Equity events include changes in share price, FMV, or outstanding shares. Admins can add equity events into Lattice Total Compensation to support calculating the current value of an employee’s equity.
Create an equity event
Generally, equity events are any events that impact the share value of your company, such as funding rounds or 409a audits. Your finance team can likely assist if you’re unsure how to populate these values.
Note: You must disable total compensation before making changes to equity events.
- Navigate to Admin > Compensation > Total Compensation > Equity > Set up.
- Note: If company currency has not been set up yet, you will be prompted to set this up before being able to continue. Visit Set Up Currency Conversion Rates for more information on currencies.
- Click Add equity event.
- The equity event modal will appear —— Add the following information:
- Event name: choose from a list to describe the type of event
- Share price: price per share based on the last round of funding. This price will be used to calculate the current value of employee equity. We generally recommend using the preferred share price.
- Share price effective date: the date when the new share price and/or valuation will take into effect
- Fair market value: the per share value based on the latest fair market valuation (409a)
- FMV effective date: the date when the new FMV will take effect
- Company valuation: the total enterprise valuation of your company based on the latest financing event.
- Total outstanding shares: the total number of fully diluted company shares.
- Note: If your equity event did not change some fields, enter the current number value.
- Click Add equity event.
View equity events and active share price
The equity events table lists all equity events admins have added. It is not required that all equity events that ever occurred are entered. Only one active equity event is required to configure equity. The most recent event is used to calculate the value of equity.
The active share price is the price on the most recent equity event that has an effective date in the past. This share price and valuation will be used to value employee equity values. If a new equity event is added with more recent effective dates in the past, it will become the new ‘active’ share price.
You can edit or delete equity events from the table by clicking on the ellipses on the far right side.
Changes to Equity Events when Equity Scenarios are Configured
When equity scenarios have already been configured and the active event valuation changes, admins will be notified that the change will impact the scenarios.
Equity scenario: 10x
Equity scenario: 20x
To keep that scenario to $10B, the equity scenario must be edited. See Configure Equity Scenarios for more information on how to edit equity scenarios.