About a third of the largest publicly traded companies in Canada offer their employees stock compensation arrangements.
Recently, Shopify announced that they will be overhauling their employees’ compensation arrangements, offering them a choice between cash or stock. But do the recipients of these compensation arrangements truly understand the risks associated with investing in stocks? Are they aware of how these securities fit within their holistic wealth management plan? It’s a real opportunity to add value as we head into an economic renewal.
When employees are given the option to become a shareholder, they will likely need securities advice to truly understand their stock compensation options; specifically, the financial, tax, and estate planning considerations. Here are some quick facts about employee stock compensation options and my personal view on the importance of planning to integrate these opportunities into a holistic wealth plan:
Why is employee stock compensation and incentives relevant today?
Why do companies typically want employees to be shareholders?
What Types of Stock Compensation Arrangements are Predominately Offered?
Who is Eligible for Stock Compensation?
Who is participating in Stock Benefits?
When it comes to stock incentive and benefit plans, employees need to understand how these securities fit within their holistic wealth management financial plan. They especially need guidance the following areas:
Bottom Line: Connect with your financial advisor, as they should serve as your financial quarterback to help you engage the right financial professional stakeholders who should be consulted to ensure you understand how the securities fit within your holistic wealth management plan throughout all your financial life stages: accumulation, growth, preservation and transition of wealth in the joint decision-making process should change be required. Example: You may need to consult a IIROC licenced financial professional to under the risks associated with investing in securities, Tax Professional for tax awareness and Financial/Estate planner to discuss the retirement income and estate planning implications of security ownership.
Kristin Ramlal, B. Comm (Hons.), PFP, CIM, FCSI, RWM™ is a Securities Specialist with Canada Life Securities Ltd.
Employers expanding equity compensation programs to attract, retain talent: survey: Employers expanding equity compensation programs to attract, retain talent: survey | Benefits Canada.com
Number of companies listed on the stock exchange, 2020 - Country rankings: https://www.theglobaleconomy.com/rankings/Listed_companies/)
Five Demographic Trends to Enhance and Evolve Your Equity Plan Now: 5 Demographic Trends for Equity Plans | Shareworks
Global Equity Insights 2018: Global_Equity_Insights_2018_web_final.pdf (equity-insights.org)
2018 global employee stock purchase plan trends survey: Insight and Challenges 2018 global employee stock purchase plan trends survey (deloitte.com)
 Publicly Traded Companies in Canada: https://www.theglobaleconomy.com/rankings/Listed_companies/)
 Publicly Traded Companies in USA: https://www.investors.com/news/publicly-traded-companies-fewer-winners-huge-despite-stock-market-trend/
 2018 global employee stock purchase plan trends survey: Insight and Challenges 2018 global employee stock purchase plan trends survey (deloitte.com)
 Five Demographic Trends to Enhance and Evolve Your Equity Plan Now: 5 Demographic Trends for Equity Plans | Shareworks
 Taken from the elements of Real Wealth Management©, Knowledge Bureau - World Class Financial Education
**The comments and ideas expressed here are those of Kristin Ramlal and are not necessarily and should not be understood to be the views or opinions of Canada Life Securities Ltd. or The Canada Life Assurance Company or Knowledge Bureau.
©Knowledge Bureau, Inc. All rights Reserved