August 30th, 2010
Volume 3, No. 8

In this Issue:

Industry Trends Affecting Equity Compensation

In Memoriam: Marilee Richardson

Upcoming SOS Webcasts: M&A Success Strategies for Stock Plan Managers, and Equity Accounting for M&A Made Simple

Update on Performance Plans Webcast

M&A: After the Dust Settles

Product Spotlight Sequel: SOS 6039 Services & Solutions

SOS Across Our Desk

NASPP Conference

SOS Xposé

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Latest Webcast Materials from BOTH of our July Presentations:

Hey Wait, Wasn't I Supposed to be Rich by Now?: Communicating Value to Private Company Stock Plan Participants:
Presented on July 21st



Employee Education on a Shoestring Budget: How to Get it Done within Your Limited Means:
Presented on July 22nd



SOS Employment Opportunities
From the SOS Library:

Five Common International Stock Plan Compliance Errors

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: xtra@sos-team.com.

Industry Trends Affecting Equity Compensation

"The time to repair the roof is when the sun is shining."- John F. Kennedy

Quotes by JFK often remind people to strive toward becoming the person they aspire to be. With this quote in mind, I think about our changing industry and remind myself that we must always remain focused on reducing risks in our companies and create value for their shareholders. We do this in many ways, but today I wanted to provide for you a few common trends we have seen that you should be preparing for.

  • Auditors questioning ongoing FAS123R accruals for option or award exchanges
    • Forfeiture Rates & True up for termination at termination or vesting
    • Inclusion in DTA/APIC calculations
    • Inclusion in EPS calculations
    • Completeness verifications

    ✓ Action: Need to automate the quarterly accrual calculations to assure data integrity and standard quarterly process
    ✓ Action: Read article written by Elizabeth Dodge on Modification Accounting.

  • FAS123R process and Executive Comp Controls have increased scrutiny in M&A or IPO transactions
    • Decrease in valuation during negotiation or termination of discussions
    • Investment bankers are being more selective and look for proper controls before taking on a client for financing

    ✓ Action: Read this article highlighting the effects of certain provisions of Dodd-Frank, especially those governing executive compensation, on M&A activity
    ✓ Action: Define compliance standards for your company to assure the equity plan is operating in an organized and compliant manner

  • Vendors are focusing more on their core business
    • Will you vendor support you in the long run if you do not fit their ideal client demographic
    • Does your single vendor create a risk to your equity plans and employees due to a vendor concentration
    • Vendors have been acquired and may change their focus

    ✓ Action: Assess if you company is at risk from a vendor concentration
    ✓ Action: Create risk mitigation plan and annual vendor management plan with goals and standards of operation
    ✓ Action: Read our white paper on stock plan vendor analysis

Barrett Scott
Stock & Option Solutions

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In Memoriam: Marilee Richardson

The SOS Team lost one of its team members, Marilee Richardson, to cancer on July 30th. The impact has been quite traumatic for all of us. In our eleven years, the thing we have prided ourselves on the most is our family atmosphere. As a matter of fact, Marilee's own daughter, Lisa, worked with SOS as well. The loss of one of our own is truly felt as a loss of a family member.

Marilee was only 55 years old and, as she told me in our last conversation, "in the prime" of her life. She was absolutely a fighter. She knew the odds were against her when she was diagnosed with pancreatic cancer in early 2009. Only 20 percent of those diagnosed live for another year. We were lucky enough to have her for over 18 months.

Marilee consulted for one of SOS's largest clients for the past five years. SOS employee Lindsey Youdan worked very closely with her during that time and had this to say:

I met Marilee almost four years ago. We have been working at the same client ever since. She was a great friend and mentor to me.

Marilee was a dedicated, hard working, strong and caring person. There were many times where she worked long nights and weekends to support the client. She was always there for me. I learned a lot from her. We were a great team.

It is an honor to have known her. She will be greatly missed.

We are so grateful to have known Marilee. We have always admired her dedication to family, friends, and work. She was a straight-shooter who enjoyed a good laugh. The love and devotion she had for her family is reflected in her amazing daughter, Lisa, and her other children and grandchildren who rallied around her in her time of need.

We are lucky to have had the time with her and she will be missed.

