Click to view this email in a browser


June 30th, 2010
Volume 3, No. 6

In this Issue:

Yourself Time...

Webcasts on July 21st and 22nd - Stock Plan Communications

SOS Employment Opportunities

M&A Due Diligence

Product Spotlight: M&A Services and Solutions

SOS Across Our Desk

SOS Xposé

Subscribe to Xtra!

Follow us on

Join us on

Watch us on

Latest Webcast Materials:

Getting Crafty with Crystal: Solving Stock Plan Reporting Issues with Crystal Reports:
Presented on June 23rd



SOS Employment Opportunities
A recorded demo of "Email Xpress", the SOS automated solution for emailing participant stock plan confirmations and statements, is now available:

Email Xpress Demo

Our Services:

People Solutions

Data & Technology Solutions

Strategic Solutions

Contact Us:


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:

Yourself time...

In reading some of the past Xtra opening articles around the "Lazy Hazy Crazy Days of Summer", "Hitting the Accelerator", "Good, Clean Living", "Spring Ahead", etc. A thought rose to mind about all the fun times this time of year can bring, but even during these fun times the requirements of our everyday jobs still pull on us. As we look out the window and see the bright blue sky, see our kids home from school and having fun, and think about having an ice cold drink and putting our feet up, let us not forget to find time to enjoy the things we love.

Time is precious and moves very fast, so don't forget to take some of that time for yourself to do the things you enjoy. Whether it is playing a round of golf, seeing a new movie, spending time at a spa, reading a good book, or, just taking some time to be with your family, these things are all things that we need to do for ourselves. Taking this time not only helps us reduce the everyday stresses in our lives, but will help us be more efficient in the time we are spending in our jobs. This "yourself" time, will allow you to clear the mind and look at things differently and in a new light, and potentially find solutions to things that might have seemed insurmountable previously.

You would probably not run your car for 100,000 miles without taking it to a mechanic to at least give it a once over and change the oil, so don't forget to provide some routine maintenance for yourself. You might think that taking this time is being selfish, and maybe you are right, but being a little selfish once in a while will allow you to keep a more positive attitude and be more efficient in your everyday tasks.

Steve Gaylord
Chief Technology Officer
Stock & Option Solutions

Need an easy way to stay up-to-date on industry news? Follow us on Twitter or become a fan on Facebook.

And we would love it if you would share this newletter with your friends by forwarding it or using this button: Bookmark and Share

Summer Special: Two free webcasts for the price of one!

Free Webcast #1 (Private Company):

Hey Wait, Wasn't I Supposed to be Rich by Now?: Communicating Value to Private Company Stock Plan Participants

July 21th, 2010

Click here to register.

Please join us for our next free webcast on July 21st at 11am Pacific Time, 2pm Eastern Time


Private companies face significant challenges in communicating the value of their equity compensation programs to their participants. In this webcast, we'll look at the obstacles private issuers face in creating a true sense of worth and ownership, and present a pragmatic framework to assist you with:

  • Communicating the goals of your equity comp programs
  • Identifying and presenting non-IPO value scenarios
  • Building value through transparency (Business, Stock Price, Financial Health)
  • Setting Mutual Expectations with your participants
  • Why the "nuts and bolts"--including clear, effective communication of the terms, conditions, provisions, and participant holdings-can be the difference between a good investment and money down the drain
  • How to communicate, answering the critical questions: Who? When? How Often? And with what?
  • Finally, we'll discuss how to do it all with limited resources and budget!


The roster of private companies offering equity is vast and growing quickly, so we can't hope to reach everyone. If you know someone who may be interested in the content of this free educational webcast, we encourage you to pass along this link.

Free Webcast #2 (Public and Private Companies):

Employee Education on a Shoestring Budget: How to Get it Done within Your Limited Means

July 22nd, 2010

Click here to register.

Please join us for our next free webcast on July 22nd at 11am Pacific Time, 2pm Eastern Time

An effective employee education strategy is an essential element in meeting the goals of any successful equity compensation program. Yet, there never seems to be the budget, time, or resources to craft and carry out these strategies. On July 22, please join us for our webcast Stand we'll show you that, where there is a will, there's a way.

