Account Recovery Measures

Who This Affects

Users without a verified secondary email address

What’s New

Additional emails are required to assist users with providing a secondary login credential in case access to their primary email address is lost. As part of our efforts to improve our clients' account security, we are updating the process of adding and verifying your additional email address. 

As part of this release, we will be notifying all users without a verified additional email address to add or verify the email they have listed. This subset of users will be receiving an email notification, as well as an outstanding task in their Carta account’s task manager. 


Timing

  • This update is available to 25% of randomly selected Carta users
  • General availability for all users by the end of Q2

Disqualifying Disposition Report - Private Companies

What’s new

Private companies can now report the complete list of all ISO dispositions and see exactly which dispositions qualify for tax incentives and which ones do not, along with Ordinary Income value and other information.

How it works

Under Capitalization > Reports, find the Disqualifying Disposition Report (ISO):

Select the reporting date range, acknowledge the report’s use of in-platform securities and transactions, and then export the report to Excel:

When the report finishes generating, it will be available in the Downloads menu:

The report shows info on Disposition Type, Ordinary Income, FMV and more. In order to be completely transparent, Excel formulas are used for Disposition Type, Ordinary income, First Qualifying Disposition Date, and Disqualifying Reason fields to show how they are calculated:

Who this affects

Private companies with tender offers or secondary ISO transactions captured in Carta.

Timing

Available now for all Private market customers (the Public market Disqualifying Disposition Report is available at request as part of the Early Access release).

Additional resources

For more information around the Disqualifying Disposition Report and underlying data, please refer to this support article.

Retain talent with Total Rewards

All Carta Total Comp customers now have access to Total Rewards. 

What’s new?

  • Customize and share equity, salary, and benefits information with employees directly through their Carta account. 
  • Enable employees to calculate and visualize their equity value based on various exit or liquidity scenarios. 
  • Share your compensation philosophy and design custom benefits packages for each employee segment. 

How do I get started?

Setting up Total Rewards is simple. Click here for step by step instructions, or check our Total Rewards User Guide for more tips for how to ensure an easy roll out to your team. 

Set your employees' local currency

You can now set the local currency for cash compensation (salary and variable) for your employees' scorecards. This new feature paves the way for better support for international employees. Target compensation for non-USD currencies will be supported in the future.


New Updated User Roles

Soon, Carta customers will start seeing an expanded set of Roles to help you reflect the different individuals who are handling different aspects of Cap Table management.

For now, users assigned to new roles will serve as point of contact for their areas. Over time, these individuals will see updated experiences and be guided to relevant Carta tools.

To see this experience, Navigate to "Company > Permissions and Roles > Roles"

Carta Web now has Section 6039: Form 3922 tax form generation

What's new? 

Carta Web now supports the generation of Form 3922 for Employee Stock Purchase Plans in the Company Administrator view. Companies that would normally have access to the Compliance tab, can now request access to Section 6039 from their Customer Success Managers. Form 3922 forms are due to stakeholder portfolios by January 31, 2022. By enabling this functionality in Carta Web, administrators are now in control of the Form 3922 generation and distribution, similar to Form 3921 for Incentive Stock Option Exercises.

NOTE: This feature can be enabled upon request from companies that have an Employee Stock Purchase Plan.

From the IRS:

Corporations file this form (3922) for each transfer of the legal title of a share of stock acquired by the employee pursuant to the employee's exercise of an option granted under an employee stock purchase plan and described in section 423(c) (where the exercise price is less than 100% of the value of the stock on the date of grant, or is not fixed or determinable on the date of grant).

How to Use

  1. To generate Form 3922, navigate to Compliance > Section 6039.
    NOTE: TCC is not required to generate Form 3922 Copy B for employees.
     
  2. Click Generate.
     
  3. Select the Effective Year of the report.
     
  4. Review any missing information, check off the box to confirm company data, then click Next: add contact info. If any information is missing, complete the information, then return to this stage.
     
  • If Company tax data is not complete:

    1. Navigate to Company > Settings.
    2. Click into the Profile tab.
    3. Enter Tax ID, TCC (required to generate Copy A, but not required for Copy B) and address.

  • If Stakeholder tax details are not complete, update missing data under the Stakeholder details tab of the same Form 3922 page

    1. The names, addresses, and SSNs can be edited individually by clicking Edit to the right of the stakeholder’s row.
    2. The stakeholder details can also be updated in bulk via Stakeholders > All stakeholders page. Review these instructions to bulk update stakeholder details.

 

5. If the missing data was entered in, return to the Compliance > Section 6039 page and click Generate to click through the steps to proceed and add company contact information. The company contact is formatted into the electronic Copy A .txt file that will be uploaded to the IRS site.


Click Generate Form 3922 to begin the generation of the files.

 

6. Refresh the page after some time if you see a spinning wheel or navigate away and return later.

 

7. Once generated, click Download reports for the tax year to download a .zip file to your local drive that contains all necessary data for Copy A (efile), and Copy B (statements).

 

The .zip file will be split out into the following three files:

  • efile will be a specially formatted electronic .txt file.
    NOTE: Do not edit this file. Only download and upload to the IRS FIRE site. If any data needs to be updated, repeat the initial steps for the same filing tax year to regenerate the reports and download the updated files.
     
  • statements should be delivered to all holders who acquired stock through an ESPP by the January 31st deadline and can be delivered electronically on Carta by clicking the link to Deliver participant statements

 

For any filing questions, contact your tax advisor. 


Who this affects

Public and Private Market companies with an ESPP. 

