Before communicating equity packages to your candidates and employees, you'll need to make sure to properly set up all the facts about your company's equity and your employee plans.
As you’re going through the following sections, keep in mind that most of this information should live in your cap table management software, such as Carta or Shareworks. If you have questions, loop in your Equity Administrator or Finance Team; they should be able to get you this information, as needed.
Note: This article is geared towards managing equity for private companies. If your company is public, you’ll have some different steps. Please reach out to our Support Team for further assistance.
To access your equity settings:
On the bottom-left of your Agora dashboard, click Settings.
From the Navigation Menu, navigate to Company > Equity.
General Equity Settings
To update your general equity settings:
Navigate to General.
From the Stage field, enter the last funding type or status, as needed. This field is optional and will be shown to your candidates. If you’re a public company, you’ll need to select “Public” for Agora to properly calculate the equity value.
The Company valuation field is prepopulated with the most recent preferred price. To update this field:
Click the Click here to update link.
Click into an existing preferred price to update or click Add new Preferred Price.
Update or add information, as needed, and click Save.
The Outstanding Shares field is optional and will be used to determine the percentage ownership for employees and candidates based on how many shares you grant them, which you’ll be able to show to the candidate, as needed.
The Total Funding field is optional and will be shown to your candidates, if entered. This will not affect any calculations.
Click Save.
Fair Market Value Equity Settings
From the FMV page, if you’re a private company, you can configure your Fair Market Value (FMV) history. The fair market value is determined by your 409a valuation and influences the strike price recipients must pay should they wish to purchase their stock options.
From here, you can create a table containing the history of all FMV values your company has obtained over time. We'll utilize the most recent row in the table, or whichever is marked LIVE, to determine the strike price for the options offered to candidates.
To update your fair market value equity settings:
Navigate to FMV.
If you’re currently undergoing a new 409a valuation, the toggle associated with Toggle on if your FMV is pending field may be enabled to hide the strike price on the Offer Letter.
Note: Some functionality, such as the Equity Calculator, will be unavailable when this toggle is enabled.
To update an existing FMV or add a new one:
Click into an existing FMV to make updates, as needed, or click Add new FMV.
Note: Any FMVs that are live are indicated by a LIVE tag within the associated row.
Update or add any relevant information and click Save.
Preferred Price Equity Settings
The preferred price is the price investors paid for your company's stock in the latest round of funding. Most private companies use this as the benchmark for what their equity is worth, so by default the most recent preferred price that you enter will be used to determine your company's stock value.
From the Preferred page, you can create a table containing the history of your company’s financing by entering each funding event, the date it occurred, the preferred price for that round, and the post-money valuation for the round.
To update your preferred price equity setting, navigate to Preferred.
Updating Existing Preferred Prices
You can update an existing preferred price, as needed.
To update an existing preferred price:
Click into an existing preferred price to make updates, as needed:
Update or add any relevant information and click Save.
Adding New Preferred Prices
You can choose to add a new preferred price. By default, your current share price will be set to the most recent preferred price that you enter. Some companies prefer to use their own formula to determine the current price for their equity rather than the last preferred price. You can set a custom value for the price you'd like to use to calculate your equity share value.
To add a new preferred price:
Click Add new Preferred Price.
Set the Event field to “Custom.” The remaining fields will change based on this selection.
Add in a Custom price explanation. Include an explanation providing context behind the valuation so your candidates can have an understanding of why that number is being used. This explanation will be visible to candidates in their Offer Letter.
Set the Closing date to today’s date, or a date more recent than your last round of funding.
From the Share price field, adjust the currency, as needed, and enter the relevant amount.
The price you choose here is very important as it will determine the projected equity value for a candidate/employee's grant in their Offer Letter (price * # shares), as shown below:
Optionally, from the Post money valuation field, adjust the currency, as needed, and enter the relevant amount.
Click Save.
Projections Equity Growth Settings
From the Projections page, you can set up your equity scenarios. These are purely for communication purposes as candidates and employees will be able to explore the return potential in various scenarios, modeling what the value of their equity could be if your company grows.
To update your projections:
Navigate to Projections.
To update an existing projection or add a new one:
Navigate to the relevant tab and update the information, as needed, or click New Projection and add in the relevant information.
Click Save projection.
Below is an example of what your scenarios will look like for candidates. Candidates are able to change the view by adjusting the valuation multiplier, as needed. Each scenario is compromised of the following:
Name: The label that is shown for the scenario (i.e., “Current,” Good,” etc.).
Description: Some context around the scenario to convey what it means and how it can be achieved. This will be visible to candidates.
Multiplier: Configure the multiplier to define the bounds for stock price projections within each scenario. For example, by setting a scenario to a multiplier of three, users will be able to see their equity's potential worth at three times the existing share value for that scenario. This feature assists in understanding the potential future value of their investments.
Value per share: How much a share of equity is worth in that scenario. This is linked to the multiplier and automatically set to multiplier * current share price (as set above).
Company valuation: What the company's total valuation would be in that scenario.
Dilution: Allows you to set an assumed dilution percentage, which will decrease the total equity value proportionally by the percentage entered. Entering ‘0%’ will remove dilution from the Offer Letter.
The multiplier, value per share, and company valuation are linked to ensure consistency, so if you change one, the rest will automatically update.
By default, you'll start with the scenarios of "Current," "Good," "Great," and "Home run." We recommend updating these to be specific to your company. Many companies use these to talk about if they were to achieve different funding milestones or overtake one of their competitors. This is your chance to get creative!
We recommend having no more than five scenarios in order to avoid too much complexity.
