5 Tips to Support Stock Plan Participants Through a Crisis

Crisis can take on many forms. There are crises that can be company specific – like in the situation where a pharmaceutical company awaited FDA approval for a drug, only to learn that approval was denied. Some crises are specific to a particular industry or economy, while other crises are far reaching and global, like the COVID-19 pandemic.

Although crises can vary in origin and scope, any crisis that affects your stock plan is likely to create anxiety, stress and even panic for plan participants. As plan administrator, you are bound to receive inquiries from nervous employees. Rather than take a “wait until they come” reactive approach to the inevitable participant stressors, here are 5 things you can do to proactively support your participants in times of crisis.

1. Keep calm.

Yes, this sounds like an obvious one. The reality is that stress is easily abundant during a crisis and highly contagious. Employees will take cues from those they are communicating with, and the result is that their attitude may either improve the situation or make it worse. Keeping calm during a crisis can prevent the spread of confusion, misinformation and panic. 

2. Adapt to the current mindset of the participant.

As plan administrators, it’s easy to generate a belief system around what participants should be doing with shares acquired from their equity awards. An example would be adopting a mindset that says that “participants should be holding their stock for the long term.” This could be due to certain tax benefits achieved from holding long, or a goal to create employee shareholders. As a result, we may be inclined to withhold certain informational resources that contradict our general belief about what participants should be doing with their company stock.

The reality is that a crisis, by definition, upends much of what is normal. Imperfect times require adaptation, and that includes opening our understanding to consider what is really going on in the participant’s mind and world. If your industry is hit hard and furloughs are coming, it’s not unreasonable to think that some of your plan participants may need a way to generate cash and quickly. If your stock price has plummeted, you can probably appreciate why a panicked employee may want to diversify holdings. Be proactive in anticipating the shifting mindset of the participant rather than adhering firmly to a set of beliefs that may not fly in a crisis scenario.

3. Source resources to educate and inform.

Knowing where to source timely and relevant resources is an essential component of crisis management. People want information, and fast. The line in a communication that says “we should have more information available soon” likely won’t sit well with anxious participants. They want information NOW.

While there are several places to obtain information, I’ll suggest a couple of avenues to consider. First, website myStockOptions.com provides content that is oriented towards stock plan participants. Some of their content is free for all, the rest available with a membership. A recent article that is relevant during times of crisis (and publicly available!) is: 7 Things to Know When You Sell Company Stock to Raise Cash.
 
Another source of information could be your third-party service provider. Many such providers have internal staff who publish content that may be helpful during a crisis. While companies should review third-party information for accuracy before making recommendations to their participants, third-party sources can be helpful in channeling helpful knowledge.

4. Maintain high service levels.

Think of a time when you felt panicked…about anything. Maybe there was a health issue that needed a doctor’s assessment. Perhaps you needed to make a bank transaction immediately. Whatever the scenario, you most likely wanted and needed immediate service. In fact, if you got that real-time service, I’m guessing that helped greatly in calming things down.

A crisis that affects stock plans is no different than any other crisis when it comes to service expectations. Participants will feel better if they experience a high level of responsiveness during this time.

Providing high quality service may require some creativity during a crisis – after all, crises by nature are disruptive. During the COVID-19 pandemic, many plan administrators are working from home along side their significant others and even children. This scenario probably wouldn’t have historically been considered an ideal working environment, but it quickly has become a new norm. The good news is that you don’t need a perfect work environment to deliver outstanding service to your participants. The most important aspect of maintaining service is to simply show up and reassure participants that you are still available for their questions.

5. Communicate about the future.

While the priority in any crisis is dealing with the issue at hand, it’s important to not forget about the future. The crisis will end. Things will move on. Crisis recovery will likely be better facilitated when contemplating the future state has not been completely overlooked. If awards/grants are up in the air because of the many present unknowns, it’s okay to say that to participants. Does the company need to slow down decision making for a while? Talking about the knowns and the unknowns of what’s next provides transparency and lets participants know that the company believes there is a future. It also communicates that the company is aware of the current uncertainties and that they will be addressed at some point.

The above tips can apply to any crisis – whether it’s a global pandemic or a company-specific nightmare. Navigating through times of turmoil is a challenge. We may not execute perfectly, but considering and addressing the needs of our stock plan participants will go a long way towards helping to calm and retain them during times of chaos and uncertainty.

-Jennifer