The Gift of Company Equity

John Anthony Almerino

December 20, 2022

The Gift of Company Equity

April 5, 2022

The Gift of Company Equity

Company equity

Stock compensation is meaningful compensation. So long as it is done right, a good private equity plan enables a company to give value to its workers, contributors, and other stakeholders. In this season of giving, providing private equity is one of the greatest gifts that private companies can give to those who contribute the most to its success.

The value of shareholders' equity extends beyond its monetary worth as it provides other forms of intangible benefits to both the giver and the recipient. In this blog post, we talk about how company equity or equity in a company can better serve the spirit of the holidays by exploring the unique “gifts” that it has to offer.

The gift of meaningful compensation

Everyone wants some money in their bank account. But cash is hardly meaningful compensation. Sure, you get to buy a few nice things with your year-end and holiday bonuses. However, meaningful compensation is concrete, sufficient, and uplifting.

Private equity or stock-based compensation (equity in a company) provides just that. In terms of monetary worth, it is truly meaningful. It is a form of compensation with an inherent potential to grow in value. Rather than short-term profit, it's something that has a long-term future value with the ability to multiply based on your company's success.

It is also uplifting in that shareholders' equity compensation gives access to a wealth-creation mode that is not usually available to workers and employees but also to institutional investors.

A company offering private equity is not just paying compensation—it also provides a rare and wonderful opportunity to improve the recipient’s life by giving them a part of the company's assets/part of total assets, to raise capital, and to have retained earnings with a significant dollar value in the process.

The gift of motivation and encouragement

A good private equity plan should proportionately reward workers and contributors. Those who contribute more to the company should be recognized and rewarded accordingly.

Equity compensation/equity in a company encourages and motivates people to do their best by showing them that their hard work is rewarded in proportion to the time and effort they spend.

It’s a simple formula that increases the productivity of a company’s workforce and pool of contributors. More results and contribution, more equity rewards, retained earnings, and inherent value through company means.

Gift of alignment

Equity is one of the few gifts that also benefits the giver. Companies offer equity to their workers and employees. As a result, they can indirectly benefit from it in terms of savings in salary expenses and increased motivation and productivity in the workforce and the overall business operations.

This unique feature is made possible by the gift of alignment. Companies offer equity and pension funds to workers and contributors with a future stake in its success. In the process, companies can align their interests with the people who are the most important and integral to their achievement while decreasing the total liabilities incurred.

Equity compensation is not a one-sided gift; it is a two-way street where its benefits and company valuation become truly realized when both the giver and recipient work together and in the same way towards a company's common goal—that is, to improve the value of the company's business in the eyes of the investors.

After all, equity represents more than just intangible assets and value that are processed in a liquidity event but the chance to have an ownership interest and total ownership mindset on the part of the employees through stock options, selling stock, preferred stock, equity grant, treasury stock, and other similar equity packages.

In other words, it's like the workers will think and act like owners or investor/investors who have to carefully consider the company money, investment/investing, cash, stock, ability to sell and get paid, valuation, strike price, balance sheet, dividends, and pay.

Gift of community

Companies, company founders, venture capitalist, management team, and company's management often have poor relationships with their end-users, investors, and existing shareholders which may lead to increased total liabilities and decreased ability to raise money, profit, assets, money, and value.

This is usually demonstrated when portfolio companies make unwanted changes to their products and services or when they leave major complaints from the community unaddressed.

This happens because portfolio companies fail to understand the needs and concerns of their community members; therefore, their net income, net worth, and capital gains suffer.

In a previous blog, we discussed how one unique use of a company's equity (like stock options) could address this problem. That is, using equity plans to build a community by engaging the untapped potential and passion of a company's members, contributors, and shareholders.

In doing so, companies and business get to work more closely with their community while they offer equity and common stock that can help improve their market rate, total income, and even the share price of the profits.

More importantly, both sides are incentivized to collaborate with each other to solve common issues, achieve common goals, and share in the fruits of their combined success while improving the total assets of the private equity firm and companies, business, and individuals in the process.

One way to do this is to raise capital to provide incentive stock options and common stock, among others.

Giving back is easy with Upstock and Uptoken

As the holiday approaches, it’s time for private equity firm, business, and companies to think about how they can give back to private equity investors and shareholders and their key contributors and stakeholders (e.g., community members, workers, and employees).

We at Upstock enable companies to do just that. Upstock offers high-quality employee equity plans (using restricted stock units) and employee equity compensation plans. Our latest innovation, Uptoken's restricted token units for crypto companies, allows companies to enjoy the true benefit and value of giving back. Consider gifting your workers and contributors an extra bonus of equity this holiday season to help motivate them coming into the new year.

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