Marianne Snook
Stock & Option Solutions

Free SOS Sales Webcasts:

M&A Success Strategies for Stock Plan Managers

October 5th, 2010

Click here to register.

Equity Accounting for M&A Made Simple

October 12th, 2010

Click here to register.

Please join us for our next sales webcast on October 5th at 11am Pacific Time, 2pm Eastern Time, and October 12th at 11am Pacific Time, 2pm Eastern Time.


M&A activity has steadily risen, while the environment in which it occurs has grown increasingly complex. To successfully tackle a merger or acquisition, stock plan professionals require more skills and knowledge than ever. And nothing is more essential than experience.

For more than 11 years, SOS has managed and assisted companies through M&A projects of every size, shape and color. Over that period, we've built on our expertise, while developing a toolbox of innovative technology solutions customized to meet the evolving needs of this marketplace. On September 17th and September 19th, we'll be telling our story through case studies taken from real clients, which will not only provide you with some tips and tricks for taking on your next transition, but will also highlight the SOS solutions and custom technology that will ensure you are never left short-handed.

This special M&A Sales Webcast will take place in two parts:

On our October 5th webcast, M&A Success Strategies for Stock Plan Managers, we'll be covering:

  • Due Diligence and Planning
  • Employee Communications, before and after transition
  • Processing the acquisition - the target side vs. the buyer side
  • Data Integration
  • International considerations
Speakers: On our October 12th webcast, Equity Accounting for M&A Made Simple, we'll be covering: :
  • M&A Accounting (accrual and true up at termination),
  • Tax Accounting, and
  • Diluted EPS Calculations
Speakers: (As this is a webcast dealing with SOS products and services, no continuing education credit is available for attending.)


Performance Plan-tastic: Handling the Perks and Pitfalls of Performance

September 7th, 2010

Click here to register.

This free webcast, originally scheduled to occur on August 26th, has been rescheduled. It will now take place on September 7th at 11am Pacific, 2pm Eastern Time. We apologize for any inconvenience this may have caused, and hope you can join us next Tuesday.

Please note: If you had previously registered for this webcast, no further action is required. The session will still be recorded, and everyone that is registered will receive a link to the materials and recording as usual. Anyone that is currently registered and is unable to attend the new date & time will still be able to view the recording at their leisure.


Are you currently wrestling with performance shares? Or are you still just dreading the day that management gently informs you that they've just implemented a performance plan? And praying that it's not a broad-based plan with insanely complicated goals and metrics?

Whichever camp you're in, our expert panel will review some of the challenges inherent in performance plans, some common (and some unusual) designs we're seeing in the marketplace, cover the accounting treatment, and give you tips to tackle and handle your performance plans and still have time for your day job and maybe even a life outside of work.


(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.)

M&A: After the Dust Settles

The third in a three part series on Mergers & Acquisitions

Whew, the merger deal is closed and the dust has settled. Or has it? In our previous two segments on M&A (See here and here), we talked about preparing for and navigating the process of a merger or acquisition. The path to M&A closure and integration can be a challenging one, fraught with minute details - to which critical attention must be paid. Our previous segments focused largely on getting from point A to B - how to take stock plan data from two companies and integrate it efficiently, with minimal pain and errors. Now that the deal is done, we move on to the final stages of ensuring a successful integration, the steps that occur largely after the transaction is complete.

Employee Communication

M&A may be one of the few areas where advance communication is not always possible. Even when permitted, what can be shared in advance may be extremely limited due to factors such as confidentiality or lack of finite certainty about the details, and that makes advance communication challenging.

While it may not be feasible to disseminate detailed information to stock plan participants in advance of the transaction close, it is possible to put together a communication plan BEFORE the transaction closes, even if you must wait until closing to execute the plan.

