I'll Race Ya to The Deadline

With tax season in full swing, employees are racing to complete their taxes prior to the filing deadline. 

With all the questions and requests, here are some key dates regarding tax related items:

February 15, 2017:  Oops! This deadline already passed!  Brokers should have sent out Form 1099s by this date if they were going to mail them. If an employee has opted in for electronic delivery of statements, that employee should see this in their brokerage account already.  If employees don’t have their Form 1099s yet, they need to contact their broker.

March 31, 2017:  This is the deadline for the electronic filings for 6039. The company’s 6039 provider probably already made this filing on the company’s behalf (but this should be confirmed!). 

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

Hope all these dates help, happy filing!


Pre-IPO Luncheon in San Francisco-Earn CEP & CPE Credit

Aspirations Fling with SF NASPP Chapter

April 20, 2017 |11:30am-2pm| 211 Main Street San Francisco

Accounting Update

This summary is intended only for a high-level overview. It is not intended to be accounting or tax advice. SOS recommends its clients consult their qualified accounting and tax advisors before taking action in order to understand the impact new accounting guidance will have on their company’s stock based compensation accounting, tax, financial reporting and equity systems/databases.

FASB Issues Proposed ASU on Improvements to Non-Employee Accounting

On March 7, 2017, the Financial Accounting Standards Board (“FASB”) issued an exposure draft of a proposed Accounting Standard Update (“ASU”) that is intended to reduce cost and complexity and to improve financial reporting for non-employee equity awards. The proposed ASU would supersede the accounting guidance in ASC 505-501 and include non-employee equity awards under the scope of ASC 7182. In short, non-employee equity awards will be treated similar to employee equity awards with certain exceptions. Here are links to the FASB's Press Release, FASB In Focus Summary and the proposed ASU. The FASB is accepting public comments on this proposed ASU until June 5, 2017. Stay tuned… there’s light at the end of the tunnel, but don’t make any changes yet!!

FASB Approves ASU That Simplifies the Scope of Modification Accounting

Per the February 22, 2017 Meeting Minutes, the FASB voted to approve the exposure draft of the proposed ASU that is intended to simplify the modification accounting guidance in ASC 718. Basically, if certain modifications are made to equity awards, but the fair value, vesting conditions and equity (or liability) classification of the award all remain unchanged before and after the modification, then modification accounting is not required. Look for the FASB to issue a final ASU on or before June 30, 2017.

Bill Storey, CPA, Manager, Outsourcing Services and Financial Reporting & Accounting Leader

Stock & Option Solutions, Inc.


1- ASC 505-50 = FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees

2- ASC 718 = FASB ASC Topic 718, Compensation- Stock Compensation


Upcoming Equity Compensation Webcast

Our webcasts cover high-priority equity compensation topics

SOS Educational Webcast: The Whole Enchilada: Accounting for PSUs from Top to Bottom

Tuesday, April 25, 2017 11:00 AM PST


This heated presentation will walk you through the entire process of accounting for PSUs: from fair values to attribution (regular and spicy - delayed service inceptions, reverse FIN 28, and time-based vesting after goal achievement), forfeiture rates, application and true up, to tax accounting (even the impact of 162(m)), diluted EPS (when to include/exclude and other FAQs) and even disclosure reporting under ASC 718. Join our expert panel as they layer in the flavors of accounting for PSUs like building a mole sauce from scratch.


          Elizabeth Dodge, CEP, Equity Plan Solutions

          Michael Esposito, CEP, Solium

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

So Quotable:

"Accounting for Performance Share Units or PSUs can be quite tricky. The accounting treatment is different for PSUs with performance conditions (company/individual specific metrics/milestones) and PSUs with market conditions (stock price/total shareholder return metrics). I’m looking forward to discussing this topic with Elizabeth and Michael and providing insight to those attending the webcast or catching a replay of the webcast down the road." 
-Bill Storey, CPA, 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.)

Temporary Staffing

We're here when you need us

Consultant Corner: Mobility – Does it Scare You?

I don’t know about you, but mobility does scare me because of the expanded attention by various state and federal agencies that this subject has received. Each company handles employee mobility differently from not tracking mobile employees at all to extensive reporting programs.  Incorrect tracking or pro-rating of gain can result in the tax man knocking at the company’s door as well as the employee’s! Making sure that mobility is done correctly requires accurate inter-departmental cooperation that doesn’t always exist. 

