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Equity Compensation & Translation: A Market Case Study & Love Story
Public fascination with translation usually centers around stories of brand exports gone wrong (we cover several of these in “The #1 Mistake Made by Most Translation Teams (and Four Examples of Why It Matters”) or the comical results that come with translating signage. These marketing and communications-focused blunders make for great reading, and are terrific cautionary tales.
But the detailed, regulation-driven world of equity compensation plans provides an outstanding case study of the critical importance of experienced financial services translation teams for even the most seemingly mundane of corporate assets.
Equity compensation is a form of non-cash compensation that represents some manner of ownership interest in a company. Companies that offer equity compensations give employees the option to purchase shares of the companies’ stocks at a predetermined price. This right “vests” with time. This means that the employee cannot use some or all of these options to buy until some set time of employment has elapsed.
These options have some unique tax consequences. They also do not represent actual ownership in the company at the same level as a shareholder. Therefore, the structure of an equity compensation plan involves expert legal, accounting, and tax advice.
The world of stock options is often seen as the purview of big, powerful companies. However, equity compensation plans are actually used by a tremendous variety of small- and medium-sized businesses worldwide. They are also increasingly used by international corporations as part of their growth and retention strategies.
Three Aspects of International Equity Compensation Plans That Demand Expert Translation Teams
1. The technical vocabulary of equity compensation requires expertise.
Glyph has over a decade of experience providing translation services for equity compensation plans. Time and again, we have seen the critical importance of having staff on both sides of a translation effort who clearly and deeply understand the key concepts in play.
Financial and equity instruments do not always match up across markets. For example, you may have one financial, tax, or compensation concept in the US that, when you try to translate it into Chinese, becomes problematic because there are two different concepts in China. Neither of these concepts matches exactly the concept in the US. So, to effectively communicate the plan’s benefits and structure it in such a way that it will pass regulatory muster, the concepts must be mapped to each other.
Compounding matters, there has been a great deal of innovation in the equity compensation sector in the past ten years alone. As a result, there are emerging terms that have previously not existed. Whenever this happens in English it is doubly hard to ensure the proper neologism is used in the target languages. An example is “restricted stock unit” or “RSU.” The term did not even have a search history in Google until around 2008.
2. Cultural differences can ruin a plan’s retention value.
Most companies offer equity compensation as a method of attracting and retaining high value employees. Since these plans have traditionally been aimed at senior staff and executives, there has been an unspoken assumption that these employees have a reasonably high level command of English. This, in turn, leads US companies to assume that leaving their benefit plan in English rather than taking the time and effort to translate it correctly will result in the same “experience” for international employees as it does for US-based employees. Making matters worse, when polled, many senior execs claim to have advanced English skills when, in fact, they have only a rudimentary grasp of the written language.
This leaves employers with a plan that these employees really cannot understand. And many studies have shown that the power of equity compensation as a retention tool is related to the employee’s ability to understand the benefit in the first place and, subsequent to that, their ability to manage the strategic and tax consequences.
“Without quality translation services, an internationally directed equity compensation plan runs the risk of losing it power to retain top talent.”
3. The number of stakeholders in a plan’s deployment will drive up cost without experienced translation management.
Organizations spend more on multilingual employee communications than they need to. They also go through more stress than necessary due to improper planning. Many smaller companies do not have in-house staff with experience in large-scale, technical translation projects. Therefore, there is no institutional procedure and project timeline to rely on.
Vendors who know the technical pieces of the space while also having deep experience with a variety of translation types can help reduce costs through effective planning. One key is to plan out the entire lifecycle of the translation and publication of a plan. This will ensure that content can go to print and release on time in all languages.
The all-too-typical mad rush at the 11th hour is as expensive as it is frustrating. With the advent of video training, Glyph has even helped clients design multimedia communications plans that maximize the effectiveness of a global learning asset while minimizing costs. This sort of bundled approach to deploying something as complex as an equity compensation plan often involves close teamwork with the digital design agency of the client’s choosing or the in-house design teams so that, from the start, assets are created with translation and localization in mind.
What’s key is having someone who understands all aspects of the process – from the plan documents themselves, to the typical timeline for legal and HR review – who can help manage the project.
So that’s the market case study. Now, where is the love story? Our love story with the world of equity compensation is that the field provides such a dramatic example of the critical role of effective translation in even the seemingly most mundane elements of corporate communications. Marketing and packaging provide obvious and dramatic examples of the need for localization excellence. Meanwhile, equity compensation yields a specific, well-defined vertical where quality execution can (and does) make millions of dollars’ worth of difference to our clients’ bottom lines. What’s not to love?
Do you have a seemingly narrow niche where translation quality is critical?
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