Author: WPAdmin

New Year Means New Tax Changes

Ringing in the New Year also means changes in tax laws that impact stock administrators. Many of you may have already heard of the changes that are here through year-end tax updates or blogs, but for those of you with your head in the sand, here are some new changes that you should note:

The ceiling on wages subject to social security contributions is rising from $118,500 in 2016 to $127,200 in 2017. The withholding rate of 6.2% remains the same. The maximum amount that should be withheld will now be $7,886.40. Make sure your equity administration system is appropriately updated.

New deadline for electronic filing of Form W-2: Employers continue to have to send out Form W-2s to employees in the mail or electronically by January 31. But now the employer also has to file these electronically with the IRS by January 31. This means it is more vital than ever to have amounts reported on the W-2 right the first time to avoid the dreaded Form W-2 C.

Form W-2 filing extension for employers is not automatic: Previously, employers could apply for, and automatically receive, an automatic filing extension on the electronic filing of Form W-2s. The extension option is still available, but the granting of an extension will be considered on a case by case basis by the IRS.

But the more things change, the more they stay the same. Some tax related stock administration deadlines and limits are not changing.

Medicare: The Medicare rates remain the same at 1.45% for the first $200,000 of taxable income and a 0.9% surcharge on any income after that threshold.

6039 Filing Deadlines. No reprieve here. The 6039 filing deadlines remain the same: 

Forms 3921 and 3922 must be distributed to employees by January 31.

The paper filing of the employer’s 6039 return is still due by February 28.

The electronic filing (FIRE) of the employer’s 6039 return is still due by March 31.

The deadline to file personal tax returns for 2016 with the IRS is April 18, 2017. Well, the regularly scheduled tax return filing deadline remains April 15. However, due to April 15 falling on a Saturday and Washington D.C.’s Emancipation Day holiday being observed on April 17 instead of April 16, 2017, Tax Day is on the following Tuesday.

Make sure you check in with your payroll department for any states who may have changed their tax rates for 2017.  And rest up, once employees receive their W-2 and 3921 and 3922 Forms, the onslaught of tax questions will begin.  Happy New Year! 

Temporary Staffing

We’re here when you need us

And the Survey Says…

Stock administrators wear many hats and do many different jobs.  SOS is frequently asked, what department should stock administration report to in a company?  In the Legal department?  HR?  Accounting?  Treasury?  The answer is that there is no right answer to this question. There is also no list of standard job duties for a stock administrator.  Some tie out bank accounts and do journal entries, while some do not.  Some are heavily involved in securities law filings both domestic and international, while others are not.  Our SOS team loves all things equity, so we asked our Xtra readers in October to tell us where they report and what their duties are and we thought we would share the results with you!

Department that owns stock administration:

Accounting/Finance:  49%

Legal:  24%

HR/Compensation/Benefits:  23%

Treasury: 4%

This breakdown is interesting considering the duties that fall under the stock administrator’s purview:

Accounting related duties:  Sending wire instructions to brokers to move proceeds from equity transactions:  30% of you are not involved in this process at all, 34% are somewhat involved in the process and 36% count this as a regular job duty.  Journal entries:  41% have no responsibility in this area, 21% are marginally involved and this is routine for 38% of the respondents.

When it comes to entering stock related items into payroll, 39% have no involvement at all, 38% are involved to some degree and 23% consider this a regular job duty.

Corporate tax related job duties don’t usually fall within the stock administrator’s realm:  With 77% having no involvement in re-charge or chargeback agreements, this is not a popular job duty among stock administrators.  16% are somewhat involved, but only 7% claim this as a primary job responsibility.  56% aren’t involved at all with preparing the corporate tax accruals, 28% are only partially involved and 16% have no involvement at all.

Legal duties of a stock administrator:  about half of stock administrators (49%) are required to draft and file Forms 3, 4 and 5.  31% are involved in the process and 20% are not involved at all.  When it comes to international filings, 30% are not involved with at all, 44% being involved in the process in some way and 26% claiming this as a regular job responsibility.

As you can see, there is really no “one size fits all” description for a stock administrator’s job.  The descriptions are as diverse as the people who make up the stock admin community!

Refresh on the ASC 718 Annual Disclosure Requirements and New Guidance Under ASU 2016-09

December 31st has arrived and another fiscal year has come to a close. It might be worth taking a step back and to re-examine annual equity compensation disclosure requirements. Whether it’s a requirement under ASC 7181, ASC 505-502 or the new guidance under FASB ASU No. 2016-093, it can be perplexing to keep up with it all.

As required by ASC 718 paragraphs 10-50-1 thru 10-50-2, there are annual minimum disclosures that companies must provide when disclosing their stock-based compensation plans. Some of this information may be repeated from the previous year or previous quarter if you kept a running tally, but it’s worthwhile to check and see if your annual disclosures are still relevant. For example, some companies are still disclosing the “Option Outstanding/Exercisable by Price” table where options are grouped by exercise price ranges (see insert below). This grouping by exercise price range was required under FAS 123 but is no longer required under ASC 718.

No longer required under ASC 718

No longer required under ASC 718

Choosing to show the exercise price ranges is left to the discretion of management and the auditors. Reducing that information may also cut down on the number of XBRL tags for those companies required to tag your footnote data under the U.S. Securities and Exchange Commission (“SEC”) XBRL rules.

What is required under ASC 718

What is required under ASC 718

Also required but not shown in the table above is information on “options vested and expected to vest at the balance sheet date”. Auditors have asked that this information be included on a separate line item between the outstanding and exercisable line items. Of course if a 0% forfeiture rate is used, the “expected to vest” info is not applicable.

Another item to note is ASC 718 permits separate disclosures for different types of equity awards that have different terms. Often times companies include all of their stock options (service- and performance-based) in one single narrative and roll forward table without distinguishing the characteristics of each award type. The ASC 718 guidance is suggesting that a narrative and share roll forward on service-based stock options should be separate from the narrative and share roll forward on stock options with performance conditions and/or market conditions. It makes it easier for the reader to understand the different types of share-based payment awards.

