February 16, 2012
Volume 5, No. 1

In this Issue:

Aspirations 2012

Towards Better Communications

Consenting Adults? Tackling the Challenges of Electronic Delivery of 3921/3922

Free SOS Educational Webcast - Mission: Implementation: A Stock Plan Professional's Guide to Implementing a Provider

RSU Services and Solutions from SOS

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

SOS Xposé

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SOS Xtranormal Participant 6039 Education Videos:

SOS Employment Opportunities
From the SOS Xtra Archive:

Diluted Earnings Per Share: Reconciling Weighted Shares Outstanding

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 -

NCEO Private Company Equity Survey Results!

Our Services:


Equity Compensation Projects/Consulting

SOS-TEAM Outsourcing

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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.

Aspirations 2012

Is your private company planning for an IPO or other liquidity event in the next one to three years? Want to get advice, hear success stories, and learn how to avoid pitfalls from experts who have been there, done that? Attend Aspirations 2012, a not-to-be missed event for emerging companies. Our 2011 event was a smashing success with 11 different sessions, over 40 speakers and nearly 150 attendees. And 2012 is shaping up to be even bigger and better.

Aspirations 2012 will be held in Santa Clara on July 25th, 2012 with the current plans including two general sessions, three breakout sessions with three topics each and a networking/cocktail reception to follow. Considering feedback from last year's attendees, we are putting on an even better event and are excited to share the details as they unfold. We have secured Lucas Hall at Santa Clara University as our venue and will begin accepting speaker submissions this week. If you or someone you know is interested in speaking at Aspirations 2012, you can submit proposals here. Aspirations 2012 speakers will receive complimentary admission to the conference. We'll provide further updates in upcoming issues of Xtra.

Mark your calendars now for this must-attend event and be sure to check our Aspirations 2012 webpage frequently for details as they unfold.

Shawna Casey
Partner & Marketing Coordinator
Stock & Option Solutions


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Towards Better Communications

Not long ago, I was enjoying a discussion with a few work friends that involved the use of Twitter to track the status of a baby's delivery. I realized how little I knew about Twitter and thought about how it might apply to or benefit the SOS business and others in our industry. With this in mind, I downloaded a copy of Twitterville: How Businesses Can Thrive in the New Global Neighborhoods, by Shel Israel. In the book, Israel details many ways businesses might learn from Twitter.

The popularity and multitude of social media applications available to the public have spawned a new breed of tools for sharing knowledge in the workplace. Companies looking to augment communications technology from the last century, like email, are aggressively adapting enterprise social network services like Yammer, Jive, and Salesforce Chatter. These programs are designed to bring the awesome communication capabilities of applications like Twitter, and contain it within a company's walls. I think the advantage of many of these lie in how they are providing solid direction on influencing change and advances in the approach we take to the management of communication to our employees and clients. The following points expand on some of Israel's ideas and I hope they provide a starting point for a dialogue about changes or improvements that can be made with the tools and applications we already have at our fingertips.

Communicating with Clients/Employees - Often communication with our clients and employees is limited to emails, phone calls, or meetings. These methods limit the number of interactions and thoughts conveyed. Technology now allows us to collaborate with more frequent, yet effective communications. If you do not have a message board, blog, website, or other means of communicating quickly with your employee base, consider implementing a solution that will allow the more dynamic means of communication technology can now provide.

Receiving Client/Employee Complaints - Public complaints and opinions scare many of us as we often feel our dirty laundry is being put out to dry in the public eye. However, studies have shown that the most aggressive promotion and criticism of companies typically comes after their response...or inactivity. If a solution is implemented to accept employee feedback in the open, other employees can see what kind of company you really are, and allow for a current and effective feedback mechanism.

Humanizing Business - Businesses who have little or no contact with the public find that providing a human touch is great for business and required for customer retention. The same principal can be applied to the business of employee communications. While it isn't always possible to meet all of our employees regularly, communicating online is a great first step and allows us to understand and know each other better, which prepares us for more effective face-to-face meetings.

