May 24, 2011
Volume 4, No. 5

In this Issue:

The Results are in! SOS 6039 Client Survey Results are Spectacular!

Save the Date: 2011 SOS Aspirations Conference

Market Research Survey

Consultant Corner - Time Saver: Documentation Binder

Free SOS Educational Webcast - The Evil Data: Stock Plan Data Horror Stories and How to Avoid Them

Free SOS Solutions Webcast - Picture Perfect Reports: What can be done and how a little work can reap a large benefit

SOS Spotlight - News and Notes About the People of SOS

SOS Across Our Desk

SOS Xposé

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SOS Xtranormal Participant 6039 Education Videos:

SOS Employment Opportunities
From the SOS Xtra Archive:

ESPP for Everyone!

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

Email Xpress Demo

From the SOS Webcast Archive -

Getting Crafty with Crystal: Solving Stock Plan Reporting Issues with Crystal Reports

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Equity Compensation Projects/Consulting

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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.

The Results are in - SOS 6039 Client Survey Results are Spectacular!

In early 2011, SOS assisted more than 125 clients with Section 6039 compliance for the 2010 tax year. We printed and mailed over 100,000 participant statements. At the end of the process, we sent out a satisfaction survey to 131 email addresses. And the results? We thought they'd be good, we knew we'd done good work. But they exceeded our wildest expectations (and we have some pretty wild expectations).

First, of the 131 email addresses to which we sent our survey, 48 responded. That's a 40% response rate, far exceeding norms for satisfaction surveys (or even surveys in which a gift card drawing is dangled as a reward).

We broke the survey into 4 parts, depending on which services we provided for each client:

  • General satisfaction, including data processing and review
  • Participant statement production (creating a PDF)
  • Participant statement fulfillment (printing and mailing, sometimes with cover pages and other, supplemental materials)
  • IRS e-filing (creating the e-file and/or filing it with the IRS electronically)

We asked clients to rank us on a scale of 1 to 10 in general and specifically about each service. And after each rating we asked the primary reason for the rating they gave us.

The first two questions were general and were asked of every client.

How well were your expectations met? 6039 Survey Graph 1

Twenty-one clients gave us a 10! (When was the last time you gave a vendor the highest possible rating?) Sixteen more gave us a 9. We had eight 8s, two 7s and a 4.

(The four was from a client that was unhappy that our proprietary substitute Form 3922 referred to "options" and "grant date" instead of using more stock purchase-specific terminology. We followed up with the client to explain that one of the requirements for substitute forms in Publication 1179 is that they use "substantially the same" language as the regular form. So while we agree with the client that a change of terminology would be better for the participants, our hands were tied by the IRS regulations.)

A few of the "primary reasons" for the ratings given were:

  • Since this was the first year of this new rule, there was a lot of confusing information being circulated. SOS took all the confusion out and our worries away.
  • Great customer service. Knowledgeable rep.
  • Excellent customer service; timely and accurate completion of project.
  • Timely responses from your team. Met deadlines and extremely efficient processes.
  • We came to SOS in need of immediate help with the processing of Form 3922 and the filing with the IRS. With a short deadline, SOS met our needs timely and effectively.
  • The product was well designed by people who understand stock plans.
  • Short turnaround time. Very friendly and pleasant to work with. Very helpful about a new area for us.
Next we asked about the data gathering and review process, since every client also went through this process:

How well did the data gathering and review process go? 6039 Survey Graph 2

The results speak for themselves. And the comment associated with the sole 6 rating named their stock plan vendor as the reason that they were not completely thrilled with the process.

And the comments:

  • The process of gathering data from the third party vendor we use to SOS went extremely well. The communication from SOS also went well. The individual assigned to us was very responsive.
  • SOS was very patient with us on learning how to manage the information process.
  • Instructions on how and what data to provide was very clear.
  • Excellent no complaints.
  • Vendor and SOS coordinated relatively seamlessly. Process worked well for us.
  • SOS was able to pinpoint and address the issues that we had with our data in a very short timeframe.
  • It was simple and easy to do and did not require much time.
  • Everything went smoothly. No issues at all.
  • Easy, help was given when needed
For clients for whom we created participants statements, we asked:

How satisfied were you with the creation of the 6039 participant statements?
6039 Survey Graph 3

And again, the reason for the 4 rating was from the same dissatisfied client and about the same issue - options terminology on the forms 3922. Sigh. If only we had some say into the way the forms were designed, we could make everyone happy!

