February 2, 2011
Volume 4, No. 1

In this Issue:

New Year Lessons

ShareComp 2011

SOS Spotlight

Free Educational Webcast: Stupid Stock Plan Tricks: Saving Your Mind, Your Time, and Reducing Your Company's Risk

Stress Free Proxy Season: An Oxymoron?

Product Spotlight: DTA Balance Proof

CEPI Referral Program

SOS Across Our Desk

SOS Xposé

Subscribe to Xtra!

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SOS Xtranormal Participant 6039 Education Videos:

SOS Employment Opportunities
From the SOS Library:

Proxy Reporting Pitfalls

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:


Equity Compensation Projects/Consulting

SOS-TEAM Outsourcing

Contact Us:




Check out the new SOS Website
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.

New Year Lessons

Over the last few months, I witnessed our 6039 Outsourcing and Configuration Managers, Vanessa Harrison, Steven Hom, Srini Kalakoti, and Priyendu Bhardwaj, design, implement and regularly update our 6039 process for our clients. Their ability to focus on the end results, adapt quickly, and communicate clearly to everyone involved, created a successful environment for the project. Because of their efforts, and many others on the SOS 6039 Team, our clients and their employees benefited from these extensive processes put in place to make compliance with the newly revised regulations easy.

What mattered most to our clients--other than the end result--was that through the consistent application of the comprehensive process, we were able to clean data thoroughly and quickly; produce accurate 3921 and 3922 participant forms; and mail those statements, typically with a detailed and customized explanatory cover letter, to participants. In general, ensure all Client 6039 needs were met. Next, onto the IRS filings.

Vanessa, Steven, Srini and Priyendu, your efforts made the SOS 6039 suite of solutions a huge success for our customers! Congratulations!

In watching them achieve success, I realized that having a standard schedule to review your processes will make you more efficient and reduce risk, which is extremely valuable to your department and company. Here are a few tips we wanted to share with our readers:

  1. Focus on the desired result of your process. Many people get stuck on a process. By stepping back and keeping focused on the end goal, you can free your mind to invent new ways of achieving the desired result.
  2. Stay on the cutting edge of knowledge. Change is constant, so we must continue to learn and apply new strategies to our processes. SOS believes strongly in continuous education. See our article below on ShareComp 2011 for an amazing continued education opportunity.
  3. Communicate, Communicate, Communicate! Before you think about changing, when you are planning the change, while you are making the change, and after the change is made. You may even want to consider re-communicating some time after you have rolled out a new process to make sure it stays fresh in everyone's mind.
  4. Have a peer group review your processes. Develop an internal or external peer group to review your processes and strategies, hire a consultant to come in and provide you their cumulative knowledge, or anything in-between. The objective is to surround yourself with a group you trust that can provide you feedback on how your system is working and how you might improve it. It is still up you to prioritize and decide if you wish to make any changes, but now you are better prepared to make an educated decision.
  5. Plan a review "process" for your processes and have fun along the way! As Warren Buffett says, "We enjoy the process far more than the proceeds."

Barrett Scott, Principal,
on behalf of

The SOS Team

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ShareComp 2011

You have more equity compensation conference choices than ever...but only one is FREE to all SOS Clients! ShareComp 2011 is just around the corner, so register now.

After a very successful 2010, ShareComp is back! ShareComp 2011 is the only fully virtual conference for share-based compensation information, solutions and access to the industry's leading experts. This year's presentations and moderated chat topics were selected by a large panel of industry experts who focused on current issues and practical solutions. This event for stock plan professionals will be held on February 23, 2011.

As a founding sponsor, SOS is able to offer you a free registration. Register now using our sponsor pass "SOS" to secure your free attendance at this exciting, market-leading event. Feel free to share this sponsor pass with others within your company...Up to 16 hours of CEP credit will be available for attended sessions!

Sean Armijo, Elizabeth Dodge, and Susan Garvin from SOS will be presenting "Winds of Change in Equity Comp: Updates and Trends in US Stock Plans" at 8am Pacific Time, 11am Eastern Time, so mark your event calendar. Apart from the events, hundreds of other presentations, whitepapers, demonstrations, videos, weblinks and related resource documents will be available on-demand in the Resource Center and via Sponsor Booths.

