Equity plan design: defining employee eligibility, allocation, and structure

Equity is one of the most powerful levers in your compensation toolkit – giving employees a genuine stake in what they're building supports both hiring and long-term motivation and retention goals.

But equity plans are also one of the hardest to design.

Unlike salaries, there's no straightforward benchmark for a well-designed, competitive employee equity plan. Different companies have very different approaches, and grant value varies enormously depending on instrument, valuation, and strike price. Plus, there are lots of opinions to contend with from leadership, finance, legal, and investor stakeholders. And if employees don't understand what they have, the motivational value is lost entirely.

In this session, we brang together data from Ravio's 2026 Compensation Trends report and Ledgy's State of Equity 2026 report to see how companies are approaching equity design in 2026 – and sharing experiences on what separates plans that work from those that don't.

We covered:

• How equity participation is shifting across Europe – and what that means for your eligibility decisions
• How companies are approaching allocation: by seniority, function, and geography
• The equity plan design decisions that matter most – eligibility, allocation, instrument choice, vesting design, new hire grants vs. refreshers – and how to approach them

As always, there'll be plenty of opportunity to ask questions, share experiences, and learn from peers on how best to approach equity design.

Key takeaway 1: Most companies are winging equity plan design – but that's not necessarily a problem

Our live poll found that only 10% of attendees described their equity framework as "very structured." The rest were split between "somewhat structured" and "no real structure at all."

Armon's take: some discretion is healthy. A strong philosophy matters more than a rigid rulebook. The risk to avoid is inconsistency: two people in similar situations being treated very differently is where things go wrong.

Figen added the company lifecycle lens: early-stage companies need flexibility; companies approaching exit need definition. "Winging it" and "having no structure" aren't the same thing.

Key takeaway 2: Start with philosophy before you touch the mechanics

When clients come to Figen with no equity framework, her answer is always the same: begin with compensation philosophy. What are you trying to achieve? Are you building something where everyone has skin in the game, or targeting a small group of senior leaders? Only then does the conversation turn to mechanics.

Armon's framing: keep it simple early on, then formalise as you approach a funding round or exit. The mistake is building a complex plan too early – or arriving at a corporate action without the plan being properly consolidated.

Key takeaway 3: The case for granting equity to all employees is stronger than most companies act on

Ravio data shows a 16% improvement in the UK this year in the proportion of companies granting equity to all employees. Progress – but there's still a long way to go.

The familiar counter-arguments for keeping equity only for senior roles – low equity literacy at junior levels, small grant sizes, shorter tenures – didn't hold up well in the room. Educating employees on equity is the employer's responsibility, not a reason to exclude people. A small grant isn't meaningless; it's a signal that someone is part of the organisation's story.

The option pool, though, is a real constraint. When headroom is limited, you sometimes have to choose between something meaningful for a few or something small for many – and it's always worth making that choice deliberately rather than by default.

Key takeaway 4: Equity participation is still starkly unequal by gender

Ledgy data shows a significant gap in equity participation between men and women.

The 2025 figures showed a 21% gap; the latest data has brought that to 15 points. Progress, but far from resolved. The EU Pay Transparency Directive is beginning to push long-term incentives into scope, which could start to surface these gaps more formally.

Key takeaway 5: The worst thing you can do with underwater options is nothing’ or something

Compressed valuations were also discussed as a real issue today: what do you do when options were granted at a £100m valuation and the company is now worth £20m?

Options discussed include cash compensation for the loss of value, refresher grants at current fair market value, and increasing the option pool to create headroom.

The worst outcome is doing nothing and letting options lapse. These situations usually need a board-level conversation where the exercise price, pool size, and overall strategy are revisited together.