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Intro to Employee Equity

Updated: Apr 26, 2023

Otto is on a mission to help employees feel great about their finances. We understand

that employee equity can be a massive component of an employee's net worth. But it is also one of the most complex areas of finance to understand, and looking at employee

equity from an HR perspective comes with its challenges; especially when it comes to

communicating it to a potential member of a team.

Each employee has such a big impact on the company's overall success, and it’s really

important to connect and align the entire business from the start. By using equity,

employees become united while simultaneously highlighting the impact of each

individual’s work. It’s important to communicate that what they do on a daily basis can

actually contribute to the overall success of the company and lead to a mutually

beneficial financial outcome.

Equity is becoming much more mainstream in businesses; therefore top talent is

expected when considering employee equity. 80% of new EU investments have a stock

option, and equities are often used in lieu of a salary because the company may not

have much funding to enable shared ownership. When the business scales, it becomes

more about the team bringing that shared ownership to life. The idea that this win is

shared down the line gives great motivation for employees.

Fundamentally, you have to think about why you grant equity in the first place. Often

they are defined as LTIPs or ‘Long-term incentive plans’, and they're called that for a

reason. Is it there to attract employees? To retain them? Is it offered to anyone or just

certain individuals? It’s important to consider how you define the terms, such as the

difference between junior employees versus senior employees. Helping your team see

the long term benefits through percentages and career development is important to

conquer these challenges from their perspective; helping them to link it to their broader wealth and overall compensation.

Here at Otto, we understand these challenges, and we want to help employees take

control of their wealth. For more information, contact us or schedule your demo today.


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