May 16, 2017 Tim Nguyen

Summertime is Here!

Well, not really.  It feels like tax season just ended and the evenings still have a chill in the air.  But the time to plan for summer is definitely here.  And here are some things to check off your list before summer arrives: 


1. Who is covering for you on your summer vacation? Are you cross training a colleague or do you need to call in coverage?


2. Are your procedures and checklists up to date so your coverage knows what to do and when to do it?


3. Read notes from Janet Bernard on Form SSA:131: Employer Report of Special Wage Payments 


4. Has your stock plan had its annual check-up yet? If not, take a look at some of the things you should be thinking about.


5. Does your payroll reporting process flow smoothly or do you need help? Check out our product spotlight: Payroll Xpress.


6. Are you ready to hand off HR, Payroll and Stock work to someone else? In our June webcast Vanessa Harrison, Tonya Epps and John Cunningham of Oclaro will discuss the pros and cons of outsourcing the stock, payroll and HR functions in their webcast: Questions to Ask When Considering Outsourcing


Dust off your flip flops and start planning, summertime is just around the corner!

Our most recent Aspirations Fling was a success!

Check out some snapshots of the event

SOS Consultant Corner: Notes from Janet Bernard on Form SSA-131: Employer Report of Special Wage Payments

I was recently contacted by an old friend, the stock plan administrator I had trained to fill my position with a former employer. She was in receipt of a request to complete Form SSA-131 and wasn’t sure what to do about it. It wasn’t on the list of regular duties I had left behind, because I didn’t – and don’t – see much of them. If you’re unfamiliar with this form, it is likely because the responsibility for completing and issuing them often falls on a company’s payroll department. Although there is no deadline for completing the form, if you receive one, it’s not something you want to casually set aside, thinking you’ll get to it later.

Form SSA-131 is used to report special wage payments (SWPs) made in the previous tax year. An SWP is an amount paid to an employee or former employee, which was earned in prior years. Take, for example, non-qualified stock options (NQs):

● An employee’s NQs vested (or, were earned) 2012 – 2016

● The employee retired December 31, 2016

● The retiree exercised the NQs in 2017

The W-2 income from the exercise would be considered an SWP; and the SWP income would be reported to the Social Security Administration (SSA) in early 2018.

The company reports SWPs to the SSA electronically (or by paper listing in some instances).  The company, of course, also reports the ordinary income from NQ exercises, and the related tax paid, on the W-2 for the year of exercise.  In some cases, as when a company is not made aware that an employee or former employee has begun receiving social security benefits and does not report the SWP appropriately, the SSA may reduce the benefits according to the wages reported on the W-2. 

For this reason, it is in the best interest of optionees that the equity team be familiar with Form SSA-131 and be prepared to issue the information timely upon request.  The form will let the SSA know that income reported on the W-2 was earned prior to receiving social security benefits.  The completed form can be sent directly to the SSA office nearest the company but is often provided to the employee who requests it so that the employee can submit it to the SSA office handling the claim.  In any case, the SSA benefits will not be reconsidered until the SSA is in receipt of the SWP details.

Because SWPs can include much more than just income from NQ exercises, it makes sense that the payroll department would be responsible for annual reporting.  However, in the interest of time, if the equity department receives a request for information, and payroll is processing that week, the equity team could manually complete a Form SSA-131.  Even a form letter from the company may be accepted:

● The form letter should include all of the elements of Form SSA-131 (name, address, SSN, date of retirement, etc.).

● The letter should state that the SWP amount being provided was related to NQs only and that the team is not aware of any additional SWP amount that might have been paid during the year in question.

● Also, if the employee still holds outstanding NQs, the letter should provide the number of NQs, exercise price and expiration date of the outstanding equity.

Please note that Form SSA-131 is not used to report non-qualified deferred compensation which is reported in box 11 of Form W-2. 

IRS Publication 957 is the best source for more information about reporting SWPs.  It can be found, with a sample Form SSA-131, at or

-Janet Bernard, CEP, Stock & Option Solutions, Inc.,

Equity Compensation Consultant


Upcoming Equity Compensation Webcast

Our webcasts cover high-priority equity compensation topics

SOS Educational Webcast: HR, Payroll or Stock: Questions to Ask When Considering Outsourcing

Tuesday, June 6, 2017 11:00 AM PST


How do you best provide HR, Payroll and Stock Administration services for your company? If your company is very small, has employees in many locations, or is trying to cut costs, having full time on-site HR, Payroll and Stock Administration employees may not be practical or cost effective. In this webcast we will uncover the questions you should ask yourself, those around you and potential service providers to help you decide if outsourcing these functions is right for your company. Who, what, where, why and how will all be revealed.