One final item that often is overlooked is the description of the company’s policy for issuing shares upon option exercises or unit conversion, including the source of the shares. Will new common stock be issued or will existing shares be reissued from treasury stock?

Regarding ASU No. 2016-09, new guidance was released in March 2016 and is effective for public entities for fiscal years beginning after December 15, 2016 and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2017 and interim periods beginning after December 15, 2018. Early adoption is permitted. The key takeaway is that ALL of the following items must be adopted, no cherry picking or “a la carte”:

Accounting for income taxes - Excess tax benefits/deficiencies will now be recorded in the income statement. Say bye-bye to the APIC Pool.

Statutory Tax Withholding - Employers can withhold taxes at the maximum statutory tax rate in the applicable jurisdictions and not trigger liability classification.

Accounting for Forfeitures - Companies will be able to elect as an accounting policy whether to account for forfeitures by a) continuing to estimate forfeitures under the previous ASC 718 guidance or b) recognizing forfeitures when they occur.

Diluted Earnings Per Share - Assumed proceeds from excess tax benefits will no longer be a component in calculating buy back shares under the treasury stock method.

Cash Flow Presentation - Excess tax benefits can be presented as an operating activity only. Cash paid to a tax authority when shares are withheld can be listed as a financing activity in the cash flow statement.

Nonpublic entity practical expedient to calculating expected term - Nonpublic companies without sufficient history will be permitted to use the SEC’s Simplified Method under Staff Accounting Bulletin No. 107/110 (codified in Topic 14D.2), which calculates expected term of a “plain-vanilla”4 option as the midpoint between the vesting period and the contractual term of the option.

Nonpublic entity practical expedient to using intrinsic value - For nonpublic entities that measure liability-classified awards at fair value, they can elect a one-time change in accounting principle to measure those awards at intrinsic value.

Keep in mind that various transition requirements will apply to these amendments, so consult your auditors when considering these key decisions.

SOS is prepared to assist you in preparing these disclosures. We recommend consulting with your legal, accounting and tax advisors before taking action on your disclosures.

Footnotes
1- ASC 718 = FASB ASC Topic 718, Compensation- Stock Compensation
2- ASC 505-50 = FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees
3- ASU 2016-09 = FASB ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting
4- “Plain-Vanilla” Options as defined in SEC SAB Topic 14D.2, Share-Based Payment- Certain Assumptions Used in Valuation Methods-Expected Term

Bill Storey, CPA, Stock & Option Solutions, Inc.

bstorey@sos-team.com

And the CEO says… “Thank you to all of our incredible clients and partners with whom we have worked with over our 18 years in business. Our success is largely due to your referrals, and we are grateful for you trusting us with your friends.  Our core values of Excellence, Integrity, Opportunity, Passion and Teamwork are the essence of how we aim to live up to your trust as we continue to work together over the next 18 years."

- Barrett Scott, CEO, Stock & Option Solutions, Inc.

Product Spotlight: Equity Expense Products & Solutions

SOS offers a number of products that can make your equity expensing tasks less onerous and more audit friendly.

Are you struggling with your Employee Stock Purchase Plan Expense? Maybe you are not sure how to capture your Non-Employee expense for options and awards. Let us help you find a solution to all your equity expense accounting issues.

Here are some features of the SOS ESPP Expense Application:

•   ESPP Expensing Edge Application
      •  Available for non-modification and certain modification plans
      •  Bridges the gap left by equity administration platforms with little to no ESPP expense functionality
•   Non-Employee Expense
      •  Mark-to-market expense until vest date, straight-line or accelerated attribution
      •  RSUs or Options
      •  Calculates option fair values automatically using remaining contractual term, as required by ASC 505
      •  Auditable and supportable
•   Modification Accounting
      •  Type I & Type III or combinations
      •  Exec modifications at termination or large modifications for repricing/option exchanges
      •  Assistance determining correct approach and shares impacted
      •  Customizable
•   Forfeiture Rate Analysis and True-Up at Vest vs. True-Up at Forfeiture Analysis
      •  Assistance developing a process to calculate the “right” forfeiture rate, with minimal time and effort
      •  Standard process overcomes issues inherent in many system’s reports
      •  Easy, repeatable, and auditable process, reviewed by Big 4 audit firms (for clients)
      •  Understanding your rates and the impact of switching from one method “Static” to “Dynamic”
•   Flux Analysis
      •  Quantifies and explains the reasons for expense variance from quarter to quarter, month to month
      •  Categorizes by new grants this and prior period, terminations, vesting changes, etc.

In addition to the expense assistance mentioned above, SOS can also provide other accounting assistance in the areas of:
•   Accounting Expertise
      •  Ad hoc assistance on questions on expense, modifications, disclosures, diluted EPS, tax accounting, and forfeiture rate application, etc.
      •  Auditor support on some systems (explain calculations, answer accounting questions)
•   Performance Grant Assistance
      •  Get your system setup to handle expense and diluted EPS correctly, no matter how complex your performance awards
      •  Spreadsheet calculations for performance options
•   System Accounting Training (not available for all systems)
      •  Inputs, system use, expense recognition, diluted EPS, tax accounting, etc.
      •  Our experts can train you onsite or via remote meeting software (sessions can be recorded for future reference

Meet our stellar team of well-known equity compensation experts

SOS Consultant Corner: A Few Skills to Master in the New Year

This month marks my 10-year anniversary of working for SOS. Similar to the reflection many of us tend to do near the end of each year, recently I've thought about the many projects I've been a part of and clients that I've had the pleasure of working with during that time. Continually working with different people and different companies can be quite a challenge in flexibility. However, it's not unlike being a typical in-house stock plan administrator. In-house administrators face the same challenges as consultants and need the same skills to navigate successfully through their day. I have found that it's helpful to have a few specific "soft skills" which are somewhat interrelated: being able to develop rapport quickly, wear different hats constantly, and most of all, use discretion. Always.