For more information, or to register today (make sure to indicate "SOS"), please go to: www.sharecomp2011.com

SOS Spotlight

News and notes about the people of SOS, and the things we've been doing.

-We heard from a number of readers who didn't catch the December 2010 Xtra Newsletter. Coming as it did on December 23rd, we must admit that our release could have been timed a bit better! Here are some of the things you might have missed:

And don't forget, you can always access our complete archives, with links to every article, from our SOS Xtra Newsletter web page.

-Latest SOS Webcast Recording and Materials:

Tackle Your Proxy with Moxie: Updates on Equity Compensation Issues for Your 2011 Proxy Statement

Resolutions and Solutions for Accounting for Equity Awards

Free SOS Educational Webcast

Stupid Stock Plan Tricks: Saving Your Mind, Your Time, and Reducing Your Company's Risk

February 15th, 2011

Click here to register.

Please join us for our next educational webcast on February 15th at 11am Pacific Time, 2pm Eastern Time.


Manual processes in stock plan administration are far more common than in many other fields such as payroll and HR. Manual processes increase costs, waste time, make audits more painful, complicate SOX compliance and inevitably lead to errors, increasing risk enormously. Which manual processes are easiest to eliminate with minimal or no expense? Join us for our next complimentary webcast and learn how to streamline your processes and eliminate many of the manual processes that cause the most risk and the biggest headaches for stock plan professionals across the country.

Topics we will cover:

  • Paper processes (grant packages, exercise forms, certificates, confirms and other communications)
  • Manual data entry from Payroll & HR
  • Period close reconciliations (rollforwards, finding post-dated entries, etc.)
  • Disposition surveys
  • Section 6039 forms 3921 and 3922

Please submit your advance questions to our panelists to xtra@sos-team.com. (You can also ask panelists questions live on the webcast, but submitting them in advance will allow for some additional preparation and research, if needed, beforehand.)


(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.)

Special offer from the National Association of Stock Plan Professionals (NASPP) for SOS clients!

Discount on the NASPP's Stock Plan Fundamentals Program

The NASPP is pleased to offer all SOS clients a 10% discount on its acclaimed online Stock Plan Fundamentals program. That's ten percent off the price in effect at the time of registration.

Designed for professionals new to the field, the Stock Plan Fundamentals will bring you up to date with current regulatory requirements as well as administrative best practices. The program also adheres to the CEP Level 1 exam curriculum, making it an excellent way to prepare for the CEP Level 1 exam and to refresh for the Level 2 or Level 3 exams.

To take advantage of this special offer, call the NASPP at (925) 685-9271 and mention that you are an SOS client or complete this form and fax or mail to them.

SOS Knowledgebase

Stress Free Proxy Season: An Oxymoron?

As the proxy season moves into full swing, I find myself thinking about what's new and relevant to equity compensation professionals this year. I remember in the days when I worked in-house for corporations, there seemed to be so much tension looming in the air until the financial statements and proxy were filed. And the anxiety level is exponentially higher in years where there are voluminous new requirements, like last year. The good news is there are no new disclosure requirements for this proxy season. Thank goodness. Okay, so even though there are no new disclosure requirements, there are new initiatives, such as Say on Pay. It seems there are constantly 'new' things that we need to understand and implement. So I am compelled to ask - is there really, truly, possibly any way to have a stress-free proxy season?

I'd love to come out of proxy season with a smile on my face, stress-free. As I was thinking about the "how" to accomplish that part of the equation, the content from this month's webcast "Tackle your Proxy with Moxie" comes to mind. There are many things that can be done to make the proxy process, at least from an equity compensation perspective, flow as smoothly as possible. With that I offer my Top 5 list of suggestions to minimize stress and maximize efficiency during the proxy season.

5. Learn the disclosure requirements. The saying "Knowledge is Power" applies in spades here. Yes, the legal advisors and finance team may already know the requirements, but having knowledge within the equity department only serves to increase efficiency and avoid misunderstandings. Have you ever completed a request for proxy from your legal team, only to find out the requestor meant something slightly, or not so slightly, different? The problem is that even the slight difference means doing the work all over again. Knowing exactly what is required will help you work smarter, even when not communicated optimally by the requestor.

