What's new?

Companies now can decide how they want their shares to be reallocated within the vesting schedules when stock splits are performed. Two vesting strategies can be selected now:

Option 1: Reapply templates

When companies choose the reapply templates option, Carta will automatically reapply the template for all securities with template vesting schedules upon performing the split. This means that Carta will re-calculate the vesting schedules attached to securities, considering the new total quantity. This can change how the vesting is distributed among the tranches since it will be an entirely new vesting schedule.

For example, a 10 shares grant that time vests with tranches of 2 and 3 shares will, after a 1:10 split, have tranches of 25 shares each if the company chooses this option.

Option 2: Apply stock split ratio to all tranches 

When companies choose to apply the stock split ratio to all tranches, Carta will multiply the stock split ratio by each tranche. In case the shares remaining in a tranche are fractional, the platform will then round down to the nearest integer. This results in fewer differences in the schedule from the pre-split to the post-split security. If a security is tied to a template vesting schedule, Carta will need to update it to a custom schedule to make this change. Custom vesting schedules cannot be reapplied later, as they are not part of any templates.

If companies choose this option, a 10 shares grant that time vests with tranches of 2 and 3 shares, after a 1:10 split, will have tranches of 20 and 30 shares each if this option is chosen.

Why is this important?

Different companies need their post-split vesting schedules to be represented differently. With this change, Carta becomes more flexible to adjust to different vesting scenarios. Having more vesting accommodation strategies also means less time dedicated to manual adjustments after a stock split is performed.

How can I learn more about this?

You can find a detailed explanation of the new vesting strategies with vesting schedule examples in this support article.

What’s new?

Private companies on Carta can now run Dilution reports. The Dilution report will include: 

• Incremental Shares
• Weighted Average Shares Outstanding
• Average Trading Prices

All 3 of these values will help customers calculate Diluted Earnings Per Share for their income statement. 

What’s important or valuable about this change?

Private company Financial Reporting administrators will be able to run a Dilution Report that will provide them with major inputs into the Diluted Earnings Per Share formula. 

In this release, the following will be available:

• Shares outstanding

  • Simple average
  • Weighted average

• Trading prices

  • Simple average
  • Weighted average
• Incremental Shares
• Supporting tabs to help auditors tie out values

What do I need to do?

Log in to Carta and go to Compliance > Financial Reporting. Run a new report (must be 1 year or less reporting period). In the drop down menu to download other reports, such as SBC Expense and Min Disclosure, there will be an option for Dilution. 

Have questions? Contact 718@carta.com 

What’s new?

Soon, you will be able to access 8 new reporting templates under Capitalization > Reporting, which provide you with access to critical data points about your equity pool, company, securities, and stakeholders. You will be able to see exactly how your key option pool values are derived, view equity awards joined with Grant Reason and Employee ID, and even export a detailed list of stakeholders and their properties.

Why is this important?

We’ve been listening to every piece of feedback from you, and have heard the challenges that you face. The new reports address these challenges, providing visibility into how key pool values are derived, and giving you reporting access to over 60 key fields that were spread across multiple places, and in some cases, previously un-reportable.

Those 8 template reports are:

• Equity pool transaction ledger: A detailed view of shares available to issue from your equity pool. This new report includes a double-entry activity log for every transaction so you can see, line-by-line, exactly how available shares and other plan values  were derived.
• Common securities ledger: A ledger of all Common shares in Carta.
• Equity awards outstanding: A detailed view of all outstanding equity awards across all plans on Carta. 
• Equity plan granted: A ledger of all securities granted from the equity plan. 
• Options outstanding: A detailed view of all outstanding options across all plans on Carta. 
• Securities ledger: A ledger of all securities tracked on Carta. 
• Share registry:  Used by companies in many countries to create a share/equity register or register of holders.
• Stakeholder details: Full list of stakeholders and their properties.

What do I need to do?

You should be on the lookout for an email from your CSM letting you know that these reports are now available for you. Once you get that email, you can go to Capitalization > Reporting, and you will see the following view, where the newly added reports will have a ‘New’ bubble next to them:

From there, you just need to export the report as usual!

Where can I learn more?

For more information on exporting reports, visit our support site. We will be adding additional information to the support site as reports are updated and improved.

What's new?

