Option exercise settings for exercises initiated and settled on Carta

Managing option exercising is now easier than ever. 

International optionholders of US companies can now exercise online via wire transfer to Carta. As a result, all US companies can now settle exercises through Carta, for both ACH and wire transfers payments. Carta conveniently manages payment reconciliation and payment issues such as insufficient funds or overpayments. This new feature is controlled via the new Transaction Settings page. 

Who this affects:

  • 🇺🇸 US companies, public and private

What's new:

  • 💸 All exercises are settled with Carta - company admins will no longer need to mark exercises as paid. No matter where optionholdersers are located, Carta will receive funding for on-platform exercises - US holders pay for their exercise via ACH and non-US holders pay for their exercise via a wire transfer to Carta.
  • ⚙️ Clear transaction settings - company admins control option grant exercisability easily in one central location within Transaction Settings, under Company Settings.
  • Auto-cancel unpaid exercises - A wire exercise is automatically cancelled if unfunded or underfunded for 30 days after admin approval.
  • ✉️Communication with optionholders - Carta communicates directly with optionholders to resolve payment issues, letting them know of an outstanding balance for an exercise or facilitating a refund for overpayment. 

Action required: 

  • Configuring Transaction Settings will enable access to online wire exercises for international optionholders.
  • Visit Company > Settings > Transaction Settings to opt in. Note: Opting "out" does not disrupt the current company or transaction settings. Access to Transaction Settings does not impact users' ability to exercise.

Timing:

  • Rollout begins Oct 14, 2021
  • Rollout to reach 100% of all customers by the end of 2021

Resources: 

Qualified Small Business Stock (QSBS)

What’s new

Companies using Carta for 409A will now be additionally assessed for qualified small business eligibility at no extra cost to the company.

Certificates issued by a qualified small business as determined by Carta will have a "QSBS" tag in the product to indicate that the shares represent Qualified Small Business Stock (QSBS). The goal of these tags is help stakeholders make more informed selling decisions.

The IRC’s definition of a qualified small business is restrictive yet vague and open for interpretation at the edges, so potential holders of QSBS should consult their tax advisor before making decisions to sell and claiming the QSBS tax benefit.

How it works

Based on company-provided information during the valuations process, Carta will assess the following criteria for qualified small business eligibility:

  • Company's gross assets are $50M USD or less
  • Company is an active business
  • Company is a C-corp
  • Company does not operate in excluded industries

If a company is identified as a qualified small business, a new badge will appear in the 409A dashboard:

If a stakeholder receives a certificate from a qualified small business but hasn't yet met the 5 year holding period for QSBS, they'll see a "QSBS eligible" tag in their portfolio:

Drilling into the security, the stakeholder will see some additional information about the QSBS status of the certificate:

Stakeholders who have held shares issued by a qualified small business for 5 years will see a "QSBS" tag in their portfolio instead:

Additional Resources

For detailed information about QSBS in Carta, please refer to our QSBS support article.

Who this affects

Companies using Carta for 409A and their stakeholders.

Timing

  • Available now to 50 randomly selected 409A customers
  • General availability for all 409A customers coming in two weeks

Partially Canceling Option Grants


What’s new

Legal administrators in Carta can now partially cancel an option grant in Carta. Partially canceling an option grant will reduce the number of outstanding shares and return the shares back to the option pool.

How it works

You'll find the partial cancellation tool by navigating Securities > Equity awards and clicking on the ledger dropdown for the specific option you'd like to partially cancel:

First, you'll be asked to provide an effective date for the partial cancellation. A partial cancellation is an amendment to the option grant, and the effective date will determine when the amendment takes effect in the company's as-of date reporting.

Next, select the cancellation method, which determines how the partial cancellation will affect the vesting schedule for the option grant. Because a partial cancellation reduces the outstanding quantity of the option, Carta needs to know from which tranches the shares should be canceled.

Last in, first out cancellation method

For some situations, the issuer or their legal counsel may not specify the way in which the amendment will affect the vesting schedule. Issuers can select the last in, first out cancellation for the vesting schedule, and Carta will cancel shares starting from the future-most tranche and move up the vesting schedule until the specified quantity has been canceled.

Custom cancellation method

For situations in which the issuer or their legal counsel want to affect the vesting schedule in a specific manner with a partial cancellation, issuers can select the "Custom" share allocation method - this approach provides flexibility and allows the issuer to cancel shares from any tranche. The in-app spreadsheet allows legal administrators to first reflect the partial cancellation in a spreadsheet application outside of Carta and then copy/paste the resulting vesting tranches back into Carta.

After selecting "Review and confirm" at the bottom of the page, verify the cancellation quantity and other information to save the partial cancellation.

Additional Resources

For more information around the limitations and best practices for the partial cancellation tool, please refer to this support article.

Who this affects

The new partial cancellation tool is available to the legal administrators in all of Carta's private market customers.

Timing

Available now.

New Shareholder Experience Page

We are making it easier for companies to keep employees, investors, and other stakeholders informed about their holdings and company changes. 

