Qapita

There are four settings you manage under Equity Awards Settings. These are Performance Condition, Vesting templates, Exercise Configuration, and Grants form. 

Performance Condition Templates

A company may decide to link the employee performance to employee stock option plans for reasons like achieving individual performance targets, departmental goals being met, or a corporate financial goal being achieved. This essentially means the company introduces a performance-based criterion to its vesting structure. In effect, stocks would be vested if they hit certain targets in a specified period instead of set vesting schedule.

Companies choose to undertake performance-based vesting for the following reasons:

• Employees can participate in a company’s growth
• Safeguard company interests in the long run by making it conditional upon stringent criteria
• Attract and retain high performing employees 
• Encourage employees to maintain high standard of collective performance

For example, an employee already has 1000 stock options in the company. The company may decide to add a condition to the vesting schedule that if the company achieves 10% growth in the current quarter, then 10% of 1000 units owned by eligible employees get vested immediately.

These Performance Condition Templates can be created and can be associated in Vesting Templates (Custom Template) and Create/Edit Option Award (Vesting Parameters -> Edit Vesting Schedule -> Type of Vesting). The Performance condition Templates can also be created directly in Create/Edit Option Award (Vesting Parameters -> Edit Vesting Schedule -> Type of Vesting)

Clicking on Performance Condition Template 

1. The landing page of Performance Condition Templates is displayed where you can Create, View, Edit and Delete a template

2. Clicking on + Add New Template

3. In the Create Performance Condition Template dialog box, enter the Condition Name.

4. Select the Condition Type. Currently, QapMap allows the following conditions:

5. Enter the Performance Condition Details.

6. Enter the Value for Minimum Payout % as decided for the performance criteria. This can be any value from 0 to 100.

7. Enter the Value for Maximum Payout % as decided for the performance criteria. This value can be from 0.01 to 100

8. Click Create to add the performance condition.

9. The created Template will be successfully added in the Performance Condition landing page and as part of dropdown in the Vesting Templates (Custom) - type of vesting dropdown and Create/Edit Option Award - type of vesting dropdown

Vesting Templates

You can set the vesting schedule to determine when employees’ equity instruments becomes available to them.

You can create a Standard or Customer vesting schedule and set it universally applied to all employees. You can also choose to create a vesting schedule as you grant individual equity awards.

Standard Vesting Schedule

If you select Standard, you can specify how soon the vesting can begin, the percentage of vesting to do, the Cliff Vesting percentage, when the Cliff Vesting period should end, etc.

1. To create a standard vesting schedule, click Create Vesting Schedule under Equity Awards Settings. The created templates can be utilised when you grant awards to your employees. Type a name for the schedule in Vesting Template Name. This template name will be displayed to the option grantee.
2. Select Standard in Type field. 
3. If you want to start the vesting schedule immediately, select Yes in the Immediate Vesting field.
4. Type the percentage to vest in the Vested immediate field.
5. Click Yes in the Cliff Vesting field to specify the required period until the vesting of the first tranche.
6. Type the percentage an employee can vest in the Cliff Vested field. For Example: If its 10%, then after the cliff, 10% of the granted options are vested. 
7. In the Cliff period at the end of field, select the appropriate number of days, months, quarters, half yearly, or years to specify the required length of the vesting period for the first tranche
8. By default, the vesting is balanced over the time frame you specify. If you would like to change this, select the days, months, quarters, half yearly, or years in the Balance vests equally over field.
9. You can also set how often vesting can happen. For this, select the relevant option in the Vesting occurs field. You can select same date as vesting start date, on the first, 15th, or last day of the month to specify the appropriate timing for the vesting.
10. The Round number of options at each vest allows you specify the logic the vesting schedule will follow in regards to rounding of vesting tranche quantities.
11. In the Round off options at field, you can enable rounding off in the first vest, last vest, or for every round. This will help you determine at what stage the rounding should apply to ensure that the split of vesting quantities across all tranches adds up to the total granted quantity.

Custom Vesting Schedule

To create a custom vesting schedule, click on Vesting templates under Equity Awards Settings. The changes you make in this setting are visible while you are granting an award to your employee in Grant Awards section. 

1. Type a name for the schedule in Vesting Template Name. This template name will be displayed to the option grantee.
2. Select Custom in Type field.  
3. Select Time based in the Type of custom vesting field (the other options are not available at this stage).
4. You can now set the Vesting Template parameters. 

1. Type the percentage an employee can vest in the Percentage field. This is always 100%, as this needs to add up to the total across all tranches in the grant. Please refer to the screenshot below to see an example of the Vesting Schedule Template creation.
2. In the Duration field, select the number of days or months to specify the total duration of the vesting period (i.e. the timing of the final vesting of the grant’s last tranche).
3. In the Vest every field, select the number of days or months, as required.
4. Click Add to complete the vesting schedule.

5. You can also set how often vesting can happen to align with your plan’s requirements for the number of tranches and vesting frequency. For this, select the relevant option in the Vesting occurs field. You can select same date as vesting start date, on the first, 15th, or last day of the month.

6. The Round number of options at each vest allows you specify the logic the vesting schedule will follow in regards to rounding of vesting tranche quantities.

7. In the Round off options at field, you can enable rounding off in the first vest, last vest, or for every round. This will help you determine at what stage the rounding should apply to ensure that the split of vesting quantities across all tranches adds up to the total granted quantity.

Exercise Period Template

The exercise period refers to the period during which an employee can exercise their equity grants. You can utilise a perpetual period (i.e. awards can be exercised all the way until the expiry date), or specify a required exercise period in accordance with the rules of the plan.

To specify the exercise period, click Exercise Period Template under Equity Awards Settings. The created templates can be utilised when you grant awards to your employees.

1. Type a name for the exercise period in the Exercise Period Template Name field.
2. In Exercise Period field, you can select to set the period to continue forever (until the expiry date of the grant) by clicking Perpetual. If you would like to set the last date of exercise and lock-in period, click Specify Period.
   • In the Last date of exercise, specify the appropriate period of time to determine the maximum allowed period for exercises from the preferred starting point (e.g. Grant date).
   • You can then specify from when the exercise period must start. This can be the grant date, vest date, or vest start date.
3. Click Yes To set a Lock-in Period, if required. Lock-in Period can be utilised to establish a timeframe during which exercises are restricted (so that holders don’t exercise their rights and incur a hefty tax).
   • In the Start date of exercise, specify the required lock-in period.
   • You can then specify from when the lock-in period must start. This can be the grant date, vest date, or vest start date.