Private dilution reports can be run on Carta.

How does it work?

Private company administrators will be able to run a dilution report that will provide them with diluted shares, average trading prices, and supporting tabs to back out the incremental shares tab. 

In this initial release, the following inputs will be available:

1. Average and weighted average trading prices, including the ability to add Fair Market Values on weekends and holidays
2. Diluted shares
3. Supporting tabs to help users recalculate their incremental shares tab

In the future, Carta will also support:

• Pre stock split values in dilution reports
• Weighted average shares outstanding (WASO)

What do I need to do to get started?

To participate in the beta and receive early access to this report, please reach out to us at 718@carta.com.

What's new?

Carta now helps private company administrators coordinate the settlement of Restricted Stock Units (RSUs). The end-to-end offering allows an Issuer to:

• configure and schedule a RSU Settlement;
• provide RSU holders with an election period to identify how they want to pay the tax withholding obligation associated with the upcoming settlement;
• collect any cash payments from RSU holders; and
• automatically update the cap table at settlement.

During the election period, RSU holders are invited to access a workflow to view their vested RSUs along with the tax withholding amounts due at settlement. They have the flexibility to meet their tax obligation by electing to net-settle, pay the full amount in cash, or use a combination of surrendered shares and cash. 

This offering helps facilitate the RSU settlement process from setup to share delivery for private Issuers that award RSUs under their equity compensation plans.

How does it work?

Issuers

Private company administrators can go through a four-step process to configure an upcoming RSU Settlement with Carta Liquidity. Issuers can:

• set the parameters of the settlement (e.g., FMV, election timing, settlement date); 
• view and confirm the RSUs that will be included based on the vesting end date (i.e., record date); and 
• view and confirm tax withholding amounts associated with the settlement. 

Issuers can set rates to use when calculating tax withholdings owed based on each RSU holder’s tax jurisdiction(s). Carta Liquidity’s integration with Carta’s equity management platform and tax engine eliminates the need for the administrator to pull and sort cap table information manually or calculate tax withholdings for each RSU holder. Alternatively, Issuer’s can provide tax withholding amounts calculated by their HRIS provider for use in the settlement.

RSU holders

When the administrators invite RSU holders to submit their elections, RSU holders will be able to view which of their RSUs will be settled and the tax withholding amount due per security. In addition, individuals will identify how they would like to satisfy the tax withholding amount owed through a self-service election workflow. 

The three tax withholding payment options include:  

• Share withholding (i.e., net settlement) - The entire tax withholding amount is paid by surrendering a portion of shares from the vested RSUs released for settlement. The net amount of shares after withholding will be delivered to a RSU holder at settlement. This is the default option.
• Cash payment - The entire tax withholding amount is paid by a RSU holder in cash (only USD is accepted). RSU holders are required to fund their brokerage account in order to make this election.
• Share and cash payment - Each RSU holder identifies the mix of cash and shares that will be used to pay the taxes due at settlement, providing them more flexibility. RSU holders are required to fund their brokerage account in order to make this election.

For any cash elections, RSU holders are instructed to transfer the necessary cash to their Carta Liquidity brokerage account*. RSU holders are able to modify their election until the end of the election period. 

At settlement, Carta Liquidity’s integration with Carta’s equity management platform automatically updates an Issuer’s cap table to reflect the shares of stock delivered to RSU holders, and any cash payments received to cover applicable tax obligations will be transferred automatically to the Issuer’s brokerage account. RSU holders will then receive their resulting equity from the Issuer in their Carta accounts. In addition, Carta Liquidity will provide a record of the RSU settlement to both the Issuer and RSU holders. 

Run regular RSU settlement processes with automatic cap table updates and tax withholding calculations, saving your team time and resources 

The RSU Settlement offering will:

• Reduce the manual administrative work required to set up a regular cadence of RSU settlement through equity management and tax engine integrations
• Provide RSU holders flexibility to choose how they would like to meet their tax withholding obligations through a self-service election workflow
• Provide optionality to RSU holders to pay out of pocket for the amount they feel comfortable paying.

Start managing RSU Settlements on Carta!

Reach out to company_coverage@cartacapitalmarkets.com to speak with your relationship manager to turn on this feature. 

