As the job market continues to fluctuate, you see more discussion of retention incentives from employers trying to keep their best employees from jumping the fence for a greener pasture. But sometimes those options are complex and might as well be written in disappearing ink. We want to help you cut through the corporate jargon to get a simpler explanation ofyour options.
A Glossary of Jargon
Sometimes all of the acronyms and densely named parts of an equity plan can make a business owner’s eyes start to cross in frustration. As you begin to plan incentives for your best employees in 2025, we hope you findthis glossary of frequently used terms helpful:
· Employee or owner equity plans: A writtenagreement that explains a company’s non-cash employee compensation offeringwith specifics about triggering events and determination of value.
· Employee stock/share ownership plan (ESOP):Company offers a program through which its employees can buy stock, usuallydeducted from their paychecks.
· Employee stock purchase plan (ESPP): Thisplan is for employees for publicly traded companies who’re offered theopportunity to by shares of the company stock at a discounted price.
· Equity: If sold, the value paid theshareholders for a company’s shares at any given time.
· Fair Market Value (FMV): This figure iscalculated considering the price at which an asset might sell under specificconditions.
· Modern Agreement for Rewards and Equity(MARE): A customizable employee rewards framework, which provides a greatplatform for allowing phantom stock awards.
· Phantom stock: Stake in company thatresults in a cash payout based on the company’s value at a future date.
· Profit sharing plan: Provides employeeswith a share of company profits, which is usually paid off at regular intervals– weeks, months, years.
· Equity Share Pool: The share of profits employers set aside in order to pay dividends to employees.
· Triggering event: What must happen for phantom stocks to pay off for employees. This is usually one of the following:the sale of the company, an annual or specific future date or termination.
· Vested: Arrival at the time during whichan employee is able to collect on their equity plan.
At Reins, we simplify shared equity and profit-sharingprograms for private business owners in the home services, trades and other deskless industries, dealing in real-life definitions rather than industry jargon. Any size business can use its current or future value to offer incentives to its employees, increasing retention and recruitment success.
To learn more about our programs or book a consultation.