Learning from Each Other - Technology is not only providing us fantastic mediums to get us in touch with of our target audience, but, just as important, it allows employees across the organization to share knowledge with each other. The next spike you see in your ESPP participation rate may come because your "community" is raving to each other about the program's benefits.

Communicate Alerts - How often do we have alerts, updates, or reminders we need to communicate to our employees or clients? Answer: Often. Social media tools can be a great way of doing this. The alerts are instantaneous and all encompassing, and can more easily include presentations, videos, and links to further information. Your information and updates will be at their fingertips, real time, whenever they want to access it.

Of course, only a portion of the teaching, learning, and sharing is going to happen inside your company's walls. Members of the equity compensation community stand to benefit in a couple significant ways from actively engaging with their colleagues across the industry.

Information Seeking and Sharing - Social media help to bring online community results together and make them readily accessible to the general public. If applied to our industry boards and communities, the answers we get will be equally relevant. As we "follow" each other, we can receive and contribute to like subjects and discussions, allowing for a broader understanding of each other's business needs and opportunities.

Effective Networking - Networking online is a great precursor for networking offline. It's amazing the amount of people you can meet and get to know online once you have established, or regularly contribute to, a business board or community. It will definitely make putting a face to a name that much more interesting when the next industry event rolls around.

I look forward to the increased integration of available technology in assisting us with our employees and clients. As the world of technology continues to evolve and expand, so do many of the benefits to our businesses. Whether you dip your toes, or jump with both feet into the sea of technology innovations, either one will have you progressing with the masses around you and working towards a communications future we can only imagine.

Sean Lembree
Stock & Option Solutions


Consenting Adults? Tackling the Challenges of Electronic Delivery of 3921/3922 (Part I)

As with any new regulation, from the IRS or anywhere else, it takes equity compensation a few years to conquer it completely, to fine tune the compliance and smooth away the wrinkles (sans botox). The revisions to Section 6039 are no different.

While the pain of the recent participant forms is still fresh in our minds, we thought we'd take a closer look at one way to make this process easier next year: electronic delivery. We had a few clients and friends opt for electronic delivery and we think it will be more popular year after year until finally all the forms are sent electronically.

It's green, it's easier for stock plan professionals, it's may be less expensive...what's not to love?

The answer: complying with the IRS' requirements around electronic delivery of tax forms. They can be a bit, um, onerous. The time has come to break down the requirements (§31.6051-1(j) of the Regulations on Employment Taxes and Collection of Income Tax at the Source) and find ways to tackle them, one by one:

Participant Consent

This is the requirement at which many balk. The IRS requires affirmative consent from the participant for electronic delivery of the forms. Affirmative consent means that the employee must opt in, rather than opting out and you can't interpret failure to respond as an opt in.

Manner of consent

The regs say "The consent may be made electronically in any manner that reasonably demonstrates that the recipient can access the Form W-2 in the electronic format in which it will be furnished to the recipient."

The regs go on to give examples of website and email consent and statement delivery. But the underlying point is that the way you collect consent must involve the way you are planning to deliver consent. If you're planning to email out PDFs, then you need to email out consent forms in PDF so you can "demonstrate" that the participants a) can receive email and b) can open a PDF. You get the idea...

This is a fairly easy requirement with which to comply. Especially since the regs also state that you can use a paper consent form if the confirmation is electronic.

If you're going to use email, you can send an email asking for consent. (However, compiling a list of consents from email response would be manual and labor-intensive.) Better to use email to distribute a link to a survey or website, from which you can download the results and import the consents (or lack thereof) into your stock plan system so that you'll know to which participants you'll need to send a paper form. There are a number of low cost/no cost survey providers out there and or there are providers (like SOS) that have built websites specifically for collection of consent.

