Share scheme administrators often rely on segregated tasks and outsourcing, making the vesting process complex and reliant on multiple stakeholders. Cloud-based digital solutions offer a unique approach to the vesting process, assisting administrators with repetitive tasks. They also ensure accurate employee awards. Employees’ pay-out depends on the vesting process for 100% accuracy. Any innovative solution to achieve this is welcome.

Testing the limits of a manual vesting process

In addition to existing complexities, managing share-based schemes involves handling deferred profiles, retention conditions, and performance vesting conditions.

Ongoing vesting management is reliant on key skills, transparency, and human precision. In addition, it involves many complex calculations which have a direct impact on your employees’ payouts. Unfortunately, your team can’t always perform vesting calculations in-house reliably without a live data source. Furthermore, looking to outsource this is usually expensive.

Where does this leave the vesting administration team in managing their vesting calculations? Well, it means a perpetual cycle of extremely tedious and error-prone tasks. The vesting election process, settlement instructions collation, and staff communication are stand to experience delays in vesting and releases.

It is also difficult to manage and maintain bespoke limits and rules, especially for companies with a large participant base. This is because there are so many rules, tax and accounting implications that govern these.

Where can technology help the vesting process?

But these complexities shouldn’t prevent you from issuing a scheme that is most appropriate to your business. The introduction of technology into the vesting process can aid in all areas of administration and calculation. There is no need for your team to incur eye-watering consultation costs for tasks that they can fully automate. Below are some areas in which technology can streamline, automate and execute tasks.

Something to watch the “many moving parts” 

With technology, administrators use task management mechanisms and system controls to remind themselves of upcoming tasks and prompt them to follow proper processes. Since there are many moving parts to this process, digital tech can allow access to many stakeholders with different access rights to perform and approve tasks.

Transparent vesting process reports at the click of a button 

In terms of calculations, you need to make sure that you have a robust solution to assist with vesting estimates and vesting result calculations during the life of, or at the end of, a vesting period. Ideally, you should automate these calculations and have them pull live data to produce fully transparent vesting reports that you can then share with the RemCo and other stakeholders. This will essentially bring in subject matter experts without the high costs.

Trackable, digital communication with your employees

For any cliff vesting election process, you need to be able to collate instructions from employees digitally by allowing participants to submit instructions online. These can include the option to sell for tax, sell all, or retain all your shares. You can then track these processes without making phone calls or following up manually.

Without technology, controlling releases and holding periods becomes difficult. However, with technology, it becomes easy to maintain limits and restrictions either on an employee level or a grant level, or both.

But wait, there’s more…

Other areas in which technology can significantly reduce the administrative burden for the share scheme administrators are: 

• Vesting task management: The tech updates information automatically and ensures that it captures all types of good, no-fault, or all-forfeit leavers before the vesting date.
• In-flight vesting estimates: auto-generate reports on expected vesting estimates for good leavers for your accounting and tax teams.
• Vesting results: Generate vesting reports with all necessary details for RemCo to approve the final vesting results at the click of a button.
• Cliff vesting elections: Cloud-based live data makes the opening up of vesting elections and the tracking of settlement choices for each participant significantly easier, faster and more streamlined.
• Suspensions & holding periods: Digitally control the release of awards to improve transparency and efficiency with public officers and directors.
• Releasing awards: Once individuals exercise their awards, a share scheme platform can automatically add any dividend equivalents.

Testing today could improve your vesting process tomorrow 

The investment into the exploration of a digital platform to assist with share incentive scheme management will not only eliminate administrative burden and free up skilled workers to apply themselves where it’s most important, it also saves significant costs. This is especially true if a business relies on outsourcing calculations and other tasks to consulting firms on a cyclical basis. To ensure that you are adopting the best scheme for your employees without the fear of overwhelming calculations and administration requirements, it is crucial to embrace technological innovation and digital transformation in this task-heavy and complex process. But it takes one simple step forward to stay ahead of the curve. 

To view a demo of the ShareForce Incentive Plan management tool, fill in the form below or visit www.shareforce.net/contact