Fidelity Launches Equity Compensation Tool for Employees – Investopedia (blog)

Equity compensation is a common tool for recruitment and retention, yet it can be confusing for those on the receiving end. Fidelity Investments wants to help employees who are awarded stock as compensation, launching the Fidelity Equity Compensation Planner tool to meet that end. Rolled out earlier this week, the digital tool is aimed at helping employees better understand what they were awarded and how to include equity compensation more easily in their financial plans.

After all, while equity compensation awards are common with all sorts of public companies, they can be complex for employees, with many not understanding the difference between stock awards – whether they include restricted stocks, stock options or performance shares. What’s more, Fidelity said that many are unsure about the role that equity awards should play in their overall investment portfolio.

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“While employers recognize equity compensation awards are a great way to reward employees and attract and retain top talent, we find many employees don’t fully understand the awards they are receiving,” said Mark Haggerty, head of Stock Plan Services at Fidelity Investments, in a press release announcing the new tool. “The Fidelity Equity Compensation Planner is designed to help individuals better understand the value of the company stock they receive from an employer, which can help maximize the role of equity compensation within their overall wealth management plan.”

With the new tool, employees can tell what type of stock award they own and the percentage of each type of stock in their portfolio. The tool can provide suggestions as to how employees can manage the stock awards alongside other investments. The Equity Compensation Planner is designed to be used with a Fidelity representative so that a customer’s specific needs can be addressed, the company said in the press release.

The Fidelity Equity Compensation Planner also includes modeling capabilities that aid workers in understanding how the value of their equity awards could be affected based on when shares are scheduled to vest and if the stock price of the company changes. The Boston-based fund company said that detailed information coupled with investment advice from a Fidelity representative can enable employees to make smart decisions when it comes to their equity compensation.

Fidelity Investments isn’t the only investment company to highlight confusion when it comes to equity compensation. Charles Schwab recently surveyed employees that participate in an equity compensation plan and found that, when it comes to exercising options or selling shares, employees tend to freeze, fearing that they will make costly mistakes. According to the survey, 36% of respondents said that equity compensation is the reason or one of the leading reasons for staying at a company. Still, despite their happiness with the compensation, only 24% said that they exercised employee stock options or sold shares. Nearly half of the 1,000 equity compensation plan participants polled said that they fear making the wrong call.

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