Shareworks by Morgan Stanley, an equity plan management platform and division of Morgan Stanley at Work, released a new report: Transparency 2021: Addressing Gaps in Equity Compensation, which was independently researched and authored by Rebel & Co, a third-party research and strategy agency. The report reveals that despite the focus on closing the gender pay gap, inequity at private companies persists in equity compensation plans, with only 41% of women reporting participation compared with 52% of men.

The report also found the equity compensation gap exists among working mothers and among Black, Indigenous and People of Color (BIPOC) employees. Of those individuals who were granted equity as part of their compensation, only 25% were working mothers compared with 60% of working fathers. In addition, 12% of BIPOC employees reported participation in equity compensation programs compared with an average of 42% of white employees.

“Education on equity compensation, diversity and the value of inclusivity can serve as an important differentiator in equity plan design and as a tool in combating inequalities,” Amy Rodriguez, head of private market relationship management at Shareworks by Morgan Stanley, said. “The report explains the disparity, unpacks what is contributing to these disconnects and provides key considerations that equity plan administrators can use to lay a foundation to create equitable opportunities in their organization.”

In the context of inequalities at work, the way in which equity is administered and to whom may unintentionally exacerbate obstacles to achieving equality in the workplace. Even in the presence of equal base pay, equity plans can increase pre-existing disparities. To establish diverse equity compensation participation, the report also highlights five strategies for diverse equity compensation plans:

1. Education on Equity is Key: Consider offering routine virtual workshops and seminars, educational articles and content that break down the value of equity, the role it plays in the company and the ways to access the offer. Lack of education was cited as one of the largest reasons that employees do not participate in their equity plan — executives reported that only 50% of their eligible workforce participates in equity.
2. Mentorship and Training: Equity plans are often tied to a specific title or job role. Offer a training or mentorship program focused on women, BIPOC employees and underrepresented minorities to help create a path forward for all employees who seek career growth and advancement opportunities. This is a great investment back into the organization while communicating individual and collective value.
3. Objective Metrics for Every Role: To combat inherent biases and potential discrimination, communicate clear metrics for each role that are measurable and transparent to the employee along with regular employee reviews covering progress and areas for improvement.
4. Diversity and Inclusion Metrics for Leadership: Incorporate diversity and inclusion (D&I) metrics in executive performance goals that are transparent and measurable. This will help to ensure the organization is headed toward an inclusive workforce.
5. Examine Plan Design: Consider reviewing existing equity plans to determine alignment with bonus structures and other benefits through the lens of making overall equity compensation plans more equitable. When considering the type of equity compensation plan to implement, look to level the playing field by ensuring accessibility across the board. Survey underrepresented plan participants to identify and remove barriers to achieving the full potential of the plan.

The findings of the report are based on a global survey of 574 respondents, which included 272 executives and 302 employees in various industries and regions.