John Cunningham, Oclaro

Tonya Epps, CEP, Stock & Option Solutions, Inc.

Vanessa Harrison, 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.)

Why SOS?

Let's Get Physical: Is Your Equity Plan Healthy?

Has your equity plan had its annual physical?  For most of you, the proxy and year-end reporting is now complete, tax season is over and now is the time for you to take a look at all those items that were pushed out of the way because there wasn’t enough time.  Now is the time for your equity plan annual check-up.  

What kind of health is your equity plan in? 

● Does the plan have enough shares for the fiscal year? Ideally this is a question that would have been asked prior to proxy season.  But looking forward, is there a request for shares in the future for the next proxy?  If so, make sure to speak up now.  Actions that companies take throughout the year may trigger negative votes or cost points on the ISS scorecard. 

● Is my plan expiring anytime soon? If you have a plan that has an expiration date, what is the strategy for granting equity after the expiration date?  A new plan?  Again, ideally this question would have been asked prior to the proxy season, but remember, it never hurts to look into the future for the next proxy season. 

● How’s your data quality? In the November issue of Xtra we talked about data quality. If you have acquired another company or changed your HR or Payroll systems recently, it might be worth auditing your data for cleanliness and completeness.

● Regulatory changes: How’s your share withholding?  Most companies were excited to see that ASU 2016-09 now permitted share withholding at the maximum rate without triggering liability accounting.  For the international employee population who were traditionally under withheld, the news was especially welcome.  But wait, what does your equity plan say about share withholding?  Some plans are silent, but many specifically call out that tax withholding should be at the minimum rate like this:

“provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum individual statutory tax rate in the applicable jurisdiction”.

Depending on how your plan is structured, this language may appear in more than one section.  If your company is planning on allowing for the maximum withholding rate, make sure to document each occurrence that needs to be changed and consult the Legal department on the right way to update this language.

● Documentation: are your grant agreements up to date?  Now is the time to make sure you have updated grant agreements, country specific supplements or translations for all countries.  And don’t forget to upload them to your equity software provider or broker if you are using online grant agreements!

● How old is this version of the plan? We’ve all found documents that were before our time, but sometimes you find agreements and plans from 10, 15 or even 20 years ago.  How long do you keep it?  Does the company have a records retention policy?  Generally, financial professionals advise keeping documents for 7 years, but your lawyers may want you to retain them for a longer period of time.  Check in with Legal before you start to purge paper or electronic documents.

What kind of health is your equity platform in?

All administrators know that your plan is only as healthy and effective as the equity platform that you use to administer your plan.  A tired, run down equity platform won’t contribute to the overall health of your equity plan.  Take a look at your equity platform as well and ask these questions:

● Are you utilizing all the features of your equity platform correctly? Enhancements to platforms occur regularly and because of timing, you just have not explored what those enhancements mean for your plan administration.  Now is a great time to dig deeper into these updates and learn if you are utilizing them to your advantage.  One area we always see under-utilized is the fungible share tools in some platforms. Even if the enhancement can’t handle your situation 100%, it may be able to provide more functionality than you thought.

● Are the plan shares reflected correctly within your equity platform? If you received shares in the proxy season, validate that they were added in your equity platform.  Additionally, you should validate with Legal that they were properly registered on an S-8 and the transfer agent has also been notified.

For most administrators, down time is approaching and it is the perfect chance to do a thorough equity plan check-up.  Remember this process includes not only the condition of your plan, but an equity platform check-up as well.   Finding and correcting any health related issues now will save time and improve accuracy down the road.  An ounce of prevention is worth a pound of cure!


Volatility Calculator Application

Detailed, auditable volatility calculation in just a few minutes

Product Spotlight: SOS Payroll Xpress

To help you avoid errors, and to help you save time, SOS Payroll Xpress has been developed to assist stock departments by instantly generating importable files and providing audit reports for review prior to loading the data into the payroll system. The application can generate the files in both CSV and XML depending on the preferred format. SOS Payroll Xpress is an MS Access application which does not require any installation. A few setup steps quickly automate the process of generating the files.

SOS Payroll Xpress Features and Benefits:

● SOS Payroll Xpress is an MS Access application and therefore does not require any installation if you already have MS Access installed. With minimal IT support this application can easily be deployed on your network.

● Since SOS Payroll Xpress is deployed at your site, data security is guaranteed. Data never passes beyond your firewall.