Companies have historically been able to grant viewing permissions to their stakeholders via our Cap Table Sharing page and features. This experience, however, was burdensome for many company administrators who found themselves having to change sharing settings as new stakeholders were added to their cap table or existing stakeholders changed their relationship to the company, such as an employee leaving the company or an investor exiting their position.

With our new Shareholder Experience page, company administrators can designate what type of information they want to share with their different stakeholders and set rules based on these preferences. By setting permissions by rules instead of a stakeholder-by-stakeholder process, we make it easier for company administrators to get the right stakeholders the appropriate information and reflect their information sharing philosophy.

Companies can choose to enable a specific shareholder experience based on the relationship of the stakeholder to the company. For example, companies can choose what information founders, investors, employees, and former employees, and other stakeholders access on Carta. We’ve renamed, updated, and simplified our access levels to Restricted, Basic, Advanced, and Full Details. We include a “Recommended” level for different relationships (e.g. Investors = Advanced) to help guide founders and other company administrators on setting up their Shareholder Experience based on user feedback. 

We’ve also added a new rule where former stakeholders--those who no longer have an active investment or holding in the company--will automatically be downgraded to Restricted automatically. This means that as stakeholders enter and exit the cap table, their respective shareholder experience will update automatically.

New Shareholder Experience page: Group levels

We know that sometimes it’s important for company administrators to create experiences specific to a single stakeholder or user. The new Shareholder Experience feature allows companies to set overrides for specific stakeholders in the “Individual levels” tab. We also provide information on that stakeholder’s relationship and holdings information.

New Shareholder Experience page: Individual levels



To help ensure company administrators set access levels that best fit the needs of their stakeholders, our access level guide is clickable from either the Group Level or Individual Level views of the new Shareholder Experience.

Access level guide

We appreciate our users’ feedback on how to make this page clearer and easier to use. We hope these improvements save company administrators valuable time and help them mirror their company information sharing philosophy in our software.

Who is this available for?

The cap table sharing page is available currently via a limited release to select Carta companies. In the coming weeks, we will begin to allow additional companies to migrate to the new Shareholder Experience feature set. This new product is not limited by subscription tier.

Companies with the new Shareholder Experience features enabled can visit Stakeholders > Shareholder Experience. 

If you’d like to enable the new Shareholder Experience page for your company, you can also contact us.

Carta Total Comp Updates: Scorecard Export, Next Twelve Months Vesting and More

Check out the exciting new updates we’ve made to Bands, Scorecard and Admin pages 

Next Twelve Months (NTM) Equity Ratio

Equity Ratio is now being calculated using Next Twelve Months (NTM) equity rather than Total Equity granted to the employee. The new formula for Equity Ratio is as follows: 

An employee’s next twelve months (NTM) equity divided by the target annual equity for a new hire today.

Why did we make this change? 

The Carta Total Comp Scorecard is designed to provide a clear view of the compensation health of your business. In order to build a score that better highlights attrition risk, we’ve changed the calculation for equity ratio to be based on unvested equity that will vest in the next twelve months. 

Employees compensated below market rate are at risk of attrition, as they would be paid more in a new role than if they were to stay in their current position. 

Vested equity does not incentivize employees, because it is already earned, and therefore does not help drive retention; put another way, vested equity is already “in the bank.” Calculating a health score that includes vested equity could lead to overlooking employees who are mostly vested and therefore at risk of going to work elsewhere. 

The additional benefit of NTM is that it allows you to compare equity compensation on the same annualized timeframe as salary. 

Additional Details

While Equity Ratio will be calculated by using NTM going forward, we will continue to show Total Equity on the company and employee Scorecard. 

Scorecard Export

You can now easily download a CSV of the entire scorecard by clicking on the “Export” button. The CSV will contain all of the available columns, regardless of whether they are enabled in the column selector.    

Admin Page

Review and modify employee details from the new Admin Settings page. This page has a complete view of all employees synced from the HRIS and cap table. 

What’s changing?

Navigate to the Admins page from the Carta Total Comp top navigation bar. From there you can access the “Roles and permissions” tab along with the “Employees” tab

New Bands Version

You can now see the date of the most recent Benchmark version in the Plan and Bands page. With the Preview plan feature, you can review the impact that updated benchmarking data has on the Scorecard prior to applying the new Plan. 

Why did we make this change? 

When benchmarking data is current, it better enables you to be competitive in today's market with the offers you take to candidates and employees. 

Job Area Descriptions and Example Job Titles

Our Roles and Levels are now defined in-app. 

Why is this important?

Carta's leveling framework provides a foundation for your company to provide career pathing for employees and to review pay fairness for each job area and level. Without consistent leveling, companies can not accurately compare their employees to market rate data, limiting their ability to effectively hire and retain talent. 

To help our customers ensure accurate and consistent leveling, we are now providing further descriptions for each job area we support, so users can make more informed leveling decisions based on commonly used job titles.

What’s changing?

We have added a “Learn more” link in the "Example title" column in the "Bands" tab. This link will launch a modal where you can see sample job titles and descriptions for roles in each job area. 


ISO 100K Dashboard

Get the transparency you need to manage ISO/NSO splits with the new ISO 100K dashboard in Carta.

