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March 25, 2010
In this Issue:
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Latest Webcast Recording: You Never Step into the Same River Twice:
Changes in International Equity Compensation:
Presented on March 23rd:
A recorded demo of "Email Xpress", the SOS automated solution for emailing participant stock plan confirmations and statements, is now available:
Ideas or Questions:
Do you have ideas for our next newsletter or webcast? Topics you're dying to see addressed but haven't yet? Please send us an e-mail with your ideas to: email@example.com.
Good, Clean LivingMy favorite season of the year is here! Spring is about rebirth, renewal, and longer daylight hours for many of the things that make life fun. If you're like me, you're thinking about getting back into shape for the summer, hitting some of those tasks (painting) you don't look forward to, or cleaning the garage and all the clutter in your living area so you can spend time on the things you enjoy.
Giving yourself a fresh start in your personal life should also carry over into your workplace. Evaluate and analyze the shape of your department or responsibilities so you feel good about it. For those projects you wished to start (and finish!), but avoided, ask yourself: Will completing these help alleviate and simplify my work in the future? Cleaning your office space and getting all those old agreements and binders shredded or into storage will surely raise your spirits and probably improve your productivity. It is also a great time to renew those New Years' resolutions you made to yourself, and there is no better time to pursue those educational and professional goals you set then (but may just not have gotten around to pursuing in earnest!)
With each passing year, it gives me great pleasure to see family and friends continue to develop and mature in their own ways. I also see peers and companies expand their knowledge, experience, and strive for continuous improvement, which makes every spring better than the last.
Henley Hom, Principal
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April 21st, 2010
Please join us for our next free webcast on April 21st at 11am Pacific Time, 2pm Eastern TimeDescription:
By now many of us have a handle on the basics of RSUs, their structure and tax implications. But how do we really perfect our plan design, administration, and employee communications? How are other companies tackling their challenges and what are the industry's best practices? In addition, how do you cope with the more unusual issues? (e.g. vesting during blackouts, tax payment complications, international tax rates and variable accounting).
This session will cover current and emerging practices for RSU plans, provide practical suggestions for your common RSU administration issues, and dive into some of the stickier challenges and unintended consequences of some plan designs. It will also provide suggestions for ways to sidestep or altogether avoid common issues, either via design or administration stopgaps.
(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.)
Market Trends & Innovative ApproachesHot spots in equity comp that are keeping us busy:
Some clients have been asking for tools to help them with their grant planning process for RSUs, looking to show how much individuals have reaped from RSUs in the past and future vesting and projected gain based on current or projected market value. SOS has developed a custom MS Access report for RSUs that is similar to the stock option planning reports many providers offer.
We're also seeing an increase in audit firms asking for an "independent" verification of DTA balance for stock plans - another source that shows grants outstanding and the DTA remaining for those shares. SOS is in the process of developing a custom Crystal report to assist clients with this auditor request.
More and more clients are switching between methods of applying forfeiture rates to their accrual of expense; from the 'static' method to the 'dynamic'.
Software clients are upgrading and struggling with new performance award features.
We've seen a resurgence in demand for "Employee Elect" our option exchange program website. Modification accounting is also hot...we will soon have a demo version of our modification accounting program suite that we plan to take on the road. Please let us know if you'd like to set up a demo.
Finally, we've seen a large uptick in M&A activity, which keeps us busy in so many ways...
Liability Accounting PrimerNo one ever said that the process of preparing data to be reported under liability accounting methods was an enjoyable experience. Well, maybe I did once...That claim aside, the fact is that going through the motions of preparing your current period liability expense can be done without too much headache, as long as you keep yourself organized and focused.
First, the grants that are subject to liability accounting need to be identified. Can they simply be "tagged" with a user-defined field unique to liability grants? Should a separate database be created to house those grants alone? Keep in mind the need to report other aspects of those grants in disclosures and the possible administrative maintenance of a second production database. Whatever you do, think mostly about the precedent you could be creating for each reporting period going forward.
Once those grants are identified, detail the steps needed to mark their values to market, and document them for later use. Can you use another user-defined field to further identify their status in the mark-to-market process (i.e. "Released", "Terminated", "Unvested")? Using a second-level identifier may make it easier to change their market value based on their status during the reporting period. A grant that is cancelling while unvested during the period will simply be reversing whatever expense has been amortized up through that date, so the value they are assigned no longer matters and need not be updated. Grants that have not yet vested by the end of the reporting period must be assigned the market value as of the last day of the period. And grants that are vesting during the period are assigned the value as of their date of vest.
Before you are done updating your data, ask yourself whether you will ever need to go back to a previous period and reverse the mark-to-market (What?! He wasn't termed until the following quarter?!). Be realistic, not necessarily optimistic. If so, the second-level identifiers could use period-specific terms such as "Rlsd FY09Q4" or "Term FY09Q4". Using more specific tagging can help if they ever need to be retroactively changed. Just remember to keep it relatively intuitive.
When your data is updated, you are ready to run the report. Remember to run only the population of grants that are subject to liability accounting. If your software does not support liability accounting, and many don't, you need to manually calculate current period liability for each grant. This is where Excel's vlookup function is your friend. Vlookup will allow you to match up numbers for the same grant from the previous report. Take the to-date expense after adjustments from the current report, and subtract the previous period's to-date expense. If some grants vlookups result in #N/As, just replace those #N/As with zeros (you can use the ISNA() function to accomplish this), since it simply means that the grant did not appear in the previous period (or change the values in your vlookup function if the grant should be in the previous period). Add up all the resulting dollars and you have your current period liability.