● Reports generated by the current equity administration platform provide the data for SOS Payroll Xpress.

● SOS Payroll Xpress currently supports standard reports from the most popular equity administration platforms.  SOS Payroll Xpress can be easily customized to support source reports from other equity administration platforms.

● SOS will assist and directly work with the client's stock administrators to implement SOS Payroll Xpress.

● Data diagnostics generated by SOS Payroll Xpress can be used to review and correct any data issues prior to uploading the data to the payroll system.

● Automatic generation of import files ensures data accuracy with no manual intervention.

● Since the SOS Payroll Xpress supports standard reports from equity administration platforms, data preparation time is limited to generating the required source reports.

Check out our SOS Solutions Webcast: Savin’ Time with Tech Tools where we review Payroll Xpress in detail.

SOS Payroll Xpress is a solution that works. Reduce your time and frustration. Call us today. 408.979.8700.

Front & Center: Juanita Medina

Juanita started working for SOS in 2004 at Foundry Networks, as a replacement for the departing stock administrator.  Foundry was so pleased with Juanita that they retained her services for several years.  When Brocade acquired Foundry in 2008, Juanita stayed to help with the transition, but Brocade found her assistance so valuable that they retained her past the merger integration and she has been there ever since.

“Juanita is an enthusiastic team player who is dedicated to her work and I’ve never met anyone like her in all my years of working. Juanita truly has an amazing work ethic and always had our best interest in mind.”

-Diana Castro, formerly Foundry Networks

“I have greatly appreciated Juanita’s knowledge on complex stock administration issues, her ability to handle tough questions from employees, and her positive attitude each day no matter what task she is handling in the moment.“

-Chris Hanson, Brocade

SOS Stock Plan Outsourcing

Full-time expertise at a part-time cost

Across Our Desk

FASB issues update on modification accounting for shared-based payment awards…If you are really into accounting, you can dig into it here.

M&A: Court questions accelerated vesting of equity compensation.

From the NASPP Blog: Trump’s tax reform planFive trends in restricted stock units.

Fred Whittlesey covers the landmines found in equity compensation in private companies.

Another reminder that director limits set forth in equity plans allow director compensation to be reviewed under more lenient business judgment rule.

And finally, something that should unite us: You would actually die without your coffee, research says.


SOS Xposé

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

Updating profiles… JoAnne Zinman is the Senior Manager, Stock Administration for Okta, Inc. Jennifer Lim is now a Stock Administrator for iRhythm Technologies, Inc. Brianne Kostielney has joined Solium as the new Manager of Client Education in the US. She has relocated from the Bay Area down to Tempe and can’t wait for the summer heat! Rob Pawlick is the new VP, Corporate Controller for Gainsight. Jeff Graham has returned to E*TRADE handling sales in the mid-market as an Account Executive after spending the last nine years at Certent/EASi.

Head of the classSOS’s Tim Nguyen is graduating June 17th from Santa Clara University with a major in Economics. 

Earning awardsSOS’s Scott McDonald’s daughter, Savannah Louie, and her class won the St. Cecilia Academy Award in the category of Life at St. Cecilia for “We Love Our 8th Grade Buddies”.  See the video and acceptance speech featuring Savannah. Congratulations!

Taking more walks… Shawna Casey of SOS and her family recently adopted a 5-month-old puppy and named him Ranger. This Labrador and German Shepard mix is a fun addition to the family and is keeping them active! LoAn Nguyen of SOS just adopted a 2-year-old Siberian Husky named Dakota (Kota for short!). What a cute pup!

Industry News… 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 before June 9th for a discount!  Enhancing a long-standing relationship, Solium and UBS have entered into an agreement to offer Shareworks as the underlying software platform for UBS’ US-listed clients. Read the press release. Intuitive Surgical recently rolled out a new annual grant program that allows each employee to choose the mix of equity (RSUs and NQs) that best fits their needs and tax strategy. The Annual Nor Cal GEO Forum is set for June 15th at Devil's Canyon Brewery in San Carlos.  Last year, they sold out, so register soon if you want to join! Register now for this special one day event. The 9th Annual New England NASPP Regional Event is on July 14th and thanks to the sponsors, this event is FREE! CEP and CPE credit will be offered. Register today.

SOS’s newest team members…

Hannah Brown, Outsourcing and Sales & Marketing Teams

EJ Haggerty, People Solutions Team

From the SOS LibraryTop 10 Proxy Pitfalls

From the SOS Webcast Archive...SOS Educational Webcast: Documenting the Process: Why You Shouldn’t Rely on Memory Alone

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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.