Timing

This feature can be enabled on demand by reaching out to our support team or Customer Success Managers.

What's Next

The product team will be enhancing Form 3921 functionality to bring it more in line with the new Section 6039 admin experience.   

Improved Public Exercising Experience

Option exercising with Public companies is now easier than ever. 

The exercising experience for public companies has been improved. The exercise request is now a coherent workflow guiding users through each step and providing key information about the exercise. With this detail, users can be more confident with their selection at each step of the exercise request. If there are issues with the exercise, clearer banners explain how Carta calculates share amounts and market prices.


Who this affects: 🇺🇸 Public US companies

What's new:

  • New experience for exercise requests:

    • Added explanations of exercise transaction methods
    • Clearer confirmation of address and payout method
    • Improved order details with indicators on maximum eligible options and clear explanation of order types
    • Incorporated review of taxes withheld and reminder of potential for additional taxes owed at end of the year
    • Summarized the exercise request clearly laying out the cost and transaction details so users understand what will be needed 
  • Cashless exercising reflects issuer imposed trade limits

Action required: No action required

Timing: Released to 100% of all public companies on Jan 24, 2022

Set Your Target Market Position

What's new?

Target Market Percentiles

Carta Total Comp will now show target data for the 25th, 50th, and 75th salary and equity percentiles.

How do I change my target market percentile for my compensation bands?

You can update your target market position to use the new percentiles either by:

  1. Visiting the Plan page and clicking on the "Create plan" button in the Active Plan window. The Create Plan window contains a section called “Market position by job area” where you can specify your target salary and target equity percentiles.
  2. Visiting the Bands page and clicking “Edit” under Target criteria. Once in edit mode, you can change the target market position by selecting the Percentile dropdown.


Market Position by Job Area

Carta Total Comp users will now be able to set their organization's target market positioning by element of compensation (salary + equity) and job area to make sure they're getting a view of market competitiveness that supports their overall talent strategy.

How do I update my Plan to define my market position by job area?

You can update your existing compensation philosophy by:

  1. Visiting the Plan page and clicking on the "Create plan" button in the Active Plan window.
  2. Under "Market position by job area" you will see a table containing your default salary + equity positioning.
  3. Select the "+" icon to create additional market positions by job area.
  4. Each additional market position will allow you to specify the job area, target salary percentile, and target equity percentile.

How does Market Position by Job Area affect the Employee Scorecard?

The compa-ratio is a quick way to compare an employee's compensation to your plan's target rate for a given job area, level, and location. A plan that specifies a market position for a job area adjusts the target rate for all employees in said job area. These changes can be previewed by selecting the “Save and preview plan” button on the Create Plan page.

Benchmarks version 2022-01-21

  • Our market estimates now include measures of the 25th and 75th percentile by job area, level and peer group. 
  • We've updated the Salary bands for all job areas to reflect market changes and improvements to our benchmarking model.

How do I update my plan to use the new benchmarks version?

You can update your compensation plan to use the latest benchmark versions either by:

  1. Visiting the Plan page and clicking on the "Update available" link in the Active Plan window.
  2. Navigating to the Bands page and clicking on the "Update" bubble in the top left.

You will have the opportunity to preview the new plan with the updated benchmarks version and assess their impact on your scorecard before accepting the new plan.

What’s next? 

We will be expanding our benchmarks to include salary and equity data for the following Engineering Specializations: DevOps, Frontend, QA, and Software Engineering.

Equity Value Settings

What's new?

You can now select how equity value is displayed in the Scorecard and communicated to employees in Total Rewards in the new Equity Settings section in the General Settings page.

How to use

Navigate to Settings in the top navigation and then click on the General Settings tab on the left-side navigation.

In the Equity Settings section, there are two options:

  • Equity share price - Set the value of the share price either using the Last Preferred Price or set a custom value.
  • Equity value calculation - There are two options to choose from to determine how equity value is calculated:
    1. Net equity value - The in-the-money value of all equity grants (i.e. net of any exercise costs). RSUs assume a strike price of zero. This is the recommended setting for most situations.
    2. Notional equity value - This is the gross value of the equity (i.e., shares granted times the equity share price).

NOTE: When using the Net equity value option on the Bands page, Total Comp will always display the notional (face) value of equity according to your set equity share price as exercise costs are only taken into consideration for individual equity awards.

Prior to this update, all equity value was calculated only using the notional value method. We recommend customers review compensation philosophy with their teams to make the determination on the best methodology for your unique circumstances.

IFRS Initial Release - Financial Reporting

What’s new

Companies using our newest version of the financial reporting tool can now report following International Financial Reporting Standards (IFRS). 

This is the first release of our IFRS reporting that includes:
1. Tranche based valuations
2. FIN28 amortization
3. Correct relationship valuation methodology (differs from US GAAP)
4. Stakeholder country field added to reports
5. Disclosures
6. Stock-based compensation expense journal entry
7. Report error validations specific to IFRS reporting

Later releases will include:
1. In-app custom assumption overrides
2. Forfeiture rate by grouping

How it works

When going to create a new expense scenario, there is now an additional step where users can select which reporting standard they want that scenario to follow. Users have the ability to create multiple scenarios to support both IFRS and US GAAP.

Once the scenario is created users can create both SBC expense reports and disclosure reports that follow the standard and give supporting calculations. 

Who this affects

Private and public companies using our new financial reporting tool. 

Timing

Available for legacy V1 IFRS users and beta customers. If you have a customer that is interested in being a beta user, reach out to Jess Carthey via slack. 

GA will begin with the second release which includes in-app custom assumptions. 

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