December 18th, 2012
Volume 5, No. 6

In this Issue:

6039: The Grinch That Won't Steal Christmas

SOS Out & About

If Only I Had Known: Implementation Hindsight

Free SOS Educational Webcast - Outsourcing's Great Expectations

SOS Product Spotlight: Outsourcing

SOS Xposé

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SOS Stock Plan Portal

Deliver stock plan tax and transactions information, obtain employee consent for electronic 6039 delivery, ESPP enrollment, grant acceptance, all in one place!

SOS Employment Opportunities
From the SOS Library:

Accounting For ESPP - Share True Ups?

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-

Evolution: Electronic Delivery - The Next Generation of Stock Plan Communications

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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.

6039: The Grinch That Won't Steal Christmas

As we all begin to prepare for the holidays by connecting with old friends, looking for that perfect gift, making sure we can get things shipped in time, and hopefully finding time to relax with loved ones, SOS is also making all the required preparations for another successful 6039 processing year. SOS began our 6039 preparation back in September and have been ramping up ever since. We have been hard at work updating the our SOS 6039 Xpress application with required changes by the IRS, filing sample files with the IRS, lining up all the required materials and resources, reviewing processes and controls, and making enhancements to the process. The month of January is always an insanely busy time for us, starting with a two-shift team and moving to a round- the- clock team, all the hard work brings with it a sense of excitement and camaraderie.

This will be our third year of preparing and delivering 6039 participant statements and IRS e-files, and during the past two years we have worked with more than 175 clients and have processed and sent more than 300,000 participant statements. From our first year, back in 2010, we continue to improve our processes and answer the very tough questions. We look forward to the challenges of the 2012 filings.

Steve Gaylord,
SOS 6039 Team Lead
Stock & Option Solutions


Need help with your 6039 filings? Learn more about SOS's 6039 services and pricing

SOS Out & About

Where we've been...

  • At the 2012 NASPP Conference in New Orleans October 8th-11th, 4 SOS team members spoke in engaging and educational sessions.  Andrea Best in Matchmaker, Matchmaker...Make Me a Match: Hiring a "Perfect 10" in a Complex World, Elizabeth Dodge in The Mod Squad: A Guide to Modification Accounting for Stock Plan Professionals and also in The Future of Equity Compensation, Julie Mrozek in Preserve Your Reserve (and Your Sanity): Conquering Challenges in Tracking your Share Reserve and Marianne Snook in Mythbusters for Stock Plans: What Public Companies Can Learn from Recent IPOs.
  • Susan Garvin presented in our SOS Educational Webcast: Options for Underwater Options alongside Fred Whittlesey of Compensation Venture Group on October 23rd. Recording  Materials
  • Elizabeth Dodge spoke at the SVC NASPP Chapter meeting on November 1st on Myriad Missteps and Mistakes in Accounting for Equity Compensation
  • On November 6th, Elizabeth Dodge spoke with Margaret Rozowski of Leapfrog Enterprises in our SOS Educational Webcast: Demystifying and Determining DTA Balances
  • Recording  Materials
  • SOS Solutions Webcast: 6039 Certainty - How SOS Keeps Your Company in Compliance and Out of Trouble was presented by three SOS 6039 experts: Steve Gaylord, Vanessa Harrison, and Scott McDonald on November 13th

  • Recording   Materials
  • Barrett Scott joined Robyn Shutak of NASPP in an NCEO Webcast: If I'd Only Known That! Real Life Equity Compensation Stories on Wrecks and Remedies on November 28th
  • ShareComp 2012: Marianne Snook gave a presentation on year end communication - Stock Talk: How to Communicate with Your Employees.
  • Elizabeth Dodge led an interactive presentation: Trivial Pursuit: Equity Compensation Edition, at the San Franciso NASPP's Holiday Party.

Who has joined SOS...

SOS is hiring, and in 2012, we have been able to bring a number of excellent consultants onboard. Here are the recent additions to the SOS Team:

Barbara Richley (Strategic/Accounting)

Brian McGovern (SOS-TEAM Outsourcing)

Carolyn Fox (People Solutions)

Elena Farias (People Solutions)

Marina Martinez (People Solutions)

Carrie Vineyard (People Solutions)


If I Had Only Known...Implementation Hindsight

You always hear that hindsight is 20/20.  As I wrap up several implementations that we completed this year with multiple vendors, I wanted to provide a few key considerations for those of you that may be exploring a vendor implementation in the New Year or possibly changing your process with your current vendor.