Note: The steps outlined above were developed for a client's cash-settled RSUs, which are measured on their release date. Other cash-settled instruments such as SARs and options are measured on their exercise date therefore the process will differ slightly.
Tim McCleskey, CEP
Tim is an Equity Compensation Consultant for Stock and Option Solutions, Inc. (SOS). He is part of the People Solutions division, providing clients help with various needs from data projects to day-to-day administrative assistance.
Tim's experience includes working as an outsourcing provider, controlling data changes during several restatements, creating various procedures while working as an interim administrator, and assistance with vendor transitions. He has been a Certified Equity Professional since 2007 and volunteers for the Certified Equity Professional Institute.
A core part of our mission at Stock & Option Solutions is to meet all of your equity compensation needs, including the delivery of useful and timely information you can use to improve your program's management, effectiveness, compliance, and participant satisfaction. Staying up to date on all that's happening around equity compensation can be critical to the ongoing well-being of your stock plan. Listed below are some ways we are keeping our network updated, and we encourage you to take advantage of these free resources:
SOS Fan Page on Facebook - Be alerted to the news that affects you by becoming a fan of SOS on Facebook. Our fans have access to the latest industry articles, white papers, event announcements, blog postings, pictures and videos which will allow you to say, with a straight face, that you are working when you log on to Facebook. In 2010, fans of our page may also be in for some surprises, so don't miss out.
Newsletter - Industry-leading monthly publication, SOS Xtra, includes insightful articles, news on upcoming webcasts and other events, market surveys, product spotlights, client profiles, links to equity compensation news, and, last but not least, industry gossip. To view an indexed archive of our newsletter, go here.
Webcasts - SOS subject matter experts, as well as partner panelists whose work touches on all aspects of stock plan management, lead presentations, and then answer questions on the most current and challenging issues in equity compensation. And the best part is that you don't have to leave your desk to attend. A sampling of past webcast topics (with links to presentation materials) include: Performance Plans, Option Exchanges, Modification Accounting, IFRS 2, and "M&A Must-knows for Stock Plans". For past webcast recordings and presentation materials, please visit our Equity Compenensation Events page.
SOS Equity Compensation Library Page - The SOS website contains a library of equity compensation white papers and other articles written by SOS and covering a broad range of topics. Keep coming back as we refresh this content regularly.
SOS Equity Compensation Events Page - Our website also contains the aforementioned Events page, which, in addition to past and upcoming webcast information, lists industry events and meetings where SOS will be presenting, and many other things you might want to get on your calendar.
Twitter - Follow us and stay informed with all the news, events, and announcements from the stock plan world.
YouTube - The newest way for us to keep in touch, our YouTube page includes interviews, discussions, and clips from industry events, and we're planning on doing so much more...check it out, and become a subscriber today.
To better meet your needs, we also strongly encourage you to send us your ideas on topics we should be covering, ways to improve the delivery of information and updates, or any other suggestions you may have.
For more information, or to send us those ideas, please feel free to contact us at firstname.lastname@example.org
ShareComp 2010 -
It's Only Just Begun ShareComp 2010, the equity compensation's first virtual conference, was a tremendous success for SOS. We had hundreds of visitors to our booth, and many more join our presentation on mergers & acquisitions. We wanted to thank everyone who was able to attend and be a part of this very exciting day with us.
One of the great features of this conference, however, is the ability to continue to be a part of it for the whole year.
All presentations will be on-demand and downloadable. All booths and their content will be available for viewing and download. You will even be able to view the discussions and chats that occurred during and after the live event. The event also includes a searchable resource library that allows quick and easy access to information by topic and title.
Our ShareComp booth is open all year. Just use sponsor code "SOS" to register if you haven't done so already
SOS Across Our Desk: Equity Compensation in the News...Global Accounting Standards
Video of SEC Chairman Schapiro discussing global accounting standards.
The Windy City Awaits
SOS Xposé...tender tidbits about people and players in our industry...
CEP Exam Registration... Don't Delay - CEP exam registration for the June 5 exam closes April 23. Never before has it been so important to have the right skills and expertise for the equity compensation industry. And to help you with that, the CEPI is thrilled to add an additional tool to the course binder - a comprehensive review guide for the study materials. This tool will help candidates with exam preparation and overall mastery of the equity compensation body of knowledge. Register today.
New Additions... Sheila Matias of Stryker and her husband Mike will be finalizing the adoption of their new son Karl (13 months old) in April. Also, they recently were placed with his sibling sister, Ava (almost 2 months), whom they plan to adopt as well once the 6 month State requirement has been met...Rajal and Keyoor Mankad of My Equity Comp finalized the adoption of their new son, Nathan Keyoor Mankad, on March 15th. They have a blog that outlines their journey through the adoption process, and also includes pictures, here. Congratulations!
On The Move...Mona Hanes, former Senior Vice President of New Business, has been appointed President of AST Equity Plan Solutions (EPS), a division of AST...Paul Buchbaum is now the CEO and President of ICM Corporate Plan Services LLC...Taeho Chung, a former member of the SOS Team, has joined FRS Equity Solutions as an Equity Plan Administrator...After a 5 year run with SOS, Lee Kelly has joined Extreme Networks as their Stock Plan Administrator...Congratulations and good luck to you all!
Coming West... Pam Chernoff of the NCEO will be moving to California--Irvine, to be exact--next month, and is looking forward to being in the same time zone as her coworkers.
Happy St. Patrick's Day!
Did you miss an issue of Xtra? View our complete newsletter archive here
Miss a webcast? You can find links to recordings, as well as the materials, on our Events 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 advisors. The preceding information does not necessarily represent the official views of Stock & Option Solutions, Inc. with respect to any of the issues addressed.|
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