Withdrawal of consent

The participant must be able to withdraw from electronic delivery after consenting and before the form is delivered. However, you can choose to make the withdrawal effective immediately or give yourself a little breathing room by letting them know the withdrawal will take place a week after receipt, so that you have time to deal with last-minute withdrawals before the forms are due out.

Change in Hardware or Software Requirements

If a change in the method of electronic delivery is made, or the software or hardware requirements to access the form electronically change enough that there is a risk that the recipient wouldn't be able to access the form, advance notice of the change must be provided and a new consent, using the updated technology must be obtained.

Required Disclosures

When obtaining consent, there are a few items you must disclose to the participant, the list follows:

Paper Form

You must inform the recipient that the form will be furnished on paper if consent for electronic delivery is not provided.

Scope and duration of consent

You must inform the recipient when the consent will take effect, to what it applies and how long it will last.

We believe is it best practice to keep the election in place until the participant terminates employment. After that generally delivery should revert back to a paper form.

Paper Form Choice

You must provide means of obtaining paper form, if requested, after consent is granted. This can be as simple giving them an email or postal mail address to which they should send their request for a paper form. Or it can be a link to the survey or consent website where they can change their election.

Withdrawal of consent

The recipient must be told that:

  1. They can withdraw via writing (electronic or paper)
  2. The company will confirm the withdrawal and the date on which it takes effect in writing (either electronically or on paper); and
  3. Withdrawal of consent doesn't apply to forms furnished electronically before the date on which the withdrawal takes effect.
Notice of termination

The recipient must be informed of the conditions under which the consent will terminate (such as termination of employment).

Procedures to update recipient's information

You must tell the recipient how to provide updated contact information and also inform them of any change in the company's contact information.

Hardware and software requirements

You must provide a description of the hardware and software required to access, print, and retain the Form. However, this may be as simple as "a company computer" in many cases.

And now a shortcut on disclosures for those of you that have made it this far through the IRS requirements: a sample consent letter with all the required disclosures, created and used by an SOS client this year: Download. Please do note that communications intended to comply with IRS regulations should generally be reviewed in detail by your legal department.

In the next issue of Xtra, Part II will cover format, notice and access requirements, paper forms in the case of withdrawal of consent, and wrap everything up with an overview of the process from start to finish.

Questions or comments? Please email us at xtra@sos-team.com

Elizabeth Dodge
Vice President, Product Management
Stock & Option Solutions


Free SOS Educational Webcast

Mission: Implementation: A Stock Plan Professional's Guide to Implementing a Provider

March 8th, 2012

Click here to register.

Please join us for our next educational webcast on March 8th at 11am Pacific Time, 2pm Eastern Time.


Your mission, should you choose to accept it, is to implement a new stock plan provider within an unrealistically short time frame while keeping your job and maintaining your sanity.

Join our panel of elite covert operations specialists who will guide you through the implementation process, point out booby traps you need to avoid, identities you may need to assume, explosive data issues you may need to defuse, and specialized technical equipment you may need to operate.

As always, should you or any of your team be caught or killed, the Secretary will disavow any knowledge of your actions. Good luck. This tape will self-destruct in five seconds.


(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.)

RSU Services and Solutions from SOS

Our line of RSU solutions and services will simplify your life, save you time and reduce your company's risk by streamlining your processes, assisting with compliance with accounting standards and tax regulations, and easing participant communication.

This month's Product Spotlight will focus on the myriad ways we have assisted our clients who utilize RSUs in their equity compensation program. This type of equity compensation continues to grow in popularity with our clients - both time-based and performance-based.

For a more detailed explanation of these products and services, please view the RSU Services and Solutions page on our website.

Participant Communications

Do you have issues with participant communications? Are you buried under piles of paper confirmations? Do you participants understand and value their RSUs? Do they take the necessary steps to activate their brokerage accounts before a vesting/release? Our solutions can help!