And more client comments:

  • Everything went well including the vendor sending a letter to explain the mailing. We received minimum calls from employees.
  • Statements were completed accurately and were easy to understand
  • Accurate, easy to read.
  • We created the statements using SOS 6039 Xpress. It was very simple and the statements looked great.
  • They were correct, they conformed with what the government required and we received them back with plenty of time to get them printed and into the mail.
  • Problems were caused by our data and SOS was very responsive.
  • Statements and cover letters were produced and sent as per our request within the short timeline that we gave the team.
  • Forms were easily created with the tool and based on personal use the statement was easy to use when preparing taxes.
  • Great job.
  • They were clear and to the point. I had no issues with them.
  • Clean and easy to understand document
  • Statements were informative; SOS incorporated our questions and answers with the statements.
Then, for clients to whom we provided fulfillment services:

How satisfied were you with the SOS mailing / fulfillment services? 6039 Survey Graph 4

Again, stellar results. Of the two 5 ratings that we received, one was due to the fact that the client wasn't aware that a bulk mailing would be used. And another noted a problem with the envelopes.

And just because we never get tired of hearing nice feedback, here are some more of the reasons for the high ratings:

  • There was constant communication surrounding the fulfillment and they were mailed prior to the deadline.
  • With a click of our mouse, all of our mailings/fulfillment were handled professionally and accurately.
  • We decided to do a consolidated mailing of all 2010 stock activity to help employees best understand their benefits, rather than getting pieces from [...] stock, from payroll, and from SOS. SOS was enthusiastic in response and in expediting the mailing. Many employees have expressed gratitude and relief at having all the info in one place, and with brief/useful explanations of each document.
  • It was done in a timely manner and there were no issues.
And the last question:

How satisfied were you with the SOS 6039 IRS e-filing services? 6039 Survey Graph 5

And again, the ratings were 10s, 9s, 8s, and one 7.

Some comments about our e-filing services:

  • Again, with a click of our mouse, all the e-filings were sent on time and accurately.
  • Smooth process. Done before the deadline with no issues.
  • Filing was done timely. Vendor kept our broker intermediary contact and me informed throughout the process.
  • They did it correctly and in plenty of time before the deadline.
  • Even with the last minute revision that we made for the filing, the team was able to complete the filing on time for us.
  • Everything went smoothly. No issues at all.


So what was it about the SOS 6039 processes that made the difference? Why were our results so good? We believe it came down to three main elements:

  • Expertise
    SOS has become the industry leader in 6039 expertise, designing our own substitute, aggregate statements and our own software to produce the participant statements and the IRS e-files. We've researched the topic extensively, spoken about it numerous times (starting in 2008!), written issue briefs for the NCEO and tracked down answers to many tough issues for our clients. This expertise gave us the know-how to help our clients through a sometimes confusing maze of conflicting information. And further, the whole process, from the initial research to the stuffing of cover letters into envelopes had our stock plan experts involved. We caught one issue with a custom cover letter that only someone that understood the differences between ISOs and NQs would have been able to find - we doubt those issues would have been found while using a non-specialized fulfillment house.
  • Teamwork
    The whole SOS team, from the CEO through the office manager, pitched in where needed to deliver the best possible experience to our clients and the best possible quality in all our 6039 products. Even when clients requested last minute changes, we found ways to come together and get the job done, QA'd, and out the door in time to meet the filing deadlines.
  • Personal Service
    Each client was assigned a client service manager who worked with the clients, explained the data requirements, and walked them through the process start-to-finish. Our client managers spent the time and effort to ensure our communications with the client were clear and commitments on both sides were met.

Thanks to all our 6039 clients for trusting us with your business and congratulations to the whole SOS 6039 team on a job well-done.

Elizabeth Dodge
Vice President, Product Management

Stock & Option Solutions

Save the Date: SOS Aspirations 2011 Conference

SOS is pleased to announce our first ever conference, Aspirations, which will focus on equity compensation issues and challenges facing emerging private companies. Aspirations will be an all-day event held on July 26th at the Santa Clara Marriott.

