Communication is very important for the success of an ESOP Plan. Effective on-going communication is required to explain something as complicated as an ESOP. For an ESOP Plan to work, employees need to understand the instrument, its limitations, and the situations in which it will be beneficial. Facilitating that understanding can take some effort when your employees are not from a financial or business background. Employees need to know how the company is doing else, they may make impressions based on the grapevine.
Companies can communicate through banners, fliers, townhall meetings, Plan handbooks, FAQs. Send reminders, alerts about vesting, end of the exercise period, potential lapsing of Options. Periodical communication on the financial performance of the company and the value of the Options based on the latest independent valuation is also essential. It is also important to communicate the Value they leave on the table if they were to leave with unvested or unexercised Options.