Equity Guidelines is where you can enter Equity Grant Guidelines for new employees, and reflects the value of a new hire grant an employee should get based on their job group, country, and job level.
Equity Model uses your company’s growth projections and unique per share value, and our proprietary Equity Market Data to calculate New Hire Grant Guidelines, Total Shares Needed for the year, and your overall Dilution Rate.
The New Hire Model uses Kamsa’s market data, typically in the market 50th percentile, divided by your company's estimated per share value, to display the new hire grant guideline ranges for technical and non-technical jobs and levels.
The midpoint of the recommended new hire grant guideline is the market value divided by the estimated per share value.
The minimum and maximum is simply 85% of the midpoint, and 115% of the midpoint, respectively. However, the vast majority of our clients use the midpoint consistently when making offers.
The Control Panel drives the equity ranges shown in the New Hire Model. The estimated per share value is calculated using your company’s preferred share price minus the last 409A valuation.
Kamsa’s team of compensation experts are available to consult with you on the best estimate per share value to use to establish your equity guidelines, and to update your Model, as needed.
Based on the distribution across the job levels and job categories for this demo company’s workforce, the New Hire Model takes their estimated new hires for the year as well as who is eligible for refresh grants (in this instance, that’s those with 2 or more years of service), to calculate the estimated number of shares needed for new hire grants and refresh grants for the year.
This company’s refresh grant guideline is 25% of what a new hire would get.
We also recommend adding in a buffer (or additional shares) to account for things like executive hires, promotions, and any other unexpected hires like from a merger or acquisition.
The model then computes the estimated total number of shares needed for your equity budget. In this example, that is 420,080 and when you divide that by their total fully diluted shares, the model calculates the estimated dilution rate.
Once your equity grant guidelines are finalized in the Equity Model, enter them for each Job Level for technical and non-technical jobs in Equity Guidelines.
You can also create countries groups, and establish respective geographic differentials to align with your current or future global workforce needs. Kamsa will apply discounts against the U.S. equity guidelines to align with the local market.
When you run a Refresh Grant program with Kamsa’s Comp Review tool, the equity grant guidelines we just entered in the Equity Guidelines section will automatically flow in. It provides your leaders with various equity data points for employees under their org, as well as a budget to empower them to make the best refresh or promotion grant recommendations.