This article applies to state-to-state transfers as well as country-to-country transfers.  I will not address expats in this article as that is an entire subject within itself. 

Many companies use outside vendors to track and maintain their mobile programs, but even if your company has contracted with a vendor, stock administration will be required to supply data to that vendor on a regular basis. 

What are several of the important pieces of data that require accurate reporting?

Addresses:  Maintaining employee work and residence addresses in your stock administration software is extremely important information to ensure your tax withholding data on any transaction is correct.  This will impact your payroll department reporting, expense information for your accounting department and an employee’s individual tax return.  Make sure you have good communication with your HR Department or Global Mobility Department and are being updated with employee work and resident addresses on a regular basis.

Some software vendors currently track both resident and work addresses.  You can indicate which type of address it is for each employee and it makes tracking much easier.  An effective date for each address is noted so that any vesting of an equity award can be tied back to when the employee was in a particular state or country.

Taxes:  To effectively manage taxes for mobile employees internally, your stock administration software must be able to allow the setup of transfer taxes that are prorated for the amount of time the employee was specifically in a country.  For example, an employee is granted an RSU while in Germany and then transfers to the UK when the RSU is 50% vested.  Check to make sure there is no reciprocity tax agreement between these two countries.  If not, you would want to prorate the percentage of tax payable to Germany and the percentage of tax payable to the UK on the second 50% of the vesting of the RSU.  The same applies to state-to-state transfers and prorating taxes.

If you are responsible internally for managing mobile employees within your stock administration software, you may want to discuss mobility with your internal or external legal counsel to obtain specific tax information for each state and country in which you have mobile employees and the tax percentages that must be withheld on each type of equity award granted.  Remember to include your payroll representative in these discussions so that their input is also considered.

Accounting:  Your accounting department are the professionals when it comes to determining any expense associated with the grant or vesting of any equity awards.  Bring them into the employee mobility program if they are not already involved.  However, it is stock administration’s responsibility to maintain accurate records.

Mobility can be scary, especially if departments don’t work together to keep one another informed.  It is vital to communicate across departmental lines to ensure that everyone who is involved in the process receives updated and timely information regarding mobile employee information.  Once this is accomplished, mobility won’t be quite as scary.

Carol Rose-Guerin, CEP, Equity Compensation Consultant

Stock & Option Solutions, Inc.

March 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!

ESPP Expensing Edge

A better way to manage your ESPP

Service Plug: SOS Stock Plan Outsourcing

Would you hire a plumber to mow your lawn? Call a dentist if you had the flu? Or would you ask an arborist to fix your roof? If you answered no to these questions, then why would you “hire” someone from your HR, legal, or finance department to manage your stock plans?  

With an SOS expert by your side, your stock plans will get the attention they require. Take this responsibility off the shoulders of your team members that already have fulltime jobs, and partner with the SOS Team. 

With experience with every system, our team is confident, knowledgeable and dedicated to being your partner every step of the way. 

Thinking about it? Want more info? Check out these resources below, and we’d be happy to jump on a call with you to answer any questions you may have and to help you get back to your fulltime job. 


Watch a quick video on how it all works

Hear from our own Madori Playford, CEP and Scott McDonald in this SOS Solutions Webcast

Read an article on how the SOS Outsourcing Team can take on your ESPP!

Check out the SOS Stock Plan Outsourcing page on our website

The time is now, don’t waste another minute. Call us at 408.979.8700. We see a partnership in your future.


Tender Offer Valuations:  The Bite-Sized Morsels

Tender offer valuations are considered a Type I modification under ASC 718 and can be confusing to even the most seasoned equity accounting professional, let alone someone whose specialty is not accounting.  However, once you break the subject down into bite-sized pieces, it becomes an easier meal to digest.  In this article we will examine each of the pieces of the fair value needed to calculate the post-tender offer valuation for expensing purposes.  For purposes of this discussion, we will assume that a company has outstanding underwater options that they want to cancel and issue new at-the-money options to employees.

The Appetizer:  Unamortized Expense from the Tendered Option

In the era of expensing for a Type I modification under ASC 718, companies are obligated to recognize all of the originally calculated expense once they issue an option.  If the company decides to offer employees a chance to tender their underwater options, any expense not yet recognized for unvested underwater options doesn’t magically disappear at cancellation.  It has to be recognized, even though the underwater option will be cancelled and no longer outstanding.  This “leftover” isn’t destined to be shoved to the back of the fridge and forgotten.  It will become part of the new valuation for the newly issued option.

