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Equity Transparency
Many years ago I got an offer to join a pretty hot tech company, but I was negotiating the equity piece. They told me the number of shares I would get but I asked about the fully diluted number of shares. They told me they don’t disclose that number….
🚩 Immediate red flag. Honestly feels like not disclosing that should be illegal…
I pushed and they still wouldn’t tell me the number OR the current 409A FMV. I liked the hiring manager, the company, the cash, etc. but the lack of equity transparency killed it for me. If they lacked that much transparency on equity then they don’t trust their employees…I was somewhat junior (Director-level role), but you can’t evaluate equity comp without the basics.
There is so much diversity (usually led by varying CFO opinions) in how transparent companies are about equity and financials, but there are basic minimum standards and best practices that companies follow.
So I asked someone who lives this topic everyday to explain best practices — Charly Kevers is the CFO of Carta (an equity management platform last valued at ~$8B). Before joining Carta, Charly served in leadership roles at companies like LendingClub, Salesforce, Hewlett Packard, J.P. Morgan and Samsung.
Keep reading for an awesome guide on how to think about this balance 👇
The CFO Playbook for Equity Comp
A little while back, one of our engineering leads Slacked a question about their equity package. It seemed straightforward—something like "Hey, how should I think about my taxes if I exercised my options now?"
They had a mix of ISOs and NSOs—a fairly common scenario at private companies—but the answer was anything but simple. We had to walk through whether they’d trigger the Alternative Minimum Tax (AMT), how that might vary depending on their income, and whether they were planning to hold the shares long enough to qualify for long-term capital gains treatment.
We also had to explain how exercising NSOs now could create an immediate tax bill based on the spread between strike price and current fair market value—even without any liquidity.
That moment stuck with me. At a company like Carta, where our entire mission is to make equity more understandable, you’d think we’d be immune to this kind of thing. If it’s still hard for our own team to navigate the world of options, RSUs, vesting, taxes, and liquidity, you can bet employees at other tech companies feel just as uncertain.
Here’s the truth most CFOs know but don’t always say out loud: Our people don’t all understand what they own. And in 2025, that needs to change. Because the way employees think about equity has fundamentally changed—fueled by technology, transparency laws, market conditions, and a generational demand for clarity and transparency.
And here's what that means for all of us in the CFO seat.
Equity isn’t just compensation, it’s foundational
When I joined Carta, I quickly realized something powerful: Equity is no longer just an incentive—it’s the foundational mechanism that helps align employees with the company’s performance. And like any such mission-critical system, its success hinges on trust and visibility.
Employees don’t expect a lottery ticket. But they do want to know what they own, how it works, how it compares to the market, what the specific tax implications are, and how they can unlock the value of their equity.
This shift isn't optional anymore. It’s a competitive reality.
The transparency tipping point
For years, equity was the mysterious bonus at the bottom of the offer letter. Promised generously, explained vaguely, and difficult to decode without a finance degree.
That’s changing fast. It’s accelerating in 2025 thanks to a few converging forces:
Software tools now offer real-time compensation visibility—bringing startup equity out of the shadows.
Gen Z and millennials expect real-time visibility, not PDFs stored in their inbox.
Exit optionality has evolved—IPOs or M&A are no longer the only path to liquidity. Employees are asking harder questions, sooner: “How do I access liquidity?” “What’s this really worth today?”
Compensation transparency regulations (e.g., California and New York) are pushing equity into the same spotlight as base salary.
When we launched Carta Total Comp, we saw something fascinating: Employees who could see their full compensation picture—including equity—demonstrated significantly higher trust in leadership and their personal financial future. They were also more likely to stay.
Which leads to an important takeaway:
Transparency is a strategic advantage, not a vulnerability.
So… how transparent is too transparent?
This is a frequent question I get from fellow CFOs:
“How much should we really share with employees?”
Having spent the bulk of my career at public companies, I was always taught to keep any information related to the company’s performance as confidential.
After several years at a private company, here’s where I land: You should treat employees like the shareholders they are, i.e. give them a similar level of visibility as you do to investors in the business. That means going well beyond a simple vesting schedule and giving them a clear understanding of what they own.
In 2025, table stakes include real-time, personalized equity insights:
Scenario modeling (e.g., “What if the company exits at $2B vs. $5B?”)
Cap table visibility (e.g., dilution)
Tax implications of exercises and sales
Easy-to-navigate dashboards, not out-of-date spreadsheets
Employees aren’t just asking “What do I have?” anymore. They’re asking, “What could this be worth? How could I realize that value?”
Here’s a framework I often use with other finance leaders:
The three levels of equity transparency
Pro tip: Try walking through your company’s equity journey from the point of view of a first-year engineer or marketing associate. What do they see? What don’t they? Is it clear? Is it inspiring?
What’s changing in equity management this year
Equity trends provide a revealing glimpse into larger industry shifts—and they tell a story.
A few examples:
Employee exercise rates: Employees exercised 32.2% of vested, in-the-money stock options during Q4 2024, compared to 54.2% three years ago, according to Carta data. A post-pandemic correction in valuations caused more employees to question whether acquiring these vested shares (and dealing with the potential tax implications) was a wise financial decision. It’s important for CFOs to understand and even anticipate these trends.
