Imagine a workplace where every employee, from entry-level to executive, walks in each day thinking like an owner. They understand their role, the company's trajectory, and how their personal efforts are tied to the long-term success of the business.
That vision isn't just idealistic—it's possible. And equity compensation is one of the most powerful tools to make it happen.
But here's the catch: employee equity can feel like a black box. It can be confusing, intimidating, and even mistrusted. Some employees may see it as a lottery ticket, while others might ignore it completely. For equity to actually motivate and engage, it needs to be understood.
Whether you're in HR, finance, or a founder yourself, how you communicate equity value can make all the difference. Let’s break down how to turn your equity compensation plan from a hidden benefit into a compelling story of shared ownership.
Start With Why
Before jumping into grant sizes, strike prices, or vesting schedules, begin with a bigger question: Why does the company exist? What market opportunity are you pursuing? How significant is the potential impact?
Equity compensation gets a whole lot more interesting when it’s tied to a mission that matters.
This approach works just as well for public companies as it does for startups. While early-stage businesses may highlight bold visions and disruption, public companies can anchor their equity story in their market leadership, long-term strategy, and values. For example, they might emphasize a strong track record of returning capital to shareholders, ambitious ESG commitments, or expansion into new global markets.
By leading with purpose, equity stops being just a financial tool and becomes a way for employees to share in something bigger.
You’re not promising riches. You’re painting a picture of potential. When people feel like co-creators, they invest more deeply in their work.
Build Trust by Addressing Stability
Once you've inspired employees with the vision, reduce their anxiety with transparency. Equity is inherently uncertain, but that doesn’t mean you can’t build confidence. Share the company’s financial fundamentals—whether that’s stability through recurring revenue, market performance, or operational maturity.
For private companies, that might include runway and fundraising. For public companies, it could mean highlighting historical performance, market cap, or dividend policies. Either way, when employees understand the financial footing of the business, equity stops feeling mysterious and starts feeling like a real financial asset.
If you’re issuing restricted stock units (RSUs), for instance, emphasize the security of the value they offer—especially for public companies where the market price is known. If you’re offering stock options, explain the risk-reward tradeoff more clearly.
Make It Click Without Making It Complicated
Let’s face it—terms like “fully diluted shares outstanding,” “vesting schedules,” “strike price,” and “exercise windows” can be overwhelming. But employees don’t need to become equity experts. What they really need is a clear, simple explanation of how it works—and why it matters.
Start with just three key points:
- Number of Shares or Units – This is the amount of stock or stock options an employee has been granted. It’s the starting number, like getting 2,000 lottery tickets—except the prize depends on how the company performs.
- What the Grant Could Mean – This isn’t just a random number. It’s an employee’s piece of the pie. If the company grows and becomes more valuable, their shares could, too. It’s a way to share in the success they help create—and it could lead to real money in their pocket.
- What It’s Worth Now, and What It Could Be Worth Later – Use easy examples to show how this works. For instance, if an employee has 2,000 stock options with a $1 strike price, and the company’s stock is worth $10, that’s $9 of potential gain per share—or $18,000 total (after subtracting the $2,000 cost to buy them). Then show how that changes if the stock price goes up or down.
You can also walk through things like when the shares become the employee’s (vesting), what taxes might be involved, and when someone can actually sell (if it’s a private company) or trade (if it’s public).
Bottom line: Equity can be a big deal—but only if people understand what it is and what it could mean for their future.
Make It Personal, Make It Powerful
Equity isn’t just about numbers. It’s about ownership. And ownership inspires.
Invite employees to connect the dots between their work and the company’s growth. Let them imagine what success could mean for them. Stories go a long way here: highlight real examples of employees who turned stock into meaningful life milestones—like paying off student loans, launching side businesses, or buying a home.
Frame equity as a shared journey. For example: “When we win, you win.” Or: “You’re not just here to build a career—you’re here to help shape the company’s future and participate in the rewards.”
You’re not promising riches. You’re painting a picture of potential. When people feel like co-creators, they invest more deeply in their work.
Talk Equity Like You Mean It—Over and Over Again
Equity education should be ongoing, not a one-time onboarding slide. Companies that do this well weave it into their culture. Consider:
- Quarterly “Ask Me Anything” equity sessions – no slides, just real talk.
- Regular Updates – Share updates on share price, valuation, or equity program changes.
- Celebrating Milestones – Send notes when grants vest, shares are issued, or dividends are paid.
- Accessible Resources – A microsite with FAQs, definitions, and tools can help employees educate themselves on their own time.
- Annual Refreshers – Use compensation review periods, merit cycles, or benefits enrollment windows to reeducate employees on their equity packages.
Even if some questions get complicated, it's better to invite the conversation than leave employees confused and disengaged. Encourage employees to reach out, offer internal office hours, or bring in outside experts to conduct workshops.
Tell the Truth (Even When It’s Awkward)
Equity isn’t always a rocket ship. Sometimes it’s a roller coaster. Stock prices dip, markets wobble, and grant strategies shift. That’s why honest communication matters.
Be upfront about risks and rewards. Talk about market volatility, underwater stock, and how the company plans to navigate bumps—whether that’s through refresh grants, payout adjustments, or regular updates.
Credibility comes from balance. Optimism and caution can absolutely coexist.
When They Leave, Don’t Ghost Them
When employees leave, your communication shouldn’t stop. Make sure they understand what happens to their equity and have answers to questions like:
- What’s vested and what’s not?
- How long do they have to exercise?
- Will they keep access to updates?
- What happens if they’re in a different country?
- Are there resources or tools to help them manage their holdings post-employment?
Proactively guiding employees through this process, especially during moments of transition, shows respect and helps maintain goodwill that can influence your reputation and alumni network.
A smooth exit experience says a lot—about the company, and about how much you value your people even after they walk out the (virtual) door.
Your Strategy Is Only as Strong as Your Communication
You can design the smartest, most competitive equity compensation plan out there, but if your team doesn’t get it, they won’t value it.
Great equity communication is:
- Transparent – No jargon. Just clear, honest explanations.
- Educational – Use real examples, simple tools, and relatable stories.
- Consistent – Keep the drumbeat going. Share updates and celebrate wins.
- Inclusive – Make it resonate across levels, roles, and regions.
- Empowering – Help every employee see themselves as an owner.
When people understand their equity, they’re more engaged, more committed, and more connected to your mission.
You’re not handing out stock—you’re building believers.
And it all starts with a conversation.
Learn more about Pave’s end-to-end compensation platform
