August 22nd, 2013
Volume 6, No. 4

In this issue:

Aspirations Sneak Peek

Outsourcing - How It All Comes Together

Product Spotlight: Strategic Solutions Analysis & Recommendations

Consultant Corner

Out and About

Free SOS Educational Webcast: Nifty Past 60: Dealing with Retirement Eligibility in Stock Plans

SOS Xposé

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Request a call from an SOS Team Member to get answers to your questions and further discuss your needs-click here

SOS Employment Opportunities

From the SOS Library:

Accounting for Terminations

Aspirations Sponsorship Details

From the SOS Webcast Archive-

Outsourcings Great Expectations (For Small to Mid-Sized Companies): What to Expect When You're Expecting Others to Do It Right

Our Services: 


Equity Compensation Projects/Consulting

SOS-TEAM Outsourcing

Contact Us:

On our webpage



Aspirations Sneak Peek

The much-anticipated session and speaker lineup is in the final stages and we are thrilled to offer a fabulous general session in the morning this year (back by popular demand) and an all-star-studded lunch session. With our exquisite new venue, the spacious session rooms will give everyone a seat with a view. From 8:15am through to the end of the cocktail hour at 6:15pm, this year's Aspirations will wow you with exciting educational sessions, a vendor hall worth lingering in, and free-flowing food and drinks.

This year's schedule is again jam-packed with the best and the brightest speakers and some fascinating new topics including:

  • Back-to-Basics: Equity Compensation Types, Pros and Cons
  • Stock Plan Gladiators: Private Company Edition
  • The Pre-IPO Value Proposition: Attracting, Retaining and Motivating Talent
  • Outside the Box: Accounting for Warrants and Their Variations
  • Tick-Tock - Counting down the Lock-up Period
  • and many more...  

Speakers will include presenters from:

  • Baker & McKenzie LLP
  • Cooley, LLP
  • Computershare
  • Deloitte Tax, LLP
  • The National Association of Stock Plan Professionals (NASPP)
  • Wilson Sonsini Goodrich & Rosati LLP
  • Workday, Inc.
  • And many more...

Whether you work for a private company now, might someday work for an IPO company, or are just looking for low-cost continuing education credits for attorneys, CEPs, or CPA, this is a conference you won't want to miss.  We look forward to seeing you there and please remember to stop by the SOS booth; we have many surprises in store!

Shawna Casey
Associate Director, Marketing
Stock & Option Solutions

Outsourcing-How It All Comes Together

After visiting and speaking with hundreds of clients throughout the years, the SOS outsourcing team has developed a structure we follow each time we implement a new client. Our goal is to integrate our team and processes around the client while providing consultative expertise to effect positive change. These same methods can be applied when you change positions, either to a new company or to a new role in your organization.

First we meet the internal team; one of the most important factors for success is how well a team works together.  By building relationships with your colleagues, you start to learn each personality and their associated expectations.  Our goal is to ensure each department knows SOS's role(s) (which vary widely from client to client) and that both the SOS personnel and the company personnel know from whom to collect essential company information.  The departments or personnel we try to meet are: current stock plan professional (if available), financial or SEC reporting, human resources, payroll, and legal counsel.

As part of the implementation process, SOS meets with and explains our working relationship to the external partners as well.  SOS needs access and authorization for multiple applications.  We are set up with your software vendor, brokerage firm, transfer agent, payroll vendor, and/or outside legal counsel.  This allows us to help manage and coordinate the stock plans and relevant processes on the company's behalf.

Once we have system access, a review of the current database and historical files is performed to familiarize our team with the company's equity plans.  We review the plan documents, grant agreements, special termination agreements, relevant accounting memos, and the data in the equity system to ensure it is consistent with the system settings and parameters.  Incorrect settings can cause major compliance and reporting issues down the road if not caught in time.  Don't forget to assess how the previous administrator organized the data like employee ID's, department numbers (for expensing), special comment fields, and grant data.  You are taking responsibility for the data and should feel confident when you provide reports and analysis from your system.  We have seen too many instances where reports have been sent out to management before the necessary adjustments and reconciliations have been performed.