It's a funny thing, rapport. You would think one would need to be a "people-person" to be good at it, but I usually don't describe myself as one. I start with the approach of humility, being honest that I really don't necessarily know the answers to all stock plan questions, but I try to display some confidence that I will be able to deliver. I think it's mostly the honesty that wins them over. Under-promise and over-deliver. Just remember to come through on the delivery part. And if you won't be able to deliver as promised, let them know. Take responsibility and don't use excuses.

As for the different roles we play, nothing illustrates our predicament more than the fact that the equity department can be managed under different groups, depending on the company. We could be in Financial Reporting, Legal, HR, or even Payroll. No matter where we report, we will end up working with the other groups on a regular basis. I think honesty ends up playing an important role here too. I often start brief discussions with other groups with the words, "Now I'm no accountant, but..." or "I'm no lawyer, but...". What it comes down to is, are you able to speak their language, put yourself in their position, understand what they need and what your role is in being able to satisfy that need? You do not necessarily need to please all people, but you at least need to know how to communicate respectfully, mindful of how others see the situation. That will help each of you as you work toward common goals for the company's success. Also remember: words matter when you are audibly speaking to someone. Body language and other inaudible cues can often clarify the meaning behind those words. But emails don't have these same cues. Sarcasm doesn't write very well outside of Instagram memes. And in all matters of communication, audience is extremely important. I've had a few situations where I've found that a phone call or face to face conversation is best. When in doubt, talk it out.

Though honesty works well most of the time, it can occasionally become a bit more complicated - that's where discretion comes in. Maybe you're having an issue with your broker or other provider, something that employees are waiting on. In that case, you might not want to tell inquiring employees what the problem really is. A nice, general apology, with an explanation that you understand their frustration, or just letting them know you're working on it, can help in the meantime.

Work is where we spend the majority of our waking hours. If we work a little harder at being honest, knowing when to be discreet about sensitive issues, and building rapport with different teams and team members, it will make the workplace that much more enjoyable.

Tim McCleskey, CEP, Stock & Option Solutions, Inc.

SOS Stock Plan Outsourcing

Full-time expertise at a part-time cost

Across Our Desk

From the NASPP Blog: Top ten trends in stock plan designForm 3922 gets an upgrade (The SOS 6039 Service team is happy to walk you through that)…Amending share withholding provisions.

ISS releases changes to US Equity Plan Scorecard

Uber engineer sues over stock options.  (I)SO confused…

Compensation Strategies releases survey on share ownership guidelines in small and mid-size companies…

Accelerating taxes by deferring taxes on equity compensation in private companies…Interested in startup equity?  Dan Walter is on part 8 in his series on the topic.

Post-election updates from myStockOptions.com…

Upcoming Equity Compensation Webcasts

Our webcasts cover high-priority equity compensation topics

SOS Solutions Webcast: The Professionals: Beyond Resources

Tuesday, February 7, 2017 11:00 AM PST

Description: 

What do you do when no one has the answer to your equity related conundrum? You contact the professionals, of course. SOS’ Professional Resources Team has seen it all, done it all, and can answer those specialized knowledge questions that don’t come along every day.
Our team of experts can assist with accounting and administrative issues when you find yourself in a bind. Whether it’s a question on how to account for a modification, or how to negotiate a tricky corporate transaction, we will identify the right person on our team to help you.
Join Julie Kenia, a member of the SOS Professional Resources Team, as she discusses the services and solutions her and her team have to offer.

Speaker:

•   Julie Kenia, CEP, Stock & Option Solutions, Inc.

(As this is a webcast dealing with SOS products and services, NO continuing education credit is available for attending.)

Educational Webcast:  Market Trends in ESPP Design

Tuesday, February 28, 2017 11:00 AM PST

Description: 

Julie Kenia from Stock & Option Solutions is joined by Emily Cervino, CEP, Fidelity Stock Plan Services, and Liz Stoudt, CEP, Radford to explore the most recent ESPP findings from the 2016 Fidelity /Radford ESPP data analysis. Discover plan design prevalence, how plan design impacts participation, industry variances, and a look back to see how things have changed since the 2014 study. We will also analyze participation levels and shareholding patterns after purchase for various plan types and demographics. Whether your company has an ESPP already or is thinking of implementing one, you will learn how new designs or changes can help you get the most out of your ESPP.

Speakers:

•   Emily Cervino, CEP, Fidelity Stock Plan Services

•   Julie Kenia, CEP, Stock & Option Solutions, Inc.

•   Elizabeth Stoudt, CEP, Aon Hewitt / Radford Valuation Services

(One hour of Certified Equity Professional continuing education credit is available for attending. See the CEPI website for more information on CEP continuing education requirements.)

SOS Xposé

...tender tidbits about people and players in our industry...

Likes Change...Christine Zwerling, CEP, is with Twilio, Inc. as a Senior Manager Equity Compensation. Megan Hunt is now the Senior Team Manager, Stock Plan Services for Charles Schwab. Jeannette Bjoernsen is now the Sr. Manager, Stock Administration for Rocket Fuel Inc.  She took over for Ken Scully, who retired in December!  Ken is keeping busy with travelling, hiking, and preparing for a soon-to-be remodeled kitchen.  Laura Gallerane is working for athenahealth as the Sr. Manager, Compensation. Emily Del Toro is the Director of Executive Compensation, Global Equity and Retirement Programs for Intuit.  Sharon Orlando is now with Workday as the Senior Manager Global Stock Administration.

CEP Designation Bound...SOS’s LoAn Nguyen and Srinivas Kalakoti have both successfully passed Level 2 of the CEP Exam and are on their way to earning the prestigious CEP designation.