Who this affects

All Carta customers can now access the dashboard under Compliance > ISO 100K.

What's new

The 100K rule for ISOs has been a historically opaque concept in Carta - customers and their legal counsel have often found it difficult to understand how the application of the rule results in the specific bifurcation of ISO vs NSO shares in a particular option grant.

The new ISO 100K dashboard brings a new level of transparency to the way in which ISO options are bifurcated according to Carta's automatic application of the 100K rules. For specific transactions and amendments that fall outside the purview of Carta's automatic bifurcation estimates, customers and their legal counsel can request access to the dashboard's grant editor feature, which allows legal administrators to change the ISO/NSO split estimated by Carta.

Last thing to mention: we worked closely with Orrick (one of Carta's law firm partners) to make sure we were solving this problem in a way that allowed our law firm partners to better support our customers. You can read more about that here on Carta's blog.

Timing

Available now to all Carta customers.

Preview and and manage compensation plans

With the new Plans page, you can now craft and manage your compensation plan to meet the needs of a changing workforce. With Plans you can:

  1. Review your active plan or create a new plan.
  2. Edit and preview draft plans.
  3. View your plan history.

Before making modifications to your plan, preview will allow you to see how a change in peer group, band ranges, or location strategy could impact your employees' compensation targets. 


Availability

  • If you are interested in learning more about Carta Total Comp, please reach out to your Carta Customer Success Manager or sign up here.
  • You must be a Carta cap table customer to sign up for Carta Total Comp.

Building your compensation plan is easy with Carta Total Comp

Streamline your compensation processes and compensate with confidence on Carta Total Comp. 

Whats new?

Easily build, manage and apply your compensation strategy across your entire employee base taking both geography and custom compensation bands into account. 

To adjust your Plan settings, click on the Details link on the top left of the Scorecard page.


Geo Adjustment

You can now choose either Local or Uniform to choose the right approach for your fully remote, hybrid or in-office working arrangement.

  • Local: When selected, all employees will have their target compensation automatically adjusted to the local cost of labor for their location. You can also set a minimum threshold to ensure that employees' target compensation are not set lower relative to the top metro market rate for their roles. We recommend setting the threshold to 80%.
  • Uniform: Using this option, all employees' target compensation will be adjusted to the market rate for a single location.

Compensation Bands

The compensation bands settings enables you to customize the width of your company's target bands for each track. Defaults are 15% for Individual Contributors (IC), 20% for Managers, and 25% for Executives.


Availability

  • If you are interested in learning more about Carta Total Comp, please reach out to your Carta Customer Success Manager or sign up here.
  • You must be a Carta cap table customer to sign up for Carta Total Comp.

Make better compensation decisions faster

Carta Total Comp 

Carta cap table customers can now access our benchmarking and planning platform to streamline their compensation processes and compensate with confidence.

What’s new?

Workflow tools built on top of the world’s largest equity data set and powerful HR integrations to help you make better compensation decisions faster. Carta Total Comp customers are now able to access the following compensation benchmarking and planning features:

  • Automated Leveling - Map each of your employees into an area, track and level using Carta’s universal leveling framework.
  • Scorecard - Summarizes employee salary and equity information from your HRIS and cap table to give a holistic overview of your organization’s total compensation.
  • Bands - Automatically generate equity and salary bands for any role by filtering for job area, track and location.  
  • HRIS Integration -  Integrate instantly with any of the most common HRIS systems.
  • Coming Soon - Plan -  Easily build, manage and apply your compensation strategy across your employee base.

Get a pulse on your org through your company Scorecard tab



Benchmark any role in the Bands tab

Availability

  • If you are interested in learning more about Carta Total Comp, please reach out to your Carta Customer Success Manager or sign up here.
  • You must be a Carta cap table customer to sign up for Carta Total Comp.

Additional Resources 

  • Carta Total Comp announcement from our Chief Product Officer, Heidi Johnson. Link to Blog Post.

Vesting & Exercise Status Bars

Users viewing the "Vesting schedule" tab in the security details modal will now see a new column in the "Progress" section labeled "Status" under which progress bars appear next to each vesting tranche that indicate the vesting and/or exercise status for each vesting tranche.

Who this affects

All users in all companies with securities that have vesting schedules

What's new

For security holders and administrators viewing individual security details, click on the "Vesting schedule" tab to see the new status bars (see red boxes below):

Depending on the status of a security's vesting and exercise status, you'll see the following colors:

  • Gray: unvested tranche
  • Light blue: vested tranche
  • Dark blue: exercised tranche

Previously, if there was an exercise for part of a vesting tranche, you'd either see the row colored in gray if the tranche was unvested, or you'd see the row colored in blue if the tranche was vested - this was confusing since neither of these results were technically accurate.

Now, if a vested tranche is partially exercised, you'll see the dark blue exercise color overlaid on the light blue vested color (show below). If an unvested tranche is partially exercised in the case of an early exercisable option grant, you'll see the dark blue exercise color overlaid on the gray unvested color.

Timing

Live now!

Show Previous EntriesShow Previous Entries