After assessment of the company's data, we review the company's current operations and process flow. Sometimes there is a complete and up-to-date procedures manual, which makes our job easier. In other cases the manual is outdated or non-existent.  This is the bulk of the education and due diligence of a company's equity program.  The goal here is to understand how stock plan services functions within the company.  This will range from defining and documenting the grant, exercise, termination processes as well as understanding the financial reporting, payroll integration, and capitalization table (for private companies) updates.  After reviewing the database and relevant documents, we meet again with each department head and ask more questions about their processes. Equity administration varies drastically from company to company, so don't jump to conclusions just because your last company did things a certain way.  Don't be too quick to offer best practices until you fully comprehend the current environment as well as the reasons for the current processes. 

Finally, develop and document a calendar of events as well as a summary of the above process descriptions and share it with all parties involved.  This should include everything from ESPP purchases to RSU releases, to period close due dates and auditor onsite windows. This will help to delineate responsibilities, provide transparency to your team, and publicize when tasks need to get done.  As a public company, this is required for Sarbanes Oxley purposes, but even private companies need to be concerned with SOX and will benefit from a detailed and documented process.

Each outsourcing client brings a new perspective and a new set of challenges and relationships from which the entire outsourcing team (and SOS team) learn and grow. Every client and new company can teach us, and you, something new, if you are open to the opportunity.

Henley Hom, CEP
Managing Principal
Stock & Option Solutions


Product Spotlight: Strategic Solutions Analysis & Recommendations

Are your stock plans humming along at maximum efficiency? Are you using the latest and greatest "best practices"? If not, or if you're not sure, SOS's Strategic Team can help! Our five-member team has nearly 100 years of combined experience in equity compensation; we have "been there, done that."

Our Analysis & Recommendations (A&R) service combs through your processes by reading plan documents, reviewing SEC filings, conducting interviews with key personnel and reviewing process documentation. It is not uncommon for us to find inefficiencies, risk factors, and outdated or manual processes that can often be remedied quickly. Depending on project scope and budget, we then provide feedback, either verbally or via written documentation, with recommendations for changes.

If you are unsure as to whether or not your company could benefit from an A&R, contact SOS and discuss your stock plans with our subject matter experts for a quick, high-level assessment.

"Based on our diligence, we expected good things when we engaged SOS, we weren't expecting though how quickly they 'hit the ground running.'  Within the first hours of the consulting engagement we were receiving suggestions on process improvements and best practices.  Technical support was amazing as answers came before we finished our question, they knew the answer because they had been there before."
- Quote from a recent Analysis & Recommendations client

Some of the areas we review include:

Personnel Data Management

  • Review eligibility, identifiers, addresses, hire/term/LOA dates, titles, retirement eligibility, client-specified fields, and other personnel data
  • Review process for collecting new and updated information, transferring data to vendor, and auditing/reconciling data

Grant Recommendations and Approvals

  • Review grant reasons and frequencies, recommendation process, and approval process
  • Review process for collecting recommendations and obtaining Board of Director approvals
  • Assist with establishing controls to ensure SOX compliance and to prevent misdating of grants

New Grant Processing

  • Review process for collecting approved grant data, transferring data to vendor, and auditing/reconciling data, testing controls of grant process and communication of grants to employees

Restricted Stock Taxation and Releases

  • Review process for establishing, maintaining and processing tax withholding elections, Section 83b procedures, escrow accounts, releases upon vest, and returns to reserves upon forfeiture for the U.S., and make suggestions for international based on existing infrastructure

Grant Adjustments

  • Review typical adjustments, as needed
  • Review process for collecting data, transferring data to vendor, and auditing/reconciling data
  • Terminations, LOAs, Death, Divorce, Disability, and special cases
  • Review process for handling each case, transferring data to vendor, and auditing/reconciling data


  • Review requirements to support accurate mobility tracking for taxation purposes
  • Review process for collecting data, transferring data to vendor, and auditing/reconciling data

Executives and Section 16 Insiders

  • Review trading and clearance policies and transaction reporting
  • Review processes for managing insider lists and trading windows/blackouts, collecting data, transferring data to vendor.