Toys, Toys, Toys… The SOS Team donated a very generous amount of toys to the Toys for Tots Program during the holidays. See our group pic from our holiday luncheon.

Nature Vibes… SOS’s Ryan Moore and his girlfriend, Justine, travelled to Death Valley National Park last month. Highlights of this short one-day trip included walking across crystalized salt flats, scaling extensive sand dunes, hiking through rock canyons carved by flash floods, beautiful sunrises, and a temperature of 20 degrees while camping (yikes!). Check out this great picture! 

Queen Encounter...Janet Cooper, Founder and Partner of Tapestry Compliance, has been appointed to ‘Officer of the Most Excellent Order of the British Empire’ (OBE) on the Queen’s New Year’s Honours List and will soon be invited to Buckingham Palace for the Queen to present her with the OBE.

Congratulations are in Order… Congratulations to the 81 professionals who recently passed Level 3 and have been added to this list! 

Industry News… Registration is now open for the 13th Annual CEP and Silicon Valley NASPP Symposium on March 28th, 2017 at Santa Clara University.  Register today for the best one-day event in Equity Compensation.  Visit the CEPI website for more details. The NASPP is celebrating its silver anniversary in the city where it all began! The 25th Annual NASPP Conference will be in Washington, DC from October 17-20. Register by March 31 for the early-bird rate. Certent Summit 2017 Registration Open! Planning your conference and travel budget for 2017? Be sure to include the 6th Annual Certent Summit, May 22 – 24 in Nashville, TN. Gather new tips and tricks, brush up on the latest trends in financial compliance and equity compensation, sign-up for a one-on-one consulting session with Certent experts, and network with industry peers. Visit certentsummit.com for information on the agenda, travel arrangements, and more.

SOS’s New Team Member...Chris Cox, Outsourcing Team-Nashville

In addition to the above employee, SOS hires, on average, approximately 30-35 seasonal employees to help us with our 6039 services.  This team aids us in producing and mailing approximately 150,000 3921 & 3922 statements for our clients.

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SOS Xtra Editor: Shawna Casey
Did you miss an issue of Xtra? View our complete newsletter archive from our website here.
Miss a webcast? You can find links to recordings, as well as the materials, on our webcast page.


Information provided in this newsletter is designed for educational and entertainment purposes only and is not provided as professional service or advice. Moreover, this newsletter should not be relied on as legal, accounting, auditing, or tax advice. Anyone reading this newsletter should not act upon this information without seeking professional counsel and/or input from their advisers. The preceding information does not necessarily represent the official views of Stock & Option Solutions, Inc. with respect to any of the issues addressed.

Stock & Option Solutions

SOS Solutions Webcast: The Professionals: Beyond Resources

Tuesday, February 7, 2017 11:00 AM PST

Add to Calendar

Description:

What do you do when no one has the answer to your equity related conundrum? You contact the professionals, of course. SOS’ Professional Resources Team has seen it all, done it all, and can answer those specialized knowledge questions that don’t come along everyday.

Our team of experts can assist with accounting and administrative issues when you find yourself in a bind. Whether it’s a question on how to account for a modification, or how to negotiate a tricky corporate transaction, we will identify the right person on our team to help you.

Join Julie Kenia, a member of the SOS Professional Resources Team, as she discusses the services and solutions her and her team have to offer.

Speakers:

Julie Kenia, CEP, Stock & Option Solutions, Inc.

(As this is a webcast dealing with SOS products and services, NO continuing education credit is available for attending.)

 

          

Register

 

Professional Resources

Professional Resources

From temporary stock administration staffing, to high level project management and subject matter expertise, we can get you through every challenge.

Temporary Stock Administration Staffing

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Stock & Option Solutions

SOS Educational Webcast: Market Trends in ESPP Design

Tuesday, February 28, 2017 11:00 AM PST

Add to Calendar

Description:

Julie Kenia from Stock & Option Solutions is joined by Emily Cervino, CEP, Fidelity Stock Plan Services, and Liz Stoudt, CEP, Radford to explore the most recent ESPP findings from the 2016 Fidelity /Radford ESPP data analysis. Discover plan design prevalence, how plan design impacts participation, industry variances, and a look back to see how things have changed since the 2014 study. We will also analyze participation levels and shareholding patterns after purchase for various plan types and demographics. Whether your company has an ESPP already or is thinking of implementing one, you will learn how new designs or changes can help you get the most out of your ESPP.

Speakers:

Emily Cervino, CEP, Fidelity Stock Plan Services
Julie Kenia, CEP, Stock & Option Solutions, Inc.
Elizabeth Stoudt, CEP, Aon Hewitt / Radford Valuation Services

 

(One hour of Certified Equity Professional continuing education credit is available for attending. See the CEPI website for more information on CEP continuing education requirements.)

So Quotable:

"I’m excited to learn what changes have been happening in the world of ESPP Plan Design and if those changes can help me better serve clients. Both Emily and Liz have had so much experience over the years in this area of equity that they always bring a wealth of knowledge and insight to the audience.

-Julie Kenia, CEP, Stock & Option Solutions, Inc.

          

Register

 

 

ESPP Expensing Edge

A better way to manage ESPP accounting

ESPP Expensing Edge from SOS serves as a complement to your equity system; you exchange the spreadsheets for a solution managed entirely by our equity accounting experts, utilizing an application custom developed to make ESPP expensing easy.

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Top 10 Proxy Checklist

Stock Administration has an important, but varied, role in the proxy process.  Depending on the department stock reports to in your organization, you may responsible for duties ranging from simply running reports containing the needed data to completing director and officer questionnaires to coordinating the annual meeting.  No matter what your responsibility level, these are the items you must have for a smooth and successful proxy.  Some of these items can be found in reports that your equity administration system will generate for you.

