Types of Stock Plan Software

by Cindy Quarters

Stock plans are typically company-sponsored plans that give stock or stock options to employees as either a bonus, compensation or as an incentive. Companies need to keep track of what was offered to each employee, when it was offered, when the option expires, when the option was exercised, the value of the option and many other things. Stock plan software can help companies to efficiently manage the many aspects of a company stock plan and to remain in compliance with the law.

Stock Options (REF 1)

Stock option software is useful for companies that have an employee stock option plan. This type of software typically provides a variety of functions. Each software company includes those features that company feels is best for its clients. Some of the features of this type of software include monitoring of option awards and purchases, tracking employee options based on eligibility, annual reports and disclosure notices based on actual options issued by the company.

Compliance (REF 2)

Companies that offer stock options must comply with a number of Securities and Exchange Commission regulations, as well as IRS reporting. Failure to do so can create significant problems and trigger penalties. Stock plan software is available that tracks stock and option activities and checks to insure that all actions are in compliance with the law. Some of the common regulations that are checked for include FAS 128, CICA 3870 and IFRS 2. Any stock activity that is not in compliance with these or other regulations is identified so that the problem can be rectified immediately.

Financial Management (REF 3)

Typically when a company offers stock plans to its employees, options are given based on such things as position in the company, longevity and pay grade. All of these factors must be considered for each employee involved in the stock plan, plus it is important to keep track of the employees’ equity and compensation received. Some types of stock plan software are designed to emphasize the financial tracking and reporting aspects of managing a company stock plan, and these store and report on virtually all data related to the finances involved in offering a stock plan.

Combinations (REF 1, 2)

It is quite common for different stock plan software to combine many of the different aspects of stock plan management into a single package. That way customers need only one type of software to manage the entire program instead of several different programs to cover all different aspects. The best way to determine which software to choose is to decide which features are most important to the company and then evaluate different software packages as to how well each meets those needs.

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