  • SOS Participant Portal allows you to communicate with your employees via a secure website. Provide your employees their release confirmation statements and other tax documents including forms 3921 and 3922, and year-end tax summaries, and many other participant communications are available.
  • SOS Email Xpress can turn manual mailing of statements into effortless emails. Confirmations of Release, Year-end Tax Summaries, Pre-vesting Notifications, and customized Award Agreements can be mailed to hundreds or thousands of participants with just a few clicks.
  • Award Agreements / Participant Statements can be customized and run within your in-house software. Allows you to better control the message to participants reducing participant confusion and avoiding the feeling of "out of the money" RSUs.
  • Prepare a wide range of roll-out or ongoing communications beyond grant agreements and presentations. May include FAQs, cover letters, email text, explanations of tax treatment at retirement eligibility, supplemental materials to assist in accessing brokerage accounts, etc.
  • RSU Grant Acceptance: We can tailor our grant acceptance website to your plan and specific requirements to allow your participants to view and accept their grants online.
  • Our suite of Participant Education products can be customized to the features of your plan to help domestic and international participants understand RSU basics, the finer points of taxation, and how to appreciate and receive their valuable stock plan RSU benefits. Formats can include live and onsite, webcasts, and/or recorded webcasts.
  • Participant Call Centers: Whether your RSU plan is new, or you are trying to find better ways to handle the flood of participant inquiries around your largest vest dates. We can establish a dedicated call center staffed by equity compensation experts trained in the specifics of your plan to provide your participants with the answers they need. Email support can also be included. And the centers can be scaled up or down based on the needs of your company.

Stock Plan Personnel Training

Customized to the features of your plan to help your staff understand RSU basic and advanced topics. RSU Basics session includes: Administration, US taxation (withholding/reporting requirements), dividends, common issues, tax payment methods. Our Advanced RSU Issues session can include accounting for RSUs, retirement eligibility, diluted/basic EPS treatment, deferrals, fungible share pools, tax accounting, IFRS 2, and mobility issues. Formats include live / onsite or webcasts/conference calls.

Process Improvement / Automation

No matter which of the RSU challenges causes you and your company the most headaches, we have the services and solutions to help.

Software and Tools
  • RSU Planning statement to assist HR in grant process
  • RSU Pre-Release Tax Estimator (Cash Flow)
Process Improvements / Best Practices Assessment
  • IRS withholding deposits within one business day of large releases
  • Reducing the number/frequency of vesting/release events
  • Retirement Eligibility Review
  • Vesting During Blackout
  • Fungible Share Pools
  • Leaves of Absence
  • SOX Review

To learn more, or schedule an individual demo, please contact us at (888) SOS-0199 or email us.

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

Cost Basis
Resources on cost basis reporting from the NASPP Blog...In addition to cost basis reporting, this piece from Accounting Today also covers corporate actions

Long-term incentive plans with relative performance measurements: Updated Dodd-Frank rulemaking schedule....More Dodd-Frank updates from the NASPP Blog.

Private Company Accounting
The NASPP Blog covers the growing disagreement over whether the FASB should have oversight of accounting standards for private companies....

Income Inequality
A very good blog on pay inequality from The Corporate Counsel.

FASB Chair Leslie Seidman on convergence with IFRS...IFRS2? Not anytime soon, according to Credit rating agency Fitch Ratings.

Equity grants could trigger financial penalties for executives and directors under Hart-Scott-Rodino Act convergence with IFRS.

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...

Change of Scenery...Tom Hyle has made the transition into the Director of Sales position with EASi...Based out of their San Jose office, Barbara Crowder is the new Equity Plans Manager at FICO... Christopher Dohrmann has joined Norse Solutions AS as Executive Director. He will be based in New York where he will focus on business development in the US and UK as well as the management of large accounts, world-wide.