1Who are the “big 5”? You can’t run stock ownership numbers if you don’t know who your named executive officers are.  These will be anyone who served as Chief Executive Officer or Chief Financial Officer as well as the next three most highly compensated officers in the company.

2List of all Forms 3, 4 and 5 filed during fiscal year: Years ago director and officer questionnaires were blank documents that had to be filled in by each officer and director by hand.  Over the years that has changed and companies now pre-complete a majority of the information for the officer or director.  Recently that has included a table of all the Section 16 filings made on behalf of the officer or director during the fiscal year.  This can be an arduous task, so make sure you keep good records of all the filings throughout the year.

3List of all exercises/releases during fiscal year: This is a standard item of information that is easy to pull out of your equity administration system.  These numbers are reported on the Exercises and Stock Vested table.

4For officers, the list of 401K matching transactions in stock: If your company matches 401(k) contributions in company stock, you will need to provide the number of “match” shares distributed to each officer’s 401(k) account.

5For officers, grants outstanding with valuations for the last three fiscal years: These need to be disclosed in the Summary of Executive Compensation table.

6For officers, grants outstanding with vested and unvested shares: These grants and the vested/unvested numbers will be reported on the Grants of Plan-Based Awards table.

7For directors, grants in the last fiscal year with the associated valuation.

8Vesting schedule details for outstanding grants: The vesting schedule will be needed for any outstanding grants in order for accurate numbers to be calculated concerning vesting at termination (the Potential Payments to Executives Upon Termination or Change in Control) or the number of shares beneficially owned (Beneficial Ownership table).

9Shares issued and outstanding as of the record date: This number will be disclosed in the proxy and also used in calculating the percentage of shares beneficially owned in the Beneficial Ownership table.

10Officer and director holdings: If your company has ownership guidelines, someone will ask for the officer and director holdings to see if the officers/directors are in compliance.  This may include any or all of the following:  shares owned by the officer/director directly, shares owned by the officer/director indirectly, vested options and unvested RSUs.

SOS Stock Plan Outsourcing

Full-time expertise at a part-time cost

Because It's All About That Data

In stock administration, our world is filled with data.  Good data, bad data and incomplete data.  How can you sort out the good from the bad and incomplete?  And once you identify bad or incomplete data, how do you correct it?  Ask yourself these questions about your data and you can identify some common data quality issues.

Do data fields contain missing values or zeros?

Sometimes a zero is valid in a data field.  If an employee terminates before their grant vests, you would expect to see a zero in the “vested” data field.  But what if the number of shares granted is 0?  This can be the result of a data entry mistake or an export gone wrong.  If you see a zero in a field that you think should have a number greater than zero, ask your data source what this means.

Why do I feel like I am missing something?

Sometimes you look at data and know you are missing something.  If you are looking at data for a company based in California and you don’t see any employees with a California address, speak up!  Your data may be truncated or incomplete.

Haven’t I seen you somewhere before?

Sure, employees may receive multiple grants and have multiple rows of data.  But if the exact same information appears in your report twice you should investigate.

Can you repeat your name for me?

If your data contains names from a culture you aren’t familiar with, how do you know which name is the first name and which is the last name?  It might seem obvious to some that in the entry “David Taylor”, David is the first name and Taylor is the last name.  But if you discover “Taylor David” in the data, is it the same person?  If you are working with diverse names you need to confirm the first name and last name columns by asking the source.

And is it possible that you have someone who goes by a nickname?  (Is William Smith the same person as Bill Smith?) Or a middle name?  (Is Roger F. Doe the same as R. Frank Doe?)  What about common names:  are the three David Johnsons listed in your data different individuals?

How do you spell that?

Beware the spelling mistake.  Spelling mistakes are huge indicators that the data is hand entered or hand compiled.  Looking at employee’s names won’t necessarily clue you in, but checking common items like cities or countries will help you understand how much auditing the data may need.

What day is it?

Being international can present a host of problems, beginning with how you record dates.  Which date is April 10, 2015?

a.        10/4/15

b.       4/10/15

If you are European, you answered A.  If you are American, you answered B.  Make sure to ask if your data comes from US or non-US sources to avoid confusion.

What’s in a (field) name?

In regard to RSU/RSA data, what does the field “vested” mean?  Is it the same as “released”?  What about “lapsed”?  Shares can be vested, yet unreleased if the employee elected to defer delivery of the shares.  Most stock administration systems will use equivalent terminology in their reporting, but beware of data that doesn’t come out of a system.  To someone using a spreadsheet to track equity outside of a system, terminology isn’t universal.

Isn’t that strange?

Any of these numbers in your data may indicate a problem:

65,535:  Microsoft reports that in an unpatched version of Microsoft Excel 2007, some mathematical computations will display incorrectly as 65,535.  You don’t have to worry if you are running Office 2007 or a later version, as the bug was fixed in Office 2007 and later versions.
999-99-XXXX or 123-45-6789; If you see these numbers in a field that should contain a social security number, you have bum data.  Some administrators use the 999 method to give international employees a fake social security number that they can use for a login.  The XXXX portion is usually an employee ID number.
2,147,483,647 or 4,294,967,295:  Despite the tendency to attribute these numbers to excessive executive grants, these numbers indicate an error in the underlying program that produced the data.
555-3485:  Any telephone number that begins with 555 is usually a fake or a placeholder.

Why do I only have 65,536 rows in this spreadsheet?

At one time, Microsoft Excel only allowed 65,536 rows in a spreadsheet.  If you have exactly this number of rows, you have truncated data.  Go back to the source of the data and ask for the full data set.  Microsoft fixed this in newer versions of Excel and the limit is now 1,048,576 rows.

Most companies don’t have this much data.  However, I recently worked on a database conversion for a company that was 37 years old.  The option grant file alone was over 101,000 rows long!

Why does this data contain dates from 1900 or 1904?