FAQs Settings
Within the FAQs > Equity page, set up Frequently Asked Questions (FAQs) about your equity program to proactively answer common questions and explain any additional relevant information. The FAQs will appear at the bottom of the Equity section on the Offer Letter.
To update your FAQ settings:
From the Navigation Menu, navigate to Company > FAQ > Equity.
To update an existing FAQ or add a new one:
Click into an existing FAQ to make updates, as needed, or click Add new Equity FAQ.
Update or add any relevant information and click Save. Each FAQ consists of the following fields:
Question: This is the label candidates will see and click to get answers to.
Answer: This is the answer candidates will read after clicking on the question.
Placement: This determines if the FAQ will appear on the Offer Letter, Employee Portal, or both.
Component: Use the tags to select all of the equity types that are applicable to the question.
Offer Equity Communication Settings
The last step is configuring the communication of equity in your Offer Letters.
Note: Updating default offer fields within a template will not update existing templates.
To configure your offer equity communication settings:
Navigate to Offer Letters > Templates.
From here, you can edit the default template, edit an existing template, clone an existing template, or create a new template. For more information on templates, see Managing Your Templates. Choose the relevant option to proceed.
Navigate to the Equity tab.
From the Express equity as field, select “Monetary value” or “Quantity of shares.”
From the Equity strike price field, adjust the currency, as needed, and enter the relevant amount. Alternatively, to update the field to sync with the FMV marked LIVE in the FMV page within Settings, click Sync with FMV.
Decide whether you’d like to show an estimated share quantity when equity is expressed as a monetary value by enabling or disabling the associated toggle. If you previously selected “Monetary Value” as your equity type, you may still show candidates the estimated share count that they'll receive based on your current share price, assuming there is no change, by enabling this toggle.
Enable the Show equity percentage toggle to show candidates which percentage ownership their shares represent in the company. This will automatically be calculated by dividing their share count by the total number of outstanding shares, which is set in the General page within Settings.
The equity percentage will look similar to the image below on the Offer Letter:
Enable or disable the Show FMV, Default early exercisable, and Default show equity performance scenarios, as needed.
Enable or disable the Default show equity calculator toggle, as needed.
When enabled, additional fields appear. Fill in or adjust these fields, as needed.
The Offer Letter will show information similar to the following, allowing users adjust their view by year and/or share amount, as needed:
Note: Employees being offered RSUs will not see the Your cost or Your potential return rows.
Fill in or set the remaining, as needed, to streamline your offer creation flow for recruiters:
Default equity formula: See Equity Formula Variables and Functions.
Available equity types: When creating an offer, recruiters will be able to set the equity type of the candidate's package to any of the options you set here. For example, if you only offer RSUs, you should leave that as the only option; this will ensure that offers are only created with that type.
Default equity type: If you leave more than one available type of equity, then this will be the equity type that an offer defaults to unless a recruiter overrides it.
Default vesting schedule: When creating an offer, you'll have the option of utilizing any vesting schedule Agora has within the system. Here, you can select the default vesting schedule that will be used unless a recruiter overrides it. The format within the Default vesting schedule field is the percent vested each year, the cliff length, and the vesting frequency. From this field, you have several options. The following goes over the “Standard” use case:
When selecting “Standard,” the “25/25/25/25” represents four years of vesting, receiving 25% each year. The "1 year cliff" means no equity will be vested until they reach the one year mark, at which point they’ll receive the full 25% of their first-year. “Monthly” represents that after the cliff, they will get to vest equity every month.
Note: If you don't see your vesting schedule in our list, please reach out to our Support Team with your vesting schedule and we'll be able to create one for you. For more information, see the Vesting Schedule Anatomy table below.
Default equity vesting description: Enter a description of your equity vesting, as needed.
Default show equity exercise window: This will indicate to the candidate whether or not they'll be able to exercise their options prior to vesting them (see example image below). When this toggle is enabled, the following field becomes available:
Default equity exercise window help text: This will indicate to the candidate whether or not they'll be able to exercise their options prior to vesting them. Fill in this field, as needed.
Vesting Schedule Anatomy
Name | The unique name you’d like to assign to your custom vesting schedule, so it's easy to choose it as an option when creating Offer Letters. |
Vesting Length | The amount of time you’d like your equity to vest over (e.g., 4 years). |
Unit | The unit of time you’d like the equity to vest over: Year, Month, or Days. |
Cliff Length | The amount of time you’d like the first portion of your equity to vest over (e.g., 1 year). |
Cliff Unit | The unit of time you’d like the equity to vest over: Year, Month, or Days. |
Year 1-5 Frequency | How often you’d like the equity to vest over the five year period (e.g., every month).
Note: While all five years are required, you’re able to enter ‘0' for years you don’t want the equity to vest. |
Year 1-5 Percentage | The percentage of the overall equity you want to vest throughout the years. |
Fixed Day | The exact date that the first tranche of the equity vests (this field is optional). This is only for vesting schedules where the candidate doesn’t start vesting on their start date. |
Fixed First Month | The exact month that the first tranche of the equity vests (this field is optional). This is only for vesting schedules where the candidate doesn't start vesting on their start month. |
Note: You're now all set to start including equity in your offers! When you create offers, all you'll need to do is enter the number of shares, type of equity, and vesting schedule, and the remaining settings will be pre-populated based on the template applied. Some settings can also be controlled on an offer by offer basis, such as Vesting schedule, enabling/disabling the Show equity exercise window toggle, Exercise window, exercise window help text, enabling/disabling the Early exercisable on/off toggle, enabling/disabling the Equity performance scenarios toggle, enabling/disabling the Equity calculator toggle, Share minimum and maximum multipliers, and calculator text.