A Walk Down the Aisle...Denise Miller from Adobe will be getting married to Kamran Hooshiar in March in Livermore, CA ...Lots of wedding bells will be ringing at OptionEase starting with Javier Medrano who proposed at home to his partner of four years, Jordan Smith. They are thinking about a beach wedding in Laguna sometime in the next year or two. Also Tracey Claxton received a proposal from her fiancé, Ben Newton, two weeks before their anniversary. With the ring burning a hole in his pocket, he couldn't wait until their special day, as planned, and blurted it out at a gas station. Boy, was she surprised! Next up, Eric Aguirre proposed to his love, Chelsea on a beach in Del Mar, California! A romantic destination wedding in Cabo San Lucas, Mexico will follow this November...Best wishes to everyone preparing to tie the knot!

New Arrivals...SOS's own Vanessa Harrison delivered a healthy baby girl, Charlotte Ann, on February 1st, 2012 weighing 7 lbs., 14 ounces and coming in at 20 ½ inches long (picture here). Congrats to her and her husband Stephen!

Baby Bump...Steven Hom of SOS and his fiancé Laurie are expecting their first child in July, congrats from all of us here at SOS on your growing family!

Questions Fired At...OptionEase's CEO and Founder, Kim Kovacs, who was interviewed on the national radio program, Bold Ventures, hosted by anchor Jean Creech. Kim's interview can be heard by clicking here.

Industry News...See John Doyle from International Law Partners present at GEO's next Silicon Valley Chapter meeting that will be held 2/23/12 from 8:00 am - 10:30 am (Presentation at 8:30 am) at Synopsys in Building 2 in the Von Neumann Conference Rm. 455 N. Mary Avenue Sunnyvale, CA 94085. Registration link can be found here...

Computershare announced that the acquisition of BNY Mellon's Shareowner Services is complete, "The combined organization will cover more markets with greater strength and depth, and together with the Shareowner Services business, Computershare can offer its clients more opportunities and solutions." See the press release ...

Radford released their new Pre-IPO/Venture-Backed Survey in December which includes detailed data on total compensation, including the hard-to-find equity ownership by role and organizational level from CEO to support with over 175 tech and biotech companies at all stages of pre-public development. They also launched a FREE research results on equity practices at recent tech and biotech IPOs over the last two years on www.PreIPOPay.com...

Because of the expanded 1099-B, new Form 8949, and revised Schedule D, the upcoming tax season will be more confusing than usual. In response, www.myStockOptions.com has updated and enhanced its Tax Center articles, FAQs, podcasts, and annotated, illustrated versions of the key tax forms (Form 8949 and Schedule D), with tips and insights on avoiding tax return mistakes with the new rules...

OptionEase is one of the sponsors of the CEP Symposium that will be held on March 27, 2012, on the Santa Clara University campus. Jennifer Baehr, Optionease's Senior Manager of Products & Industry will be a speaker in the session, "What Stock Administrators Always Wanted to Know About Financial Reporting (but were too afraid to ask)."

News from the CEPI...

Mark your calendar for March 27, 2012 for The CEP Symposium! Register for this event and plan on catching SOSers Elizabeth Dodge, CEP, and Susan Garvin, CEP, featured in Stock Plan Gladiators: Best Practices Worth Fighting For. The Symposium sold out last year...be sure to save your spot and register today.

The CEPI is hosting a game-show style presentation at the CEP Symposium on March 27. They need to gather some easy and fun data for the game. The survey is open to issuers and service providers of all types and sizes, will take less than five minutes, you don't have to attend the Symposium, and responders get a chance to win a prize!

Congratulations to the 43 newly minted CEPs! See the complete list here

Congratulations also go to the newest CEP Honor Roll! Companies with 10 or more CEPs are recognized on the CEP Honor Roll, and SOS is thrilled to join this elite group.

The 2012 CEP exam season kicks off now! If you aren't already a CEP, what are you waiting for? 2012 exam materials are ready and registration is open until April 27 for the June 9 exam.

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