4. Keep abreast of changes and network. Yes, change monitoring and networking are combined into this tip. Why? Because new changes mean figuring out what needs to be done, and a great way to do this is to network with peers and colleagues to find out how they are tackling the same requirement. Being on the forefront of a change, offering information and expertise to your internal team may serve to increase your value proposition to the organization as well.

3. Determine Named Executive Officers ("NEOs") from scratch each year. This is an area where we see common mistakes. Some companies tend to have the same general population of officers included in the proxy each year. It's tempting to start with that list and evaluate compensation from there. This may have been a more predictable path before the determining 'compensation' included things like the fair value of equity awards. It's best to start fresh each year, evaluating all officers, because you never know when a single award or other compensation element will tip someone into the NEO category. Just thinking about the extent of 'do-over' that would result from incorrectly determining the NEOs the first time gives enough headaches to warrant avoiding that trap altogether.

2. Plug yourself into the process up front. This is the time to be proactive; don't wait for someone to come to you and ask for the relevant disclosure inputs. Get out there and own it. Find out exactly what will be needed from you and when. Insert yourself into planning meetings; if there are no planning meetings, schedule one. Assert yourself so that you are not at the mercy of the process. Synchronize with internal business partners on the plan for various narrative components and footnote requirements.

1. Get the context for every request and save backup! When someone from legal, finance or other areas ask you for information, the first priority should be to understand what disclosure it relates to and the specific context for their need. Having completed Tip #5 (Learn the Disclosure Requirements) will come in handy here. For example, the term "value" can mean different things, depending on the disclosure. Is it a 'fair value' for the Summary Compensation Table? Or, is it the 'intrinsic value' necessary for the Options Exercised and Stock Vested Table? Or, did someone decide that a footnote was necessary on a certain table? If so, save the provided instructions (email?) along with your resulting output. Sometimes it's helpful to jot down a few comments about the 'why' so that you can refer to it later. If someone provides you with information that you utilize for a disclosure or other important component, save the written back up with a copy of the relevant proxy page attached so that it's easy to answer future questions about the origin of information used in the disclosures.

While there are no guarantees to achieving a stress-free life (if there were, I'd have a lot less gray hair by now), taking steps to insert yourself into the proxy process and gain expertise in that area can certainly minimize the stress of the proxy season. It may not take all the pain away, but will surely give you many more reasons to smile once you've completed the process in a more efficient and stress-free manner. I'll toast to that.

Jennifer Namazi, CEP, Director
Stock & Option Solutions


Jennifer Namazi is a Director in the Projects/Consulting 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.

SOS Product Spotlight: DTA Balance Proof

Lately we've come across a number of clients being asked to "prove out" their current Deferred Tax Asset (DTA) balance by their audit firm. They've been booking DTA as they accrue expense since the advent of FAS 123R (and in some cases before that) and reversing DTA when a grant is forfeited, expired, exercised, or released. However, in most systems the reports used to book and reverse DTA are independent and suddenly, even though they've been auditing them for years, the auditors don't trust that the balances are right?

So, when and if your auditor requests such "proof" from you or your accounting team - call on SOS, we have a wide range of solutions! Below are a few examples of the different solutions we can provide.

Spreadsheet processes: Working with standard reports generated by your stock plan system we can download data, manipulate it in spreadsheets and prove out your DTA balance grant by grant, even including (in most cases) shares outstanding for each grant. We will also develop a detailed process for you to follow in the future so that you can repeat the process yourself. (If desired, may also include a recorded demonstration of the steps via a web-conferencing software, so you can refresh yourself quickly and easily before you begin the process each year and/or quarter.)

MS Access Solutions SOS can create an Access application that will take the data you export from your stock plan system, crunch the numbers and supply the proof you need with minimal time and effort for you. This solution is more automated and requires less time from you to run each reporting period.

Crystal Reports Solution: If your in-house software uses Crystal Reports as its reporting engine, it is often possible to create a custom report that will run from within your software requiring only a few clicks each reporting period to provide your auditors the proof they need for your DTA balance! (Capabilities vary based on which version/edition of the software you are using and on whether you have grants with the same vest date for multiple tranches.)