Information Required for Brokerage Account Set-up - Understand from your vendor up front, what information is required to establish brokerage accounts and the field constraints of that information. 

Let's say that you are one of the lucky ones that have a consolidated HR system, but maybe Birth Date is not something that has generally been populated for international participants.  In most cases, Birth Date is a required field for brokerage accounts and obtaining this information from your international locations will take time. 

Addresses can also cause many issues.  Maybe your HR system allows for 50 characters in Address Line 1 through 4, but the vendor only allows for 30 characters and 3 address lines.  Know exactly what will be required for participants to confirm their accounts, how this data will be populated with the vendor, and start working immediately on updating the company's data source to ensure the information is not only populated, but accurate. 

Other areas to consider are names, special characters (usually non-US), and the type of account to establish for each individual (US or non-US, some brokers will have different account types which could be tricky for mobile employees).  Time spent in this area will save you many headaches later on.

Go-Live Timing - Carefully schedule your participant go-live date with the new vendor taking into consideration large releases immediately prior to and after go-live date. 

Why prior?  Well, depending on the vendor, you may have additional challenges loading supplemental (interim) data into the new database especially if some options would have expired prior to loading the exercises or the way in which the system handles releases that should have occurred during the interim period.  In most cases, you will load all prior history up through a certain point in time and will have several incremental loads for additional activity prior to go-live.  The less information you are required to load incrementally, the fewer challenges you will face prior to go-live. 

It is always my recommendation to also schedule the go-live date for a historically quieter period for the equity compensation group.  Although you can't plan for a spike in the stock price, you can plan for releases, purchases, and quarter/year end activities.  Having a large release immediately after go-live not only adds unnecessary stress to an already stressful time, but there could be additional areas such as the share transfer process or taxation which have not been fully tested with the new vendor.  It is always best to start with a small population and work towards a seamless release for the broad-based population after you have more experience with the new platform.

Financial Reporting - Most vendors follow an implementation plan of participant go-live with a separate financial reporting go-live date.  Understand your company's financial reporting needs and how the new vendor will accommodate. 

If, for example, your Finance/Accounting group would like financial reporting to be live the same date of the participant go-live, find out during the RFP process which vendors can handle or if you have already selected the vendor, have the discussion now.  You may need to adjust your participant go-live date in order to allow for sufficient time for internal groups to review reports and sign-off on the financial reporting.  This area takes a great deal of time and you need to plan accordingly.  Your new vendor MAY NOT be able to work with your proposed financial reporting go-live expectations.

Historical Information - Determine what information you would like transferred to the new vendor and make sure the new vendor understands and is able to load the information. 

I recommend a full data audit of your current database prior to implementation of the new vendor. Putting this effort and time in up front can save a tremendous amount of time as you approach the go-live date. Pay special attention to duplicate accounts, ISO/NQ splits, over-exercised shares, vest schedules, or other administrative considerations such as loading performance awards onto a performance platform.

In addition, work with your vendor on the information that will be loaded during a standard implementation and discuss any additional fields you would like populated such as historical taxes.  Take into consideration if you will have access to your prior database after go-live.  Loading the actual vesting tranches from the prior vendor, rather than vesting templates, will provide for exact vesting and will not complicate matters with rounding issues.  Also become familiar with the information that will be visible to participants on the new vendor website and how long they will have access to the information at the prior vendor.  

Transfer of Assets - Understand from your outgoing vendor if they will transfer the assets and if not, what type of reporting will they still be able to provide to you after you have transitioned to the new vendor. 

Generally speaking, if your outgoing vendor has opened full brokerage accounts for your participants, you most likely will not be able to do a bulk transfer of equity compensation related shares to the new vendor.  For example, if you have an ESPP, you will need to continue to report disposition information with respect to those shares.  If the shares remain at the prior vendor and they are not able to report disposition information to you, you will need to find another solution, such as a third-party vendor, to assist in tracking those dispositions. 