With the IPO market heating up, an increasing number of private companies want to know what it would take to get their equity compensation programs ready for this transition. Whether the move into the public company arena is happening next week, or sometime in the next decade, there is always more to learn about how to ultimately make that transition a successful one. Aspirations will include presentations, discussions, and networking opportunities for private company management and staff members charged with the oversight and growth of their equity compensation programs. It will also provide attorneys, compensation consultants, and other types of specialists whose work touches on emerging company stock plans with a great opportunity to build their knowledge and network.

Sponsorship opportunities are available to companies looking to increase the visibility of their products and services in this thriving market segment. SOS is seeking submissions for speaking proposals, and will be circulating a request for speaker submissions shortly.

If you are interested in attending, or want more information on sponsorship opportunities or speaking, please email us at xtra@sos-team.com. And check SOS Xtra next month for more details!

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

May Market Research Survey

Complete the survey and be entered into a drawing for a $100 Visa gift card!

Periodically, SOS will ask for issuing companies' participation in a market research survey to enhance our understanding of current practices and trends in the industry and to provide our clients insight into the practices of other issuing firms. Our surveys are brief, taking no more than 5 to 12 minutes to complete. Complete the survey today!

Please note that only issuing companies, not vendors or consultants, should complete the survey and are eligible for the drawing. Thank you for your cooperation!

Congratulations to last month's winner, Esther Shon, of Tula Technology.

Consultant Corner

Time Saver: Documentation Binder

No matter how long you have been in this industry, there is no doubt you have been affected by personnel changes within your department. One single item that I have found invaluable in my 15 years in the equity compensation industry to ensure a smooth transition is the documentation of all equity compensation policies and procedures (P&P). Yes, I hear you groaning audibly. This is not the most glamorous task, but I cannot stress enough how important this is for the integrity of your department and success of the new individual in the role. (Or even if, heaven forbid, you should need to go on vacation or leave.)

Many times, especially for less frequent activities, we fail to document how we handled or processed certain one-off situations. We spend a lot of time researching the plan documents, award agreements, or prior history to work through the puzzle. Documenting all procedures and stock plan information in one location not only provides an enormous time savings for you, but also affords a new or temporary employee in the role a solid base to start with and minimization of time spent on the learning curve.

Although, I have seen many versions of equity compensation documentation, my preference is a standard binder. It is a convenient reference tool that does not require network access for a new employee or consultant on-site. My one-stop shopping for stock administration at any company would include, but not be limited to, the following:

  • Contact List: Information all on external and internal business partners with all pertinent details including phone, email, address, and fax.
  • Plan Documents: The current plan documents are most important, but this section should also include information on the location of prior plan documents.
  • Sample Agreements for each Award Type: The current agreements for new awards are most important as well as the location of all prior award agreements.
  • Documentation on Special Events: Document all exchanges, mergers, divestitures, stock splits, and other company events. Include the dates, summary of terms of each event, and additional documentation of events such as the location of employee communications.
  • Insider Trading P&P: The company Insider Trading Policy and step by step instructions on trading procedures for insiders.
  • Award Matrix: Summary listing of all award dates, award types, and provisions for those awards.
  • Award P&P: Company policy detailing award dates for the focal grant and off-cycle awards as well as the approval process. Step by step procedure from approval to entry into your record-keeping system to communication to the employee.
  • Daily Trade Procedures: Step by step procedure on processing option exercises from broker notification to internal reporting to employee communication.
  • Restricted Stock Lapse Procedure: Step by step procedure on processing restricted stock lapses including policy on the Fair Market Value used.
  • Termination Matrix and Procedure: Full list of all termination scenarios by plan and plan revision date. Step by step procedure for processing terminations including timing, special provisions, and any communication to former employees.
  • Special Procedures: Include any special procedures involved with special circumstances such as dividends, deferrals, divorce, rehires, and leave of absence.
  • Reporting Procedure: Full list of all reporting requirements for equity compensation and timing including such items as monthly roll-forward and financial reporting.
  • Payroll: List of all payroll codes used for equity compensation with detailed descriptions.
  • Vendor: Information applicable to your vendor/service provider such as service standards and database information.

Whether you have a binder that is out of date or you are starting from scratch, where do you begin? Following are some tips on how to get started:

Do Not Wait for a Transition - First and foremost, do not wait for a pending transition to occur to start your binder. You never know what may happen. Mergers and divestitures often occur without much notice and believe me, you'll have much more on your plate than to worry about than documenting retirement provisions by plan and revision date.