*Note: Brokerage accounts and other brokerage services are offered through Carta Capital Markets, LLC (Member: FINRA/SIPC)

What’s New

When a user’s bank account does not have sufficient funds to pay for the exercise via ACH, Carta will warn the user when reviewing the exercise. The user will have the option to change the selected bank account, lower the amount of options to exercise, or proceed with the exercise.

Additional improvements to the review exercise page better highlight key details of the exercise, reducing the need for scrolling. The UI also now explicitly states that the total represents a cost to the user.

Users choosing to proceed are then given a final message that an underfunded exercise may be canceled.

Who this affects

This feature is available to employees who have set up their ACH bank account on Carta through Plaid. 

How it works

Carta is using Plaid Balance to confirm the available balance of the associated bank account prior to submitting the exercise request. No account balance information is stored on Carta. This feature does not block users from submitting exercise requests, rather warns them about the potential risk of a canceled exercise.

What happens if the selected bank account doesn’t have enough money for the exercise? 
We now warn users that their account doesn’t seem to have enough money to cover the exercise cost. We allow them to proceed anyway, as they could potentially add funds to the account before Carta attempts to pull the funds. If it turns out there are insufficient funds, we will cancel the exercise.

How does Carta know how much money is in my bank account?
By connecting a bank account through Plaid, we can use Plaid’s APIs to retrieve real-time balance information at the time of the exercise request. Checking the accounts available balance represents the predicted balance net of any pending transactions. This type of information is often used to protect against overdrafts and non-sufficient funds fees. For more information on Plaid Balance, see here.

What if I manually connected my bank account?
Users can always connect their bank accounts manually instead of using Plaid. For these users we cannot know their available balance and they will not receive any warnings about insufficient funds.

Timing

• 12/21/2022 - Released to 25% of users, with general availability by the end of January

How do I learn more or get help?

Visit Carta Support for more details on Exercising Using ACH and Setting Up Your Bank Account

What's new

Employees who have access to Carta Tax Advisory through their employer now have access to on-demand educational content in their Carta portfolio. As an employee, you have the ability to re-watch your company’s recorded webinar, as well as view chapters of key concepts about your equity. The video chapters cover topics such as exercising your option, selling your options and other important topics.

Who this affects

This feature is available to employees who have access to Carta Tax Advisory through their employer. Employees will be able to view their company's recorded webinar once it has been completed.

Where to find it

As an employee, navigate to the Learn section of the Tax Advice page in your Carta portfolio. If you have any additional questions, please schedule a session with an Equity Tax Advisor.

What’s new? 

Public company administrators can now run a Dilution Report to help them calculate their company’s diluted earnings per share (EPS). The Dilution Report will contain the simple and weighted average of common stock outstanding (WASO), the number of incremental shares, the average trading price for common shares, and supporting information for all calculations. This feature will simplify diluted EPS calculations and help public companies meet their diluted EPS reporting requirement for their quarterly income statements.  

How does it work?

To calculate diluted EPS, an Issuer will need the WASO and shares outstanding (new common shares issued at conversion - repurchased shares) for the reporting period in question. The Issuer will calculate its own net income, preferred dividends, and after-tax cost of interest. 

Note: * denotes fields not provided by Carta

After logging into their Carta accounts, public company administrators can navigate to the Financial Reporting section of their profile to generate a new Dilution Report for a desired reporting period. Dilution reports are only available for periods that begin on or after an Issuer’s IPO date.

After the report is generated, the administrator can download an Excel file which includes calculated values for simple and weighted average of common shares outstanding, the number of incremental shares, the average trading price for common shares, and supporting information. The file also includes an “Errors” tab to flag any data issues that should be resolved to produce an accurate report.

Simplify diluted earnings per share calculations to meet quarterly reporting requirements for public companies

With the Dilution Report, public company administrators can:

• Save time and reduce the work required to calculate WASO and shares outstanding to meet public company reporting requirements;
• Customize the diluted EPS reporting period as needed;
• Use Carta’s calculations to verify their own calculations as a sanity check; and
• Understand if there are any data discrepancies that need to be addressed. 

Start using the Dilution Report now!

Do you need additional help in using the Dilution Report? Refer to this support article for more information. For further assistance, reach out to Carta’s Financial Reporting team at 718@carta.com. 