Post-termination exercise period trends: As the economy cycles through boom periods and downturns, employees also must make decisions on whether to exercise their options during the post-termination exercise period (PTEP) after leaving a company. During challenging economic environments, the percentage of companies that extend the PTEP beyond the traditional 90 days ticks upward—it began rising in 2022 and has settled well above the 25% mark through 2024:
Equity packages by job role: Often the data tells us a nuanced story of shifting trends. For example, new hires in HR, sales, and customer success saw declines in median equity for those job roles of 23%, 18%, and 14%, respectively, in the second half of 2023. But those same roles had the biggest increases in equity compensation in 2024, with the median equity package increasing by at least 10% for each role (see below chart). Staying on top of these changes is critical, and as CFOs we must have command of the data to guide decision-making and help our companies attract and retain talent.
These data points are snapshots in time, and command of the details and trends is crucial.
But it’s even more important to think bigger. Let’s unpack four major shifts happening in 2025:
1. Secondary liquidity is now strategic
The only path to liquidity isn’t an IPO or M&A event anymore—and employees’ expectations are evolving accordingly. Tender offers and managed secondary programs have become tools to consider as part of your overall compensation strategy.
Case in point: Dating back to Q2 2023, the number of new tender offers administered by Carta has now increased in five of the past six quarters. That includes Q3 2024, which saw 26 new tender offers—the highest quarterly total since the middle of 2022.
CFOs are leading here: creating rules-based liquidity programs, defining eligibility and guardrails, and educating about potential tax outcomes.
The question isn't "should we offer liquidity?" anymore. It's "how early can we do it responsibly? What types of securities are best suited for liquidity? And how can we help employees understand potential tax implications?”
With all this said, these transactions are complex and have implications for the company, which CFOs are expected to understand. These trends put more pressure on finance professionals to get more familiar with the valuation, accounting (see #3) and tax implications—so you can avoid surprises.
2. Equity calibration is tighter—but needs more storytelling
In tougher market climates, we’re all being more disciplined with equity. That’s a good thing. Case in point: Median equity packages plummeted post-pandemic by 45%. Since then they’ve ticked upward only modestly, and are still 40% lower than the packages seen during the boom period of 2021-2022.
But whether it’s boom times or belt-tightening times, pure benchmarking isn’t enough. Employees need context—comparing bands, equity versus cash mix, or how to think about refresh grants.
Narrative clarity matters more than ever. Do your managers understand how equity awards are determined and how equity value ties to the company’s performance? Can they explain it?
3. Accounting standards & tax modeling are evolving
One of the more nuanced—but increasingly critical—challenges we face as finance leaders is the growing divergence between 409A valuations and ASC 718 fair value calculations. While both aim to estimate the value of equity, they serve fundamentally different purposes: 409A is used to set the strike price for options and ensure compliance with IRS safe harbor rules, and it is central to tax calculations in the context of liquidity events, whereas ASC 718 governs the expense recognition for equity awards under GAAP.
In a stable market, these values tend to track closely. But in today’s environment, where secondary activity is more pronounced, we’re seeing wider gaps between the two. That divergence creates complexity in financial reporting, and potential misalignment in how equity is perceived versus how it’s accounted for.
With employees exercising options early—and participating in tender offers—we must ensure tax modeling and communications are bulletproof. Not only that, but the onus is on CFOs to understand if liquidity transactions may lead them to have to move to liability accounting.
Distributed workforces raise thorny cross-jurisdictional issues too. Which brings me to #4…
4. Global equity is no longer a side project
Your next executive hire might live in Sydney. Equity is global, and understanding the details matters. Employees in Australia and New Zealand exercised significantly more options than those in Asia or the Middle East, according to Carta data.
Global teams mean global equity—and global compliance. Traditional email and spreadsheet workflows can’t keep up with this complexity.
As an employer, you’re expected to offer equal access to equity insights and guidance wherever your people live.
That means investing in tooling that supports multi-country vesting, currency conversion, tax obligations, and localized timelines.
A CFO’s equity manifesto for 2025
Let’s bring it home. Equity has outgrown the “maybe they'll understand it eventually” stage. In 2025:
Equity is no longer treated like a bonus—it’s part of every financial conversation, from boardrooms to Slack threads.
Transparency builds trust. Trust drives performance. And performance compounds over time.
Programmatic, tech-enabled, globally aware equity programs are the new standard. CFOs aren’t just guardians of the balance sheet—we’re the architects of long-term capital culture.
The future belongs to CFOs who can manage ops with precision—and tell the story with clarity.
TL;DR: What you should do tomorrow
Audit your current employee equity visibility. Would a new hire understand what they own after 10 minutes?
Evaluate your scenarios and modeling tools. Do they align with what employees actually want to know?
Prepare a strategy for managed secondary liquidity events—even if you're private for the foreseeable future. Make sure you are clear on the likely implications for your company.
Think global. Standardize your equity programs across remote and international teams.
Not everything will change overnight. But trust me—every step you take toward clarity today will pay off in performance, retention, and resilience tomorrow.
Footnotes:
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Transparent, every time, and I say that having built comp bands from the operator side. The secrecy usually protects the company's negotiating leverage, not the employee's interest, no matter how it gets framed internally.