If you are able to transfer the shares and bring over the cost basis information to the new vendor, make sure you audit the cost basis information that is being provided.  Don't assume that the since the shares were split correctly for a prior stock split that the cost basis followed suit.

Communications - Prepare your communications early and don't forget about special groups.

Start preparing your list of potential questions for your Frequently Asked Questions (FAQs) that will be distributed to your participants prior to go-live as soon as the vendor is selected and continue to update this list throughout the implementation.  It is much easier to maintain a list rather than trying to remember all of the questions that came up immediately before go-live. 

Most vendors will have a standard document that you can use as a starting point.  These FAQs will be critical in a successful transition for your participants.  Screen shots and step-by-step instructions are helpful.  Incorporate information regarding the prior vendor, access, and costs.  Also include information on the transfer of assets and trading window blackouts, if any, and how participants may update their personal information, if required.  Promote participants to call the new vendor (not your group) with questions.  Trust me.  Your hands will be full with many other details. 

Don't forget about special populations such as international, beneficiaries, Board of Directors, terminated employees with outstanding options, and those on leave.  For example, international locations may require more lead time with the materials in order to translate and set up meetings to discuss the change.  Depending on the type of account, instructions may be different for different populations.

I also always suggest a communication test group to review material.  This group should be a cross-section of participants throughout the organization.  Our equity compensation jargon may make sense to us, but may not to those without an equity compensation background.

Payroll Information and Tax Rates - Work with Payroll at the start of the implementation process to determine what the future state will look like.

You may now have additional functionality with the new vendor for example, taxation for mobile employees.  Now is a good time to look at the current process and see how it can be improved such as feedback files directly into the payroll system, mobility tracking, or scheduling reports for non-US payrolls, to name a few.

Make sure that Operations at the new vendor reviews the information included on the interface files to ensure they logically make sense.  Often times, Payroll, the programmers, and the vendor are not speaking the same language with respect to the fields and their functionality.  For example, 1% may have been incorrectly programmed at 10%, separate accumulators may be required for different rates, or the system determination for tax rate maximum may be different than what you are used to with the prior vendor (calculated from taxable compensation or year to date paid provided).  Additionally, check with your vendor regarding year-end tax rate updates.

Implementing a new vendor is a big project with a lot of moving pieces.  Despite the recommendations above, the common theme I have witnessed for every successful implementation is a dedicated and engaged cross-functional team.  You will not be able to do this alone and especially not on top of your “normal” job.  Although the new vendor and other third party resources you engage will provide assistance and guidance, you or someone at your company will ultimately be responsible for the success of the project. With the right tools and people in place, you too can achieve a successful implementation and hopefully be able to keep any issues (and stress) in check.   

Julie Mrozek,
Senior Consultant
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:

Outsourcing's Great Expectations (for small and mid-sized companies): What to Expect When You're Expecting Others To Do It Right

January 24th, 2013

Click here to register

Please join us for our next educational webcast on January 24th at 11am Pacific Time, 2pm Eastern Time.


Outsourcing is defined as the contracting out of a business process. The term "outsourcing", as we have learned, can mean something very different from one company to another; though the idea might be the same, the model varies significantly. The decision of determining if outsourcing is right for your company can be difficult since passing off any level of work to a third party comes with its own risks.

In this SOS Educational Webcast we will delve into:

  • Different types of co-sourcing/outsourcing models in the industry
  • What helps to make a decision on outsourcing (pros/cons)
  • How to work with your vendor(s) in preparing:
    • Employee communications
    • Management planning
    • Problem resolution
    • Financial reporting
  • Best practices for administrative challenges and frequently asked questions

Join our expert panel in this discussion that will leave you with more answers and a clearer picture on how outsourcing can work best for YOU.

(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.)

Product Spotlight: SOS-TEAM Outsourcing

SOS-TEAM Outsourcing (Total Equity Administration & Management) is a comprehensive and flexible outsourcing system designed for companies looking for stock plan certainty at a reasonable cost. Staffing; ever-changing regulations and compliance issues; various tax, accounting, legal, communications, and systems requirements…all these things put an enormous burden on your company. By partnering with SOS, you are not only getting the best minds in the equity compensation business to handle your unique requirements and challenges, but also the assurance that things are being handled correctly. 