This presentation will provide bite-sized employee education efforts that can be put to use immediately, or spaced out over time to create a well-rounded and thorough employee education standard. We will detail a number of mini-campaigns for stock plan managers to initiate as a part of their total education package as well as the advantage of providing information in smaller pieces. Topics Include:

  • General tips on successful employee education
  • Leveraging your Intranet
  • Taking advantage of new hire orientation
  • Communicating on tax issues
  • Internal partnerships
  • ESPP enrollment

(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 Employment Opportunities

As we hit the year's midway point, and the economy continues its recovery, we've seen a rapid and continuous increase in the demand for qualified equity compensation professionals to meet our clients' and partners' needs. We are currently seeking excellent candidates interested in day-to-day stock adminstration, or high-level consulting with the SOS Team, as well as those looking for change of scenery through our temp-to-perm and direct placement services.

To learn more about these exciting opportunities, please click here.

M&A Due Diligence

The first in a three part series on Mergers & Acquisitions

While your company may have put months of thought and planning into acquiring a company, the handling of equity plans is typically something that must be sorted out and dealt with quickly, efficiently, and often at the last minute. Even in the best of cases, where the stock plan group is brought in early in the process, a lot of the data you need to work with may not be accessible until after the deal is complete. Therefore, you need to be ready to spring into action at a moment's notice, which makes. due diligence critical. This article is intended to provide you with many of the critical questions to which you need answers BEFORE you get started.

The best place to start is to understand the timing of the transaction. When is the acquisition planned to take place? What might cause the date to be pushed or pulled in? What is the likelihood that a change will happen and how (and how fast) will you be notified? How quickly will you be expected to complete your portion of the project? The answers to these questions will allow you to begin setting up your timeline. It is crucial that you immediately compare the required M&A timeline with your other regularly-scheduled activities. If the expectations of you and your team are not realistic, make that clear earlier rather than later. Make your concerns and solution clear - do you need more time, more help or more what? Once the process begins, it is too late and you WILL BE held accountable for meeting those improbable/impossible deadlines.

The next step is to understand the terms of the acquisition and how they apply to each equity plan. At this juncture, it is not just about asking questions it is key to do your own homework. Read the actual acquisition documents from start to finish. Highlight any areas that do/may apply to stock options, restricted stock awards/units, ESPP, insiders, conversion ratios for shares/prices, rounding methodology for shares/prices, etc. The devil really is in the details. It is critical that the processing of the acquisition proceeds in exactly the manner it was documented and communicated, and according to the agreed-upon terms. There is no "close enough" in this situation! We suggest that you compile a document that outlines what needs to happen and have counsel confirm that you have all the details correct.

Once the general terms are confirmed, you need to dig a little deeper. What kinds of equity plans does the acquired company have? Will there be accelerations or vesting extensions? Will there be immediate terminations? Who are their Section 16 filers and how will that change? Will there be a final ESPP purchase and who will be responsible for processing it? Which system is the other company using? How/when will new employee IDs be assigned and how will you be notified? You now need to use all of this information to flesh out your timeline with each and every necessary step.

During this Due Diligence/Planning Phase there are likely some details you won't know until you can actually see the data which with you will be working. Your detailed timeline might have a couple of areas marked "TBD". For instance, you may not know how many ISOs will need to be accelerated which means you won't know if there will be ISO limit recalculations and/or how many, which means you don't know how much time that will take, etc. You may, therefore, need a few different paths planned out so that you will know exactly what to do when the time comes.

Next month we will walk you through the actual processing of the acquisition including how to get through some of the most common TBDs. 'Til then...

Product Spotlight: M&A Services and Solutions

Last year's webcast, "Caution! Dangerous Merge Ahead: M&A Must-knows for Stock Plans" (hit link for recording), had one of the largest attendance numbers we've ever seen. We had already experienced an increase in M&A-related projects, and the webcast's popularity proved a harbinger of things to come, with the ensuing months bringing an absolute flurry of companies looking for solutions to the complexities inherent to these events

This month's SOS Product Spotlight focuses on the solutions we deliver to our Clients involved in a merger or acquisition

Mergers and acquisitions are fraught with challenges, whether you are assuming, converting, or cashing out equity instruments. From conversion services to data audits to custom reports and participant communications to assistance with accounting under 141R, Stock & Option Solutions provides the services and tools that help you sail through the stock plan side of these complex transactions with minimum effort and maximum results.