Start Small - Do not attempt to create or even update one day, week, or even a month. A good reference binder will take time and will always take longer than you expected.

Set Time-Based Goals - Using the list above as a guideline, assign dates for completion. Breaking up this project into pieces will make it appear less daunting and will give you sense of accomplishment as you complete individual tasks. Then report to management on your success. If you're going to do this hard, challenging work, you should take credit for it.

Keep It Simple - A reference binder provides a summary of all applicable current information as it relates to successfully executing the role. To keep it simple and manageable, provide a list of other historical information that can be found online such as prior grant agreements, plan documents, and employee communications. If someone needs additional details, they know where to find it.

Peer Review - Ask a peer to review and test your step-by-step procedures. When you are familiar with the process, you have a tendency to overlook steps that an individual walking into the role may not be aware of.

Updates - Don't wait for your annual review to update the information if things change. It is much easier to update information when it is fresh in your mind. I have found that keeping a manila or e-mail folder with pending binder updates a handy tool to house the information.

Annual Review - Once per year, review all the information contained in the binder from start to finish ensuring nothing has been overlooked on your periodic updates.

As we know too well, frequently we get so caught up in the day-to-day activities and emergencies that we're not able to take the time to document procedures and special company policies. I've been in those shoes as well, but documenting now will save you an incredible amount of time and many headaches later. Remember this is a project that will take time to do well. It may seem overwhelming now, but the rewards you will reap later will more than outweigh the time and effort you put in up-front.

Julie Mrozek, CEP
Stock & Option Solutions


Julie is a Senior Consultant for Stock & Option Solutions, Inc. (SOS). In her 15 years of equity compensation experience, she has worked in the equity administration outsourcing division of a major brokerage, assisted numerous SOS clients as a consultant on new vendor implementations, database audits, and financial reporting, and managed the equity compensation department for a Fortune 100 firm. Julie holds a Bachelor of Science in Applied Economics and a Master in Business Administration (Finance). She earned her CEP in 2003 and remains active with the CEPI and the NASPP.

Free SOS Educational Webcast

The Evil Data: Stock Plan Data Horror Stories and How to Avoid Them

June 21, 2011

Click here to register.

Please join us for our next educational webcast on June 21st at 11am Pacific Time, 2pm Eastern Time.


Ever had a data nightmare? You wake up suddenly thinking that something has gone horribly wrong and all your participants are exercising their unvested shares? Your financial statements need restating and it's all your fault?

Accurate data is arguably the most important element in a properly managed stock plan. Yet everyday little or big things can go wrong that wreak havoc on your data, causing significant downstream impact to your reporting, your controls and even your participants.

Join our expert panel to hear horror stories collected over the years, learn how to find and fix the most common data issues and prevent the problems they cause, and how to avoid creating the data issues in the first place.


(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.)

Free SOS Solutions Webcast

Picture Perfect Reports:
What can be done and how a little work can reap a large benefit

June 16, 2011

Click here to register.

As an SOS Solutions webcast, this event will cover SOS products and services. It does not contain solely educational content, and therefore does not offer continuing education credits.

Please join us for our next SOS Solutions webcast on June 16th at 11am Pacific Time, 2pm Eastern Time.

You'll want to join this panel of experts as we will show you how you can go from flat to fancy with a few simple changes utilizing everyday tools like MS Access and Crystal. These targeted approaches will pump up your reports with reduced effort on your part - removing those unsightly (spreadsheet) lines instantly. Say good-by to a daily report regime that requires manual manipulation and using VLOOKUP or HLOOKUP. Say good-by to combining different data to fulfill requests from other departments. Instead, say Hello to Picture Perfect Reports. Do you have a report that needs a makeover? Send us your case by June 6th and we'll work out the solution during this valuable webcast. Here are just a few examples of the makeovers we will show:

Monthly Option Planning Summary - Flat: standard canned report
Monthly Equity Planning Summary - Fancy: includes all equity types, added text, assorted features

Annual Proxy Reporting - Flat: multiple canned reports and additional manual manipulation to determine proper table requirements
Annual Proxy Reporting -Fancy: Produce single report with data in required Proxy table format

Simple Report Modifications - Flat: Canned report, dull, very boring
Simple Report Modifications - Fancy: Add logo, modify language, add more fields, beautiful!