What to Communicate

When communicating about M&A to stock plan participants, put yourself in their shoes. Anticipate the questions that they will need to know. Such anticipation and proactive planning can greatly minimize the number of inbound, one-off inquiries that flow into the equity administration department. Typical areas of question for employees involved in an M&A situation include:

  • What will happen to my stock options/awards?
    • Address what will change, including number of shares due to conversion ratio, and any 'triggers', such as acceleration of vesting, cash payouts, etc.
    • Address unchanged variables , such as retention of original term and/or vesting schedule if applicable
    • Address implications on shares held outright, such as those previously acquired from an ESPP, stock option exercise, or award vesting
    • Don't forget former employees who may have outstanding stock options, or previously acquired shares
  • Where are my stock options/awards?
    • Where can the participant access information about their stock plan holdings? Are there changes to vendors/brokers? If so, what is the new process to access stock plan data?
    • Are there any nuances to how stock plan data will appear in a participant account? For example, did the original grant date become the acquisition date for administrative purposes? Describe any changes to appearances of data that may be seen and misunderstood.
  • When can I access my stock options/awards?
    • Are there any restrictions on when/how participants can access my stock plan holdings, other than those contained in the terms of the award Agreement?
  • What is the expected process for issuing stock options/awards going forward?
    • Was there previously a routine grant practice, such as an annual grant? How is that expected to change in the new environment?
    • Are there any changes to eligibility requirements for granting stock options/awards in the new environment?
  • Where can the participant find additional information?
    • Consider creating an email address or designating a dedicated contact for employee inquiries
    • Consider establishing a 'library' of relevant information on an Intranet, broker online website or other source
How to Communicate

Employee communication is an area where the means is just as important as the message. If you're going to go to the effort to communicate with employees, then invest equal time in ensuring you're utilizing effective communication channels.

Our favorite communication methods for M&A include:

  • Employee Statements: the old saying that 'a picture is worth a thousand words' applies. It's important to explain any conversion ratio formula to employees. In doing so, provide a visual of how this applies to their personal situation. A customized statement showing the 'before' and 'after', along with the 'middle' piece (the conversion calculation) can go miles towards ensuring employees understand how the M&A action applies to them individually.
  • FAQs: M&A is an area where there tends to be many questions. With some planning and careful thought, you should be able to anticipate most questions. Answering them proactively, in the form of an FAQ, will help employees to find quick answers, as well as minimize the number of incoming and redundant inquiries to the equity department. Tips for an effective FAQ include writing a list of all possible questions, and then answering them. You may even consider grouping related questions together and creating 'categories' or a table of contents to simplify the process of finding an answer.
  • Meetings: meetings can be an effective forum for interaction during a confusing and critical time. While face to face contact can be beneficial in communicating, we also see a large number of clients utilize web tools to host meetings via conference call and Internet. This allows the Company to reach employees globally on a timely and efficient basis. Consider permitting employee questions during these meetings - there may be an FAQ that you hadn't thought of that can be widely addressed.
  • Email Staging: one common mistake is when a large amount of information is distributed in a single, solitary communication. Many times the Company thinks they've put all the information out there, so it must be understood - communication done. Rather than putting ALL the communication eggs in a single basket (e.g. one communication), consider staging the communications such that you filter a bit of information at a time, and as you build one communication upon the previous one, you REMIND, REPEAT, REMIND, REPEAT. Repetition can be important in complex scenarios such as M&A, and multiple communications provide the opportunity to refresh previous information without taking on an overwhelming feel.
  • Visual Aids/Guides: If you are introducing new information, such as a new vendor, it may be helpful to have supplemental information available - such as a step by step guide, with screen shots, on how to activate/access the account. Other supplemental information could include a chart of commissions and important URLs, email addresses, phone numbers that participants can have readily available in a consolidated format.
  • Appropriate Staffing: responsiveness is a critical component of any communication plan. As much as you proactively communicate, there are bound to be questions. Ensuring you are appropriately staffed to handle inquiries on a timely basis will help avoid backlog, stress, and a negative impression of the communication process.

Jennifer Namazi, CEP, Director
Stock & Option Solutions


Jennifer Namazi is a Director in the Strategic Solutions division of Stock & Option Solutions. At SOS, Jennifer's focus is to help clients ensure they have the proper practices and infrastructure to implement and support their equity plans. Jennifer approaches her clients with an eye towards best practices and providing general strategic guidance.

Prior to joining SOS, Jennifer spent more than 10 years working in various corporate equity administration positions ranging from administrator to senior management for companies such as Adaptec, Broadcom Corporation, Oakley Inc., and Sicor Pharmaceuticals. Jennifer earned her Certified Equity Professional designation in November 1997. She has been actively involved in various organizations such as the NASPP for several years as well as served as a volunteer for the CEP Institute. She is a past program Chair for the San Francisco Chapter of the NASPP, and served on the CEP Advisory Board from 2002 - 2009. She frequently speaks on current and emerging topics for industry organizations and events, such as the NASPP, GEO, and SOS.