How SOS can help:

General Management and Other Key Areas of Assistance

  • Overall management, including project management of the Merger & Acquisition for Stock Plans
  • Guidance on execution of the transaction terms while staying in compliance
  • Guidance on the execution of the treatment of employees (retention concerns and payouts, severance treatment, acceleration triggers, special agreements, tax impact, reporting obligations etc.)
  • Employee education development and delivery to reduce participant confusion and concerns, and ensure a successful transition
  • Assistance with internal reporting requirements and documentation while maintaining SOX compliance concerns
  • Understanding of the mechanics of the transaction terms, and how to best implement, accelerations, terminations, restricted stock issues, fractional share handling, special option issues, part-stock, part-cash deals, deferred compensation issues, performance vesting issue within your stock plan database.
  • Assistance identifying ISO modifications due to the merger terms
  • Assistance with accounting consequences as a result of the transaction, including customized reports to assist in complying with FAS 141R
  • Communication to employees through customized reporting solutions - resulting with the employees receiving one simplified statement reflecting the changes and impact of the transaction.
International Assistance
  • Generate country-specific communications for events related to Merger & Acquisition transactions (exchange or cash out of equity awards, explanation of awards for new employees of acquired foreign entities
  • Pinpoint issues and questions for more detailed review with global tax and regulatory specialists
Assistance in Execution of the Transaction
  1. Due diligence: The first and arguably the most important part of the merger process is the due diligence work performed before the transaction is complete.
    Let SOS' experts assist you with:
    • Examination of plan documents
    • Understanding acceleration clauses and provisions
    • Severance agreements
    • Review of merger agreement and plan of merger
    • Understanding of the conversion ratio and impact to equity
    • Understanding the timing of events, transaction date vs. impact to equity
    • Blackout periods - if any - resulting from transaction

  2. International Compliance:
    • Legally compliant to set up and do business if new locations will be acquired
    • Trustee or Financial Intermediary Requirements
    • Data privacy issues addressed
    • Translation issues
    • Security exemption trigger - headcount in existing countries vs. adding new employees
    • H1 Visa Issues for employees transferring to the US following transaction

  3. Data Audit: Even if the system used by the target and buying companies is the same, the data must generally be moved from one database to another and consolidated. A best practice is to begin this process with a thorough data audit of the target company's database. Identifying issues early can prevent numerous problems for years to come.
    Audit items can include:
    • Shares Outstanding
    • Duplicate account
    • Duplicate Employee IDs
    • Duplicate SSN's
    • Different use of same/similar fields (user-defined fields, class, type, etc.)
    • Award number sequencing (need to understand in preparation of loading new grants to system) and duplicate award IDs
    • Completeness and accuracy of participant data
    • Completeness of year to date withholdings
    • Reconciliation of equity types issued to board minutes
    • ISO limits - have they been applied correctly?
    • Are the current withholding rates accurate?
    • How current is the employee data? Hire dates, termination dates, leave of absences, severance agreement or retirements, inactive accounts
    • Do historic market values match historic exercise prices?
    • Do historic grant prices match market value on grant date and board meeting minutes?

  4. Conversion of data into new system: In the majority of mergers, converting data from one system to another is a necessary, but time-consuming and often painstaking process. SOS has processed numerous conversions for mergers, vendor implementations, etc. Let the SOS experts:
    • Apply Merger agreement terms to convert shares
    • Map and format files into new system required formats
    • Review the resulting vest schedules by auditing reports several years into future. Many times the concern is focused on converting and integrating the data based on the as of date of the merger or acquisition. SOS also checks the data at different points in time up to four years out to ensure that ongoing vesting has been converted correctly.
    • Provide a soft copy audit binder that contains reports and reconciliation from acquired company and acquiring company pre and post conversion.
    • Work with Exchange/Broker/Escrow for smooth transition

