercised? Perhaps there was an award amendment (see item 1), which accelerated vesting or the plan allows for early exercise. If not, did the exercise get approved despite a vesting issue?
  4. Cross-check all data sources to ensure they are aligned. If they are not aligned, locate the correct source of information or, if that's unclear, locate the original signed agreement.
  5. Do you allow for partial shares granted? If so, be sure to check whether the implementation software allows for the partial shares.

Checking through each of these potential issues beforehand will help ensure that your equity implementation to the cloud is smooth and cost-effective.

Learn more about Equity Management Planning for better insight into cloud implementation.

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