The SOS-TEAM Outsourcing Difference

  • Flexibility – SOS-TEAM Outsourcing allows us to grow with our clients and adapt our services according to their needs. Other outsourcing providers try to draw a box with clearly defined boundaries for you to stay within. Our core competency is stock plan administration so we understand that this is a fluid process and things change quickly.
  • Expertise – Our clients stay with SOS because of our people.  The SOS-TEAM has been assembled to reflect the wide range of experiences in stock plan administration. By partnering with each client, our Account Managers take ownership of each equity plan and design a client-specific strategy for the future. 
  • Infrastructure – SOS has been driving best practices in the stock plan industry since 1999. We continue to expand our service offerings and overall expertise.  Our clients can expect to be at the leading edge in handling the increasingly complex challenges in equity compensation.  With more than 50 employees dedicated to stock administration, we have the unique ability to manage our time and resources to accommodate each client’s needs. 

The Customer Service Model

We offer our clients a three-tiered relationship management structure to ensure their needs are met in the most efficient manner possible while providing seamless management of your day-to-day operations.

Account Manager:

  • Day-to-day administration and overall plan management
  • Ongoing client employee support
  • Calendar of events to integrate stock administration function with other departments
  • Customized desk procedures to identify SOS responsibilities and client responsibilities
  • Compliance checklists to ensure tasks are completed timely and before period close

Equity Compensation Consultant Specialists:

  • Drive best practices for our clients and the industry
  • Provide specialized niche equity expertise for resolving customer issues
  • Subject Matter Expert on stock plan administration and consulting

Managing Principal:

  • Escalation point for clients and Account Managers
  • Oversees special events and client projects
  • Coordinates additional resource needs to meet customer needs
  • Ongoing account review meetings with clients

At SOS, we offer a scalable solution to meet any company’s equity plan administration needs.

Click here for a FREE SOS-TEAM Outsourcing quote

SOS Xposé

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

New Kid on the Block... Laura Verri has moved to London and started a new job at Solium UK as Financial Reporting Manager for the EMEA market.  Mark Clem is returning to equity compensation, joining Equity Methods as their Vice President of Sales and Business Development.  With Equity Methods' recent spin-out from Bank of America, Mark will focus on expanding the firm's relationships and industry partnerships.  Cooley LLP has some news to share- Sarah Dale joined the Palo Alto office in November as an Associate in the Compensation and Benefits Group while Keith Ranta joined the DC office in October also working as an Associate in the Compensation and Benefits group and Amy Wood made partner in the San Diego office, congrats to all!

Change Up... SOS's Strategic/Accounting group has expanded by hiring two employees already working for SOS: Susan Garvin and Julie Mrozek. Elizabeth Dodge, leader of the Strategic/Accounting group says "Susan and Julie both bring amazing depth of knowledge and incredible work ethic to our group. We are thrilled to have them on the team."

On the Way Down the Aisle...The members of Illumina's stock admin team are engaged to be married, though not to each other! Both Eddie Chen and Claudia Baranowski are planning their summer weddings in San Diego, congrats!

Making Strides...Tim McCleskey of SOS ran in his second marathon finishing in 3 hours, 35 minutes and 28 seconds making that about 8:13/mile. Way to go Tim! Check out a post-race pic here

Family Matters...Betsy Eberg of Insight has moved back to Ohio from Arizona to be closer to family and continues to work for Insight, albeit remotely.

Got Milk? Shawna Casey of SOS donated 101.16 gallons of breast milk to the Mother's Milk Bank of San Jose. During a national shortage this is an especially BIG deal!

Diaper Duty...SOS's own Jessica Castro and her husband Shaun are expecting their first baby in April and it's a girl! Pam Ellis of Solium just delivered a baby girl on December 3. Jordyn Alexandra was 7lbs, 5oz, and 20.5 inches long. Congratulations to Pam and Frank!

Industry News... 

GEO's San Francisco Chapter is gearing up for their post-holiday meeting and happy hour on 1.22.13. See here for details: http://www.globalequity.org/geo/node/2700

Solium is gearing up for their annual Synergy conference that will be held in Calgary and Banff Canada with the conference itself held at the Hyatt Regency Calgary May 5-8, 2013. Visit www.solium.com for more information.

Happy Holidays from everyone at SOS!

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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