  5. Process: Seldom do the processes of the acquiring company remain intact after a merger. From simple adjustments to complete overhauls, SOS can help you get your process and related documents revised and perfected to ease administration in the future.
    • Streamline/integrate stock option process into acquiring company's process
    • Document resulting processes
    • Update related documents for SOX compliance
    • On-going updates (demographic data, tax rates and changes to locations, etc.) for acquired company participants, timeline for full integration if delay is necessary

  6. Accounting: FAS 141R (now ASC 805) has clarified and streamlined the treatment of equity grants in merger transactions. What used to require custom systems can now often be handled with tweaks to existing calculations and custom reports.
    • Expense allocation for post-combination expense allocation under FAS 141R (now ASC 805)
    • Tax Accounting with DTA from pre- and post-combination expense
    • Diluted EPS calculations with Tax Benefit proceeds considering pre- and post-combination expense
    • Custom reports or applications for accounting assistance

  7. Participant Communications: The importance of clear and effective communications with your participants before, during, and after the merger and the impact it will have on their grants is paramount to morale and retention of key employees. SOS' experts have vast experience in forming and executing communication plans that strike the right chord with employees while avoiding advisory tones.
    • Insider trading policies
      • Who will be impacted going forward
      • How will they be notified
    • Participant Call center staffed with stock plan experts to answer participant questions
      • Treatment to historical stock plan accounts
      • New exercise procedures resulting from transaction
      • How and where they will receive stock detail updates
    • Detailed participant communication plan and execution
      • Develop and or give participant education onsite / via webcasts, recorded or live, all combinations
    • Acquisition Statement Generator: Custom reports with grant status before and after merger that can be printed and mailed or sent electronically.

SOS Across Our Desk: Equity Compensation in the News...

Sarbanes-Oxley in the news
The Supreme Court rules that a portion of Sarbanes-Oxley is unconstitutional...A survey shows that the longer a company has been in compliance with Sarbanes-Oxley, the higher the percentage of executives who say the benefits outweigh the costs...Smaller companies to be exempted from Sarbanes-Oxley?

Option Backdating...we bring you at least one every month
Broadcom backdating case ends.

Stuff happens
The NASPP Blog discusses divorce and termination, and then death.

Around the world...
Baker & McKenzie quarterly newsletter summarizing developments around the world that affect global stock plans for the first quarter 2010.

10 Tips for Navigating the ISS Equity Plan Maze

New group for Crystal users (umm...the software, not the drug)
Are you using Crystal Reports to create custom reports? Looking for a place to learn and network? There's a new Yahoo! group for you.

Want to get these updates as we find them? Follow us on Twitter or become a fan on Facebook.

SOS Xposé

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

Engagement News... John McCann, of Accenture and a member of the program committee of the SVC NASPP, popped the question to his girlfriend, Shelley Hoeft, at 10,000 feet after skiing up from their campsite at Mount Shasta. She accepted, they then drank canned champagne and skied back to their campsite. Congratulations!

Top Honors...Emily Van Hoorickx, CEP, CFP®, Senior Vice President at UBS, has been named to Barron's Top 100 Women Financial Advisors List . Congratulations, Emily!"

On the Move...Greg Snyder has moved to Merrill Lynch, and is their new Vice President, Retirement and Philanthropic Services. Good luck, Greg...We are a little late to the party, but wanted to congratulate Tim Davis on his new position, Stock Benefit Consultant ,Wealth Strategy Associate, at UBS. Tim can be reached at

CEP Symposium...The CEPI is currently accepting speaking proposals and sponsorships for the CEP Symposium on December 8. Proposals are due July 9. For more information, please go here.

Scholarship Announcement...The CEPI and OptionEase are proud to announce they are accepting applications for the Marilyn Perkins Scholarship. Applications are due August 16. For more details, please go here.

Elvis has left the building...For the past 4 years, SOS Consultant Apollo Mok has brought expertise, reliability, and his own unique charm to our clients across the country. He has recently been offered a great opportunity to work with CareFusion as their stock plan manager, and has accepted that position. Thank you, and all the best to our good friend Apollo!

Happy Birthday, America!

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.
Stock & Option Solutions | (888)SOS-0199