Over the years, we have advised many companies on the considerations related to suspending vesting of equity awards and/or suspending participation in an employee stock purchase plan while an employee is on a leave of absence. This seems like a relatively straightforward concept. In practice, however, it can be difficult to get right and a challenge to administer. When determining whether to adopt a leave policy, companies will want to consider:
- the proposed terms of the leave policy
- how to communicate the leave policy
- when to implement the leave policy
- local law requirements, and
- general administration
If your company has implemented or intends to implement a leave of absence policy, what is essential is (1) regular communication between human resources and the relevant stock and ESPP teams, (2) resources to determine the current legal requirements, and (3) systems for applying the leave policy on a consistent basis. For more information on how to implement a leave policy for equity awards, read our recent NASPP guest blog post here.