E-Service Business Model for the Management of Equity-Linked Compensation

Summary

Today, in the U.S., equity-linked compensation (ELC) is well established, for the management as well as for the employees. Since ELC is not normally considered as “business critical”, companies usually outsource ELC administration in line with the current trend of outsourcing non-core business processes. Many different and very specialized skills are necessary to implement and administer ELC programs.

In Europe, implementing and administering ELC is more difficult. Outsourcing is not an accepted practice, especially for sensitive data. In addition, cultural, foreign exchange, legal and tax requirements differ from country to country and make the implementation and administration of European ELC programs very challenging. In spite of the obstacles Europe is seeing a strong and increasing demand for ELC.

The business model Employee Equity Services (EES) developed in this paper focuses on ELC-related processes of both, corporations as well as their employees. The core product is an Internet-based collaborative application infrastructure application (EES Platform), which provides corporations and their employees with functions, processes and information to manage their Employee Equity Plans (EEPs) and access to additional 3^rd party services. This allows corporations to outsource major parts of the administration of EEPs to service providers.

The business architecture is based on an e-service model, which includes application service provisioning (ASP). The ASP model, combined with the Internetenabled collaboration of stakeholders in a community of practice integrates the customer process. The EES business network includes specialized service providers, which enable a comprehensive coverage of client needs during the entire life-cycle of EEPs.