The Main Course:  Incremental Expense 

An evaluation needs to be done to see if the newly issued option will be worth more than the tendered option at the time of the modification.  It requires determining the appropriate “before” and “after” expected terms which will drive the volatility and risk-free interest rate inputs to the Black-Scholes calculations we all have seen on the menu repeatedly.  There are a few different entrees to choose from when it comes to determining the appropriate “before” expected term.  You should read the menu carefully to make sure you know exactly what you’re getting.  The “after” expected term is simply what you would normally order when faced with a new option. 

So, let’s say that the Black-Scholes value of the underwater option just before the modification is $2 and the Black-Scholes value of the new option will be $3.  The difference ($1 per share) is the incremental expense that must be recognized over the service period of the new option.

Dessert:  Number of Shares in the New Option

The cherry on the top of the valuation is the number of shares in the new option.  All of the valuation inputs are known, so all that is left is to add them up and divide by the number of shares in the new option.  (And possibly sit back and enjoy a cup of coffee or after dinner glass of port while you do!)

The new valuation is equal to:

Unamortized Expense (tendered option)  +  Incremental Expense

Number of Shares in the New Option

Or, to make this easier to swallow:

Appetizer  + Main Course


Tender offer valuations are not the tough to digest meal that many believe them to be.  Breaking them down to the basics (Unamortized Expense of the tendered option, Incremental Expense and the shares in the new option) makes them more palatable.  When you next encounter these on a menu, don’t be afraid they will leave you with heartburn!




SOS Stock Plan Outsourcing

Full-time expertise at a part-time cost

Across Our Desk

FASB happenings: FASB proposes simplifying accounting for share-based payments to nonemployees…From The NASPP Blog -  FASB Votes on Modification Accounting ASU and Modification Accounting Update: Is it in Time? 

Equity comp at startups: Interesting discussion of the “work for equity” model…Dan Walter wraps up his fourteen(!) part series on startup equity

Taxes: From the myStockOptions.com blog - The top 10 questions you should ask about reporting stock sales on your tax return 

Legal happenings: Another Federal Court affirms the enforceability of restrictive covenants in electronically delivered equity award agreements

SOS Xposé

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

On a new team… Laura Reis is the Director of Equity Administration at Cylance Inc. Jill Gilmer is now the Director of Executive Compensation at Acuity Brands, Inc. Susi Gibbons is the new Manager Stock Plan Administration and Treasury for CallidusCloud. Pam Chernoff is back working as the Curriculum Coordinator for the Certified Equity Professional Institute, SCU while still working as a Freelance Technical Writer and Editor.

Time to smell the roses…Veena Bhatia is finishing some integration tasks for Pfizer (formally Medivation, Inc.) but is enjoying being temporarily “fun-employed” and she is getting out to do some travelling and volunteering.

It’s a big one…Solium’s Jeremy Wright celebrated the BIG 4-0 this month! His team got him a Darth Vadar singing telegram who joined his birthday lunch, check out the video!

Take me back… Lydia Terrill of Vocera and her family recently enjoyed visiting family in Hawaii. They visited the southernmost point in the U.S., had dinner overlooking a volcano, and Lydia came home with as dark a tan as she expected. Check out this great pic! Marlene Zobayan of Rutlen Associates toured Havana last month with her son, Joey. They learned about the culture, history and life of Cubans under the embargo, did a lot of sightseeing and shopping and, of course, Marlene got to drink plenty of Mojitos (no cigars for this gal!). This pic shows the view from Ernest Hemmingway’s office, how cool! Vanessa Harrison of SOS and her family enjoyed a fabulous vacation at the Aulani Resort in Kapolei, HI on Oahu.

#Goals…Carine Schneider of WWFConnect is one of the "17 Women to Watch in 2017" and she also is listed in the Top 100 Influential Women in Silicon Valley by the Silicon Valley Business Journal. Congrats on being recognized, Carine!

Industry News… Certent Summit 2017 registration is 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.  Register today for the 13th Annual CEP and Silicon Valley NASPP Symposium–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. 

From the SOS Library Savvy Stock Plan Spreadsheets 

From the SOS Webcast Archive... SOS Educational Webcast: Defeat Disturbing and Dastardly Disclosures 

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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.