Excel starts counting dates at January 1, 1900, except in the Excel version for Macs, which starts counting at January 1, 1904.  Data entered a variety of ways can end up as one of these two dates.  Chances are your company didn’t exist on either of these dates, so this data has problems.

Does formatting really make a difference in data quality?

Frequently grant numbers and employee IDs begin with leading zeros.  But if these were dropped when the data was extracted, you can end up with data that doesn’t tie out.  Conversely, if leading zeros were used and then discontinued, you may have duplicates in your data.  For example, grant numbers 0001 and 1 will appear the same in a spreadsheet where the data was exported incorrectly and the leading zeros dropped.

And the formatting fun continues:  dates that were converted into general number formatting in Excel will become 5 digit numbers.  For example, 1/1/2015 becomes 42005.  This fix is relatively easy: just highlight the data, and change the format to date, instead of general.

Where in the heck is Mu�chen?

To computers, letters are represented as numbers.  Problems arise when special characters are included in the data and the computer doesn’t know how to “translate” these characters from numbers to letters.  One of the most common characters is the umlaut, used primarily in the German language.  (It is that pair of dots used over vowels.)  Müchen, the German word for the city of Munich, often falls prey to this problem.  This problem is most often seen in Excel, which is built to process numbers, not different languages.

How do I audit data in a pdf?

Beware if you ask for data in “soft copy.”  You may receive data that converted into a pdf.  If there is data you need in a different format inside the pdf, and you have Adobe Acrobat Pro, you are in luck.  It contains a feature that allows you to export tables into Excel.

If you have data in a pdf that comes from a scanned document, it may be tricky to convert it into Excel.  This can result in the data converting in a text format.  It would be best to go back to the source and ask for the original file instead of scanned documents, if available.

Who entered this data?

Beware that you may have to get creative when auditing and decoding human entered data.  Human entered data is prone to errors and inconsistencies.  For example, I once reviewed the database belonging to a company headquartered in Pittsburgh, Pennsylvania that contained the address:  London, Pennsylvania, US.  The zip code was missing, so I scoured the internet for a city named London in the state of Pennsylvania.  There wasn’t one.  There was a London, California and London, Ontario, Canada.  I wondered if the city should have been New London, which is located in Connecticut.  I finally abandoned my search and I asked the person responsible for the data entry.  She confirmed that she didn’t know where the city of London was, assumed it was in her home state of Pennsylvania and was looking for the zip code as we spoke.  Turns out the company opened a branch in London, United Kingdom and she was unaware.

This data is as of what date?

Most reports will display an “as of” date.  But what about exports from databases?  Most exports don’t contain any as of date, so it is best to ask for confirmation, rather than to assume.  In merger and acquisitions, the due diligence materials you receive containing data you are reviewing may have been generated months before.

It is so easy to receive bad or incomplete data, so be sure when you receive any type of data you run a critical eye over it.  Never be afraid to go back to the source and ask for clarification on the data or any support that may exist for the data.

 

Let SOS File Your 3921 and 3922 Forms

Check out our 6039 services and solutions

Product Spotlight: ESPP Expense Application

Expensing can be one of the more difficult aspects of administering an Employee Stock Purchase Plan depending upon your equity software and your plan rules.  Many current equity platforms limit your ability to determine ESPP expense at a participant level, handle modifications due to contribution increases or plan reset and rollover features.  Some platforms offer no ESPP expense assistance at all.

SOS has been assisting clients with their ESPP expensing needs by creating excel files that can be extremely cumbersome and prone to human error. We have used those experiences to design a more systematic approach using client source files and an Access based application to develop detailed and summarized output to support your expense needs. 

Here are some features of the SOS ESPP Expense Application:

•   Consistent client source input files
•   Automated output in Excel format for easy review
      •  Details on a participant level
      •  Summary at client specified user field
•   Modification Accounting details
      •  New grant expense related to contribution increases
      •  Incremental expense for each reset or rollover event
•   Documentation for auditors
      •  Application White Paper
      •  Output field definitions
•   Timely Reporting
      •  SOS will establish client calendar for each purchase period
Call us today at 408.979.8700 to learn more about the application and how SOS can help with your ESPP expense.

November Market Research Survey

Complete the survey and be entered into a drawing for a $100 Visa gift card!

Periodically, SOS will ask for issuing companies' participation in a market research survey to enhance our understanding of current practices and trends in the industry and to provide our clients insight into the practices of other issuing firms. Our surveys are brief, taking no more than 5 to 10 minutes to complete.

Please note that only issuing companies, not vendors or consultants, should complete the survey and are eligible for the drawing. Thank you for your cooperation!

 

Across Our Desk

Dan Walter covers one of our favorite topics with 4 end-of-year tips that should come in handy

Speaking of favorite topics, Dee Crosby was interviewed in the NASPP Blog about her conference presentation: Hitchhiker’s Guide to Stock Plan Administration Consultants.

CFO.com highlights a key finding from the Equilar’s equity compensation trends report for 2016.

The rising importance of the Employee Stock Purchase Plan as a key benefit is covered by CNBC.

Incentive plans and non-GAAP performance measures

We heard a lot about this at the NASPP Conference this year: Group Five releases annual ratings of corporate stock plan administration service providers.

An innovative approach to equity compensation in the freelance economy.  Should be a big topic in the coming years.

SOS ESPP Expensing Edge Application

Expertise meets technology.

NASPP Career Corner Blog: A Year in Review

For those of you who have not yet visited the NASPP Career Center, the page houses resources for both employers and job seekers in our industry.  I was invited to be a guest blogger on career topics back in May of 2013 and have continued to write for the Career Corner ever since. 

Upon reflection, I can see that 2016 was about taking your skills to the next level professionally.  From resolving conflicts and being of service to building your brand and attracting top talent, the blog explored ways that readers can unite their passions with their work and be more genuinely and authentically themselves in their professional lives.