Product Spotlight Sequel: SOS 6039 Services & Solutions

Last month's Product Spotlight focused on our line of 6039 services & solutions. We followed that up with a sales webcast, which included a discussion of the new regulations, as well as our related services. The webcast culminated with a demonstration of our industry-leading solution for handling the required e-filing and generating 3921 and 3922 participant statements, SOS 6039 Xpress.

SOS 6039 Xpress Webcast Screenshot

Screenshot from our 6039 Sales Webcast. Click the image to view the recording.

Attendance was high, and the response we received from companies looking for a simple and cost-effective solution has been amazing. To streamline the proposal process, we are asking three simple questions which will allow us to deliver a customized proposal and pricing within 1-2 business days. If you are interested in our solutions, please email us with answers to the following:

  1. Do you need it for ISOs or ESPP (or both)?
  2. How many participants do you have (for each)?
  3. Paper or email participant statements?
    • If email, are you interested in the consent collection website?
January is just around the corner. We're ready, and just a phone call (or email) away!

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

From Dan Walter: Top 3 Provisions of Dodd-Frank...at least for the moment...Another detailed overview of the financial reform bill...From the NASPP blog, an interesting posting on possible future directions for equity comp.

An excellent blog from Barb Baksa, Exec Director of the NASPP, re: a study on the "impact" that repricings (aka option exchanges) have on company performance.

Accounting Considerations Related to the New Policies Proposed by the Special Master for TARP Executive Compensation are covered here.

Big Happenings
Solium acquires North American employee stock option and Transcentive businesses of Computershare.

US adoption of IFRS remains "highly uncertain".

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

NASPP Conference

SOS is proud to announce that we will be sending three speakers, Elizabeth Dodge, Laura Reis, and Jennifer Namazi, to this year's NASPP Conference in Chicago. Please read our latest press release to learn more. We look forward to seeing you there!

SOS Xposé

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

New Additions... Paul Valencia of E*Trade Corporate Services and his wife Janie welcomed Austin Cruz Valencia into the world on July 16th. Austin weighed 6 lbs, 6 oz. and was 20 inches long. To see some pictures, click here, here, here, and here...Kevin Osterman of Edwards Lifesciences has another baby on the way in February. Congratulations to you both!

Nuptials...Jennifer Bertagnolli, a Client Manager at E*Trade, was married in South Lake Tahoe on Sunday, August 8th to Marc Wallace...Christine Deleo, a Senior Solutions Specialist at Transcentive/Computershare, recently got engaged to her long time boyfriend, Mike Ross, who also works at Computershare in the Corporate Governance Services group.

On the move...Alison Wright has joined Baker & McKenzie, and will be working out of their San Francisco offices. Alison will be working on Executive Compensation and Employee Benefits as well as U.S./domestic equity compensation issues.

There is a Doctor in the house...SOS would like to celebrate one of own, Andrea Best, who graduated with her Ph.D.in Comparative Studies from Florida Atlantic University on August 10, 2010. Her research focuses on sustainability, ethics, environmental justice, and complex systems thinking. We have some pictures from the ceremony here and here. Great job, and congratulations Andrea!

SOS at SF GEO on Thursday...Elizabeth Dodge will be there, speaking on how to get more use out of the internet, both for participant communications, career development and internal (and international) stock plan group communications. Learn more at the link, and don't forget: it's not too late to register!

Happy Belated Birthday...Laura Verri of Computershare recently returned from her vacation and birthday celebration with friends in Spain. Having a birthday that falls on the same day as the town fair there paid dividends, as she not only got cake, but a parade and fireworks! http://www.globalequity.org/geo/node/344

CEP... Registration for the November 6 CEP exams closes on September 24. There is a lot at stake with equity compensation. Make sure you have the right skills and expertise...And mark your calendar for the CEP Symposium on December 8.

Conference News...Wendy Davis of Cooley forwarded us the details for their 3rd Annual Jumpstart Your Year-End Compensation Decisions conference. Click here for more information.

Have a happy and well-deserved Labor Day weekend!

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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