What's new?

Public company administrators can now utilize the brand new Communication Center to send secure communications to stakeholders in the company’s equity plan managed on Carta. This feature allows public companies to create and send timely communications to equity plan members in bulk. Recipients can be selected by relationship type and other filters to further customize the message’s distribution list. In addition, the Communication Center dashboard allows company administrators to view sent and drafted messages, and see which stakeholders have viewed a communication. 

Examples of communications include, but are not limited to: instructions on how stakeholders can manage their equity at Carta, employee stock purchase plan (ESPP) offerings, upcoming trading windows, and updated disclosures.

How does this work?

Permissioned company administrators may access the Communication Center. Before sending any messages, company administrators should check that the company’s Stakeholder Ledger is up-to-date to ensure messages are sent to the correct individuals. At minimum, an individual’s Relationship, Contact Email, and Officer Code (if applicable) should be updated.

Once these steps are completed, company administrators can proceed to the Communication Center dashboard (found under the Employee tab of the main navigation toolbar).

Here, company administrators with Company Editor or Legal Administrator roles can compose, review, and send secure messages with or without PDF attachments. They can also filter for previously sent and drafted messages. 

When choosing who to send a communication to, the Company Editor or Legal Administrator may send bulk messages by Relationship Type (e.g., Employee, Ex-Employee, Advisor), and then also filter recipient lists by Officer Code, Trading Restrictions, the employee stock purchasing plan (ESPP) an individual is a member of and associated status, or the outstanding security type(s) held by each stakeholder. 

Company administrators will have the opportunity to review the communication, save it as a draft, remove individuals as needed, and reconfirm the recipients before sending the message. 

After sending the message, stakeholders will receive an email notification that they received the secure message. They must log in to their Carta accounts to view the message, and messages on the Carta platform may not be forwarded to an external email account. 

Company administrators who can view the Communication Center dashboard can monitor which stakeholders have viewed the communication.  

Send secure messages and archive them safely in a centralized location with Carta’s Communication Center. 

The Communication Center allows public company administrators to: 

• Craft and send secure communications with or without PDF attachments in bulk to stakeholders within their public equity plans; 
• Easily create recipient lists by relationship type and other optional filters, removing the need to maintain multiple distribution lists manually;
• Quickly filter recipient lists of sent communications by who has or has not viewed the communication; and
• Review and archive communications to remain compliant with recordkeeping and reporting laws; 

Start using the Communication Center now!

Need help with the Communication Center? Refer to this support article for detailed instructions on how to manage, view, and send out your next secure message. 

What’s new? 

Carta improved how public company administrators can manage and designate equity plan stakeholders as Rule 144 Affiliates. Designating stakeholders as Affiliates ensures that their trade orders get reviewed before execution through a separate SEC Rule 144 due diligence workflow and that those trades are properly captured for Form 144 inclusion. Company administrators can also now easily access and review a filtered list of Rule 144 Affiliates from their Company Summary page. 

The management of Rule 144 Affiliate status has been separated from the Officer Code workflow to simplify this process and to ensure trading blackout periods for stakeholders with certain Officer Code(s) will not be impacted by one’s Rule 144 Affiliate status.

How does it work?

Company administrators can update Rule 144 Affiliate status by clicking on “Manage Employees” on the Company Summary page. 

From there, administrators can click on each stakeholder’s record and view their current Rule 144 Affiliate status. Administrators can also track the Effective Date of when a stakeholder was first marked as an Affiliate without leveraging Officer Codes.

To designate an individual as a Rule 144 Affiliate, administrators can check the box within the Update Stakeholder flow:

Easily manage, review, and designate public equity plan stakeholders as Rule 144 Affiliates to ensure trading compliance via an improved workflow.

With the improved Rule 144 Affiliate workflow, company administrators can:

• Easily manage, review, and designate equity plan stakeholders as Rule 144 Affiliates;
• Be assured that Affiliate trades go through the proper reviews and are included on Form 144; and
• Set blackout trading periods for certain Officer Code(s) without an impact to a stakeholder’s Rule 144 Affiliate status.

Start using the improved Rule 144 Affiliate status workflow now!

Do you want to update Rule 144 Affiliate status for individual stakeholders or in bulk? Refer to this support article for more information.