Creating New Reports Using MS Access - Flat: Single or canned reports no modifications
Creating New Reports Using MS Access - Fancy: combine 2 or more reports, create payroll extracts, build reports for internal business partner needs

Join us for a discussion on how a custom report will help to streamline what you are doing and provide other departments the ability to obtain their own data as they need it. We will discuss a variety of tools available for custom reporting while presenting the pros and cons of each. Learn how a very simple custom report could save you time and provide stronger controls over a current manual process, making your canned reports a series of Picture Perfect Reports!


May Educational Webcast Today (5/24) at 11am

Defending, Debunking, Demystifying Diluted EPS: A Plain-English Explanation

Click here to register.


SOS Spotlight

Where we've been... Where we're going...
  • On June 8th, Barrett Scott will be presenting "What Did We Learn in 2010 That We Can Leverage in 2011?" at the Seattle NASPP Chapter meeting.
  • Elizabeth has been selected to speak at 3 sessions at the upcoming Solium Capital / Solium Transcentive Synergy 2011 Conference. During that busy week, she'll be presenting "Equity Comp Smackdown", "Watering Down Diluted EPS", and "Performance Problems? Addressing the Emerging Issues Related to Performance Plans". For more details, click here.
  • On July 14th, Elizabeth will speak on the NCEO webcast "Equity Administration and Compliance - A Closer Look at FAS 123(R) (Now ASC Topic 718).
  • On July 23rd, Elizabeth will be part of a panel at the Silicon Valley Chapter of NASPP All-day Conference on "The Next Generation of Performance Plans: Fixing the Governance Ups and Downs". For more information, including the full conference agenda, click here.
  • Finally, on July 28th, Elizabeth will help to present on Diluted EPS as part of the NASPP University "Financial Reporting for Equity Compensation webcast series.
In case you missed them, here are links to the April Issue of SOS Xtra and our April SOS Solutions Webcast:

April 2011 Xtra Newsletter

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

SOS Solutions Webcast: 5 Ways to Add Spice & Streamline Stock Plan Communications

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

Option Exchanges
Wow. A Stanford study shows that Option Exchanges designed in line with ISS recommendations are "less effective" (of course we may not all agree with the definition used here) at creating shareholder value than those that weren't. Hm...

Restricted Stock
The NASPP Blog looks at restricted stock vests during a blackout

Pay-for-performance (registration required) can turn an ISS voting recommendation.

8 steps to surviving an IRS corporate audit - IRS Audit Help.

Plan Design
Are Your Compensation Goals Getting You to the Top of the Wrong Mountain?...Options with a cash-settlement choice caused this company to have a loss this quarter...And the NASPP blog about the potentially cash-settled options with liability treatment.

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...

On the move...Apollo Mok has rejoined Carefusion as their Stock Plan Manager, and is glad to be back in California...Donna Hammer has joined the M&A team at Cisco...Andrea Kagan is now the Equity Plan Administrator at QlikTech...Carole Payne is moving to a new role in legal at Netflix...Congratulations also to Pam Chernoff, CEP, who will be working with the CEPI on exam development activities starting in June (after the next round of CEP exams on June 4th).

Speaking of which...Good luck to everyone taking the CEP Exams on June 4th!

Weddings... John McCann, of the SVC NASPP and Shelley Hoeft have set a date for their wedding! The event will be held on May 28th in Greenville, SC...Jeff Ungurean married Rachel Dunst on May 1st, and then honeymooned in Spain...Congratulations to all the knot-tiers!

The Host with the Most...Please join the Deloitte Tax LLP's Global Rewards team for a presentation and experience-sharing session on recent Global Reward Updates on Thursday, May 26, 2011 at Deloitte Tax LLP - San Jose (225 W. Santa Clara Street, 6th Floor Room 6405) RSVP here or call Lori Clyne at (408) 704-4451 **This event will qualify for 1.5 CPE credits.**

Industry News...Solium Capital / Solium Transcentive just opened early-bird registration for Synergy 2011 held September 12th -14th, 2011 at InterContinental Montelucia Resort & Spa in Scottsdale, AZ. Register today.

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 Fathers Day!

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 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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