A significant portion of stock plan administration involves employee communications. Communications break out into four basic categories: standard education materials, plan documents and agreements, individual statements and alerts, and correspondence. It is important to not only document delivery of (or access to) many communications, but also archive them so that they are accessible in the future. Plan documents and grant agreements receive the most scrutiny when it comes to documentation and archival procedures. It’s more difficult to know which of the other communications may either be the focus of a misunderstanding or the resolution to it.

Standard Education Materials

This is what your plan participants look to for answers regarding their own equity compensation. As you update educational materials, be sure to document the dates and locations that older versions were available. This is true for both printed and electronic materials. For printed versions, ensure that outdated versions are no longer available at any location within your company. It’s a good idea to date each printed version of your educational materials, with a note that the current version supersedes any previously distributed version(s). If your materials are posted on the intranet or otherwise available online to plan participants, be sure that there no outdated materials or links remain accessible after they have become obsolete. In addition, alert participants to updated materials so that they are aware of changes being made.

Individual Statements and Alerts

In the case of individual statements and alerts, aside from confirming the accuracy of all information delivered, possibly the most important factor is being able to prove delivery. Your broker may be able to assist with this for statements delivered via the individual brokerage account. Confirm what technology is available and for how long.

If you send alerts or statements to employees internally, consider how you will document delivery. See if you can use a return receipt, or if it’s possible to deliver via the intranet and archive access records. In addition, it’s best if you can archive the actual statements and alerts rather than relying on your stock plan administration database to reproduce it at a later date.

Correspondence

Of these four, correspondence generally receives the least amount of scrutiny and is least likely to be archived. It’s not feasible to have your legal team approve each and every response that you provide to participant inquiries, and so the risks of communicating information that is inadvertently incorrect, misleading, or could be taken as tax or investment advice. Additionally, it’s likely that some correspondence takes place outside the stock plan management team.

Ideally, your company would have a common repository for interaction records with employees that could be easily referenced by employee, date, or subject. Since I don’t actually know of one single company that has a system like this in place, I’ll scrap the ideal for now. If all you have is Outlook, then devise a strategy for archiving sent e-mails, including which types of correspondence qualifies as important enough to archive. It could be by location, topic, or whatever makes the most sense for you and your team. Don’t forget to document your strategy for future reference!

Why Bother?

This all might sound like a lot of work, but there are two very good reasons to have a robust communications archiving practice. First, it may be necessary to recover communications in the event of a legal or compliance issue. Second, it can serve as a way to calm an agitated employee who feels that the stock plan management team failed to provide enough information. This is particularly true for alerts–if you can tactfully show an employee that they actually did receive a “missing” alert, she or he will be less likely to focus anger and frustration at the stock plan management team. Also, that employee will be way more likely to pay attention to communications from the stock plan management team in the future!

A Cautionary Note

The flip side of diligence in archiving communications is that they can be made available in the event your company is involved in a lawsuit. Depending on the issue and how closely it relates to equity compensation, it could obligate the stock plan administration team to a significant amount of time dedicated to retrieving archived communications.

-Rachel