Retention Incentives and Equity Plans: Key Terms

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.

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