In summary, whatever your need around DTA Balance, SOS can help. If you simply need a little guidance on how to do this yourself, or if you need an application built and fully-documented, we have a complete spectrum of solutions and the expertise to help you solve your stock plan accounting and tax accounting challenges!

CEPI Referral Program

Since its inception in 1989, the Certified Equity Professional Institute (CEPI) has set the educational standard for the equity compensation world. SOS is very proud of the significant number of Certified Equity Professionals (CEP) who are part of our team.

The CEPI owes much of its success to the advocacy of its members, and we are happy to do our part. They recently announced a referral program that is available to both its members (CEPs and CEP candidates), as well as those that they refer to the CEPI.

To participate, simply send the following email to anyone you know who can benefit from a great industry resource who is not already a CEP or in the CEP program. Participants will be entered in a raffle, and receive one raffle entry for each eligible referral; more referrals increase your odds of winning the raffle.

Sample email:

Subject: Great Industry Resource


I want to share with you a great industry resource. As you may know, I am a CEP through Santa Clara University. The CEP program is the only source of professional credentialing for stock compensation. I know first hand the benefits of the program and the resources available through the CEPI.

The CEPI is raffling off a free exam registration simply for joining their mailing list*. I thought this is something you would be interested in. It's a great opportunity for you to get connected to one of the best resources in the industry, and for a chance to win a registration worth $1295. You can even transfer the registration to someone else in your company if you choose to do so. Simply join the mailing list by April 1, 2011, www.scu.edu/business/cepi/join_mail_list.cfm and enter my name in the "Referred By" field.

With over 1,100 CEPs and thousands more in the CEP program, the CEPI knows first hand the issues facing the stock compensation industry. Resources include landmark research, news and events, and articles and resources. Sign up for this great free resource today.

* Must be a new addition to the CEPI mailing list to be eligible for raffle.

For questions, please contact the CEPI.

Good luck and thank you for your support.

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

Burn Rates
From Compensia: ISS Updates Burn Rate Tables for 2011 Proxy Season

Thinking about an IPO?
Read this...and this article about executive compensation before and after the IPO...(then call SOS to learn more about how we can help you manage the transition!)...

SEC votes to finalize:Pay vote rules approved...Five Areas of Incentive Plan Change in 2011

Section 16
From the NASPP Blog: Section 16 Exit Reporting.

Equity Comp Trends
Some interesting data from Radford on equity comp trends specific to life sciences.

Stock Compensation and Academia
The NASPP blog also discussed, and linked to, three recent studies of interest to the stock plan professional. Read about them here

Increased Employer Social Tax Due on French-Qualified Awards

On the Equity Compensation Experts site, Dan Walter points to an article that effectively illustrates why a typical ESSP is the best investment deal you will likely ever find.

Twitter or become a fan on Facebook.

SOS Xposé

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

On the Move...Veena Bhatia, an SOSer who worked with so many of our clients over the last 5 years assisting with international stock plan issues, as well as myriad other high-level stock plan needs, has taken a new position as Manager, Stock Plan Services at Gilead Sciences. Congratulation Veena, and we will miss you!...Though he left SOS a little while back, Hall of Fame Consultant Apollo Mok always keeps in touch. He let us know that he will be taking a stock plan position with Apple. He will be moving to Austin, Texas on Friday, and begin next week. Good luck, Apollo!

New Arrivals...Julie Morton had a baby boy, Daniel Benjamin Morton, on December 7th. Daniel weighed 7lbs, 3oz, and measured 19 3/4 inches at birth. Congratulations Julie!

Future Deliveries...Scott McDonald of SOS and his wife Erin are expecting a baby girl on July 4th. Her name shall be Savannah Louie, and her looks will hopefully come from her mother.

We'd love to hear from you for our next newsletter. If you or someone you know is taking a new job, expecting a child, getting married, releasing a new product, or has just done something that might be interesting to the good readers of this publication, please drop us a line: xtra@sos-team.com

Happy Valentine's Day!

Did you miss an issue of Xtra? View our complete newsletter archive from our new 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 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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