“Who am I?”  “What is my purpose in life?” “What do I want to be known for?”  “How am I making a difference in the lives of others?”  These are some of the big questions posed in Branding Basics: Four Steps Towards Building Your Personal Brand.  I am energized by the idea that we can actively and intentionally build a brand for ourselves, one that reflects our core values and unique value proposition.  Unlike the processed and packaged brands we find on store shelves, our personal brand reflects the commitment we make to ourselves to show up everyday living by our core values and sharing our one-of-a-kind gifts with the world.

What seemed to strike a chord in the hearts and minds of some of our readership was the theme of servant leadership. After reading Being of Service: Three Benefits of a Purpose-Driven Workday, some readers commented that in an industry like ours, servant leadership is not frequently discussed.  The idea that we have an opportunity to make a difference in the lives of those with whom we work is certainly not a new one.  That being said, in a fast-paced, numbers oriented industry such as ours, we can easily lose sight of that opportunity.

The Win/Win philosophy is one that I strive to embody in my day-to-day life.  When conflicts occur, it can be easy to take sides and pit “us” against “them.”  Yet, inherent in any conflict is opportunity.  In Beyond Defense and Offense: Four Steps Towards Taking the Conflict Out of Conflict Resolution, I discuss some of the ways that one can approach challenging conflicts on the job that can lead to greater trust and a brighter future of mutually beneficial teamwork.

The theme of going deeper also found its way into 4 Tips for Attracting Top Talent.  Though solid compensation and benefits packages are fundamental when it comes to wooing high performers to join your team, the intangibles are surging to the top of many job seekers’ priority lists.  Leading edge companies are cultivating a corporate and departmental culture that ties job performance success to a greater purpose and engaging employees by aligning their passions with their responsibilities.  Discerning recruits are holding out for a company that facilitates a more organic and authentic work/life integration that honors them as human beings and supports them in achieving their personal and professional goals.

2016 has been a great year for exploring the possibilities for turning our careers into our vocations and making the world a better place through our everyday approach to our work and our lives.  I look forward to continuing to explore these ideas in the year to come.

Andrea Best, Ph.D., Stock & Option Solutions, Inc.

abest@sos-team.com

408.979.8700

www.sos-team.com

Upcoming Equity Compensation Webcasts

Our webcasts cover high-priority equity compensation topics

Solutions Webcast:  Savin' Time with Tech Tools

Tuesday, November 29, 2016 11:00 AM PST

Description: 

Tired of formatting payroll files?  Dread sending out individual confirmations?  Need a special customized statement for a specific population that your equity system doesn’t produce?  Join SOS’s Sorrell Johnson and Srinivas Kalakoti for a demo on how SOS’ tech tools can simplify your life!

Speakers:

•   Srinivas Kalakoti, Stock & Option Solutions, Inc.

•   Sorrell Johnson, CEP, Stock & Option Solutions, Inc.

(As this is a webcast dealing with SOS products and services, NO continuing education credit is available for attending.)

Solutions Webcast:  SOS Stock Plan Outsourcing

Tuesday, December 6, 2016 11:00 AM PST

Description: 

Stock plan outsourcing is not only where the biggest things are happening here at SOS, but we are also the fastest growing outsourcer in the equity compensation industry. With all the expertise it takes to run a stock plan, it is becoming next to impossible for most companies to manage things in house…which is where we come in. Join us to learn more about how SOS can make your stock plan challenges disappear. In this special webcast, you will hear:

•   What makes SOS Outsourcing different and better than any other way you could manage your stock plans

•   How our service will be customized to meet your company-specific requirements and equity plans

•   From our customers, who couldn’t be happier after making the decision to use SOS

•   Why we are the only truly complete outsourcing solution in the industry

•   What we will do for you on the legal/Section 16 and Financial Reporting side

•   Who makes up our team

•   How our implementation sets us up with our clients as partners, and ensures a fully integrated solution

•   About our pricing

Speakers:

•   Madori Playford, CEP, Stock & Option Solutions, Inc.

•   Scott McDonald, Stock & Option Solutions, Inc.

(As this is a webcast dealing with SOS products and services, NO continuing education credit is available for attending.)

Educational Webcast:  Weathering the Storm - From Private Company to Public Company

Tuesday, December 13, 2016 11:00 AM PST

Description: 

If you are in the process of becoming a public company or just thinking about an IPO, join us for some interesting tips and discussion of what you might encounter during this journey.

Our two experts have navigated these challenging waters and will share their experiences as they discuss numerous topics such as broker and transfer agent selection, employee communications, grant process, taxation on exercise of options or release of restricted stock units and employee stock purchase plans.

Speakers:

•   Rachel Southorn, CEP, Stock & Option Solutions, Inc.

•   Madori Playford, CEP, Stock & Option Solutions, Inc.

(One hour of Certified Equity Professional continuing education credit is available for attending. See the CEPI website for more information on CEP continuing education requirements.)

SOS Xposé

...tender tidbits about people and players in our industry...

Fitting in somewhere new…Gilbert Szeto is now a Regional Sales Manager for TD Ameritrade. Jennifer Lopez is now the Vice President, Marketing and Development at WFFConnect. Barbara Waters is the Equity Compensation Director for Aetna. Nina Chellew is now the Manager, Equity Administration for Seagate Technologies plc.

Gettin’ a feel for that Texas BBQ… The SOS Team had a great time at the booth at this year’s 24th Annual NASPP Conference in Houston, Texas. It sure was a boot stompin’ good time with $800 in cash prizes, fun giveaways, and the chance to meet and greet with old and new friends. Check out our pics from the event!

 She found the perfect dress…Julie Kenia of SOS and her husband, Ken, gave away their daughter, Justine, on September 30, 2016 in New Jersey. Rumor has it that guests caught her calculating quarter end ESPP expense during the reception!

Growing families… Dan Schwab of Charles Schwab and his wife, Jen, welcomed a son, Rex, on 10/2/16. Weighing 7 ½ pounds, and 20 ½inches. Two year old Colette is a proud big sister. Bill Storey of SOS and his wife, Tanya, and son Jordan, welcomed the newest edition to their family, a baby girl, Rali Harper Monroe, on October 19, 2016. Rali weighed 5lbs 14oz. and was 19.25 in. long. Mom and baby are doing well, Jordan has accepted his Big Brother responsibilities (except diaper changing duties) and Bill is over the moon!

Wearing Mickey ears… Scott McDonald of SOS and his wife, Erin, took their daughter, Savannah, to Disneyland for the first time this month. This princess was all smiles meeting Princess Ana from Frozen!

The 24th Annual NASPP Conference & Exhibition Wrap-up… The 24th Annual NASPP Conference in Houston was an unqualified success! With close to 100 sessions on today’s hottest topics, led by nearly 200 of the top minds in the industry, the Conference was an educational and networking extravaganza.  Highlights included an inspirational keynote address by former Texas Senator Wendy Davis, the unveiling of the new NASPP website, and the NASPP shuffle dancers.  See pics from the Conference in the NASPP Blog.

SOS’s new team member
Linda Barkley - People Solutions Team

Stock & Option Solutions Logo


SOS Xtra Editor: Shawna Casey
Did you miss an issue of Xtra? View our complete newsletter archive from our website here.
Miss a webcast? You can find links to recordings, as well as the materials, on our webcast page.


Information provided in this newsletter is designed for educational and entertainment purposes only and is not provided as professional service or advice. Moreover, this newsletter should not be relied on as legal, accounting, auditing, or tax advice. Anyone reading this newsletter should not act upon this information without seeking professional counsel and/or input from their advisers. The preceding information does not necessarily represent the official views of Stock & Option Solutions, Inc. with respect to any of the issues addressed.

Stock & Option Solutions

SOS Solutions Webcast: Your 6039 Dream Team

Thursday, October 13, 2016 11:00 AM PDT

Description:

Year-end is a hectic season for any stock administrator and 6039 compliance reporting is likely just one more thing to juggle on your long list of things to do. Let our team of 6039 experts walk you through how to make 6039 reporting a slam dunk. In this webcast our all-star team will provide a play-by-play of the 6039 requirements and regulations, penalties for not playing, and how our unrivaled SOS solutions can tackle every aspect of 6039 reporting from auditing your data to mailing and filing your participant statements.

Speakers:

Vanessa Harrison, Stock & Option Solutions, Inc.

Michael McDonald, Stock & Option Solutions, Inc.

(As this is a webcast dealing with SOS products and services, NO continuing education credit is available for attending.)

So Quotable:

"It’s that time of year again! As we get ready for year-end and ALL the required tasks that comes along with this time of year, let us take one thing off your plate, which is 6039 reporting. SOS can produce, file and mail these statements on your behalf. Get a head start and give us a call and we’ll guide you every step of the way."

           - Mike McDonald, Stock & Option Solutions, Inc. 

View Webcast

 

Contact a Sales Representative Directly

Scott McDonald, Director, Sales & Marketing
(408) 979-8715
smcdonald@sos-team.com

Michael McDonald, Associate Director, Sales
(408) 385-8773
mmcdonald@sos-team.com

Ryan Moore, Associate, Sales & Marketing
(408) 385-8772
rmoore@sos-team.com

 

 

 

Receive Alerts for Future Equity Compensation Webcasts

Stock & Option Solutions

SOS Announces New ESPP Expense Application

September 27, 2016

FOR IMMEDIATE RELEASE

 

Stock & Option Solutions Announces New ESPP Expense Application

 

ESPP expensing can now be done easily with the new SOS ESPP Expensing Edge Application.

 

Campbell, California, September 27, 2016 - Stock & Option Solutions (SOS), a leading provider of stock plan administration, management and consulting services, today introduced an application that significantly saves time without the use of endless spreadsheets, making ESPP expensing easier than ever before.

 

"I’m excited to begin migrating our current ESPP expense clients to this new application.  It will provide a more standardized process and reduce manual entry and computations”, says Julie Kenia, Senior Equity Compensation Consultant at SOS.

Manual accounting for ESPPs has been the time consuming, detail monitoring experience of the past. The SOS ESPP Expensing Edge Application is changing the way you manage these plans. This application coupled with the expertise of SOS’s experienced consultants, serve as a complement to the current equity system in place. Without the difficult, inflexible spreadsheets, ESPP expensing can be done effortlessly and without dedicating countless hours to complete this task.

“Accounting for ESPP has always been a huge issue for our clients, who have been forced to rely on error-prone spreadsheets and cobbled together solutions to get through it every quarter.  We are really excited to get out there and let people know that there is finally a better way to handle it”, said Scott McDonald, Director, Sales & Marketing at SOS.

For more details, please contact Shawna Casey at scasey@sos-team.com or 408-979-8700.

Stock & Option Solutions, Inc. (SOS) is a leading provider of stock plan administration, management and equity consulting services for companies offering equity compensation programs to its employees. For over thirteen years, hundreds of organizations, from private start-ups to Fortune 500 companies, have relied on Stock &Option Solutions’ expertise for strategic planning, methodologies and skilled resources to build and support the most effective stock administration programs possible. The company offers its services through its People/Staffing Solutions, Consulting/Project Solutions, and Outsourcing/Total Administration Solutions business groups. For more information about Stock & Option Solutions, please visit http://www.sos-team.com or call 888-SOS-0199.

###

Contact a Sales Representative Directly

Scott McDonald, Director, Sales & Marketing
(408) 979-8715
smcdonald@sos-team.com

Michael McDonald, Associate Director, Sales
(408) 385-8773
mmcdonald@sos-team.com

Ryan Moore, Associate, Sales & Marketing
(408) 385-8772
rmoore@sos-team.com

 

 

 

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