  • Review interfaces for generating reports
  • Review process for setting up users, generating and delivering reports, and importing/exporting data

Reconciliation and Audits

  • Review all controls, audits/reconciliations required
  • Daily, weekly, monthly, quarterly, and year-end processes
  • Review the processes and frequencies required for closing periods

International Processes

  • Obtain additional information regarding global locations and equity population/practices
  • Review any existing guidance provided by tax or legal advisors
  • Review requirements for locations in which equity is granted
  • Review compliance measures to date in each location

Other Processes

  • Review other Sarbanes-Oxley compliance requirements
  • Review any additional processes impacted but not covered in other areas
  • Make suggestions in other areas, as applicable, including tax & accounting

Recommendations Report

Provide detailed overview of findings, including program strengths, weaknesses, and additional commentary and discussion covering various issues (Immediate Actions, Compliance, Operations and Process, Staffing and Training, Security and Controls).  The report outlines specific items identified in the Analysis phase, SOS-assigned priority level based on risk assessment and effort to correct, control type (preventative or detective), discussion of impact and risk factors, parties involved in correcting the issue, and any recommended follow-up actions to correct the issue.

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SOS Consultant Corner- Loss of a Stock Employee

As manager of your company's Stock Administration group, you feel confident that things are going well.  Transactions are being processed in a timely manner, employees are receiving needed communications, financials are updated on time quarterly, and there don't seem to be any compliance issues.

Suddenly, your long-term Stock Administration Manager decides to leave the company.  It could be for any of a variety of reasons:  a better opportunity, a promotion, maternity leave, ill health, or a disagreement with a colleague or management.  That confident feeling you had about the stock group quickly flies out the window, along with your former employee!

Sound far-fetched?  Unfortunately, it's all too common!  As an equity consultant for Stock & Option Solutions, I walk into situations like this every month. The good news for you is that companies such as SOS can provide you with experienced, qualified equity professionals who will help you out during such emergencies.  The less welcome news is that even experienced equity professionals cannot prevent confusion and wasted down time if a company is totally unprepared for the loss of a Stock Administrator.

So what can you do to prepare for the eventual departure of an essential stock employee?

  1. Cross train employees.  No person should be an island; at least one other person should always know how to do the bare minimum of another employee's job.
  2. Plan for succession.  If a critical employee leaves, who would you promote within the organization to take over?  Identify the person and help them learn what they need to know, while the critical employee is still part of the organization. 
  3. Document all processes.  There should be a written description of every critical task within the organization. 
  4. Focus first on complicated processes.  If there are processes that require a great deal of detailed manual manipulation, give these priority in the documentation process.  Such processes can and should also be analyzed to determine if there are better, less manual ways to accomplish them.
  5. Review all processes regularly.  Your employees may be doing something manually because your equity system could not manage it seven years ago, but there's a good chance the problem has been corrected since then.  Review all of your processes every few years to determine if you're using up-to-date "best practices".
  6. Automate when possible.  Auditors look more favorably upon data that is not manipulated, and automated processes are faster, more efficient, and less error prone for the department.

This is all basically Management 101; however, in my experience many managers fail to spend much time on such pro-active planning.

You may think that this is good advice, but you're just too busy to do any of it.  One more piece of good news is that equity professionals at SOS are experienced at training employees, documenting equity procedures, and analyzing stock processes.   Time and money spent on these management essentials now will save you plenty of time and money later, when you're dealing with the unexpected loss of an employee.

Sarah Roberts, CEP
Stock & Option Solutions

Sarah is a Senior Equity Consultant for Stock & Option Solutions.  With over 15 years of experience in equity compensation, she has consulted with companies throughout the country, ranging in size from start-ups to Fortune 100.  She became a CEP in 2007, and holds an MBA in finance from UCLA.

We want your input! Send us ideas on what you want to read and learn about.
Suggestions for articles and webcasts are welcome. Please email us at xtra@sos-team.com.

Out and About

Where we've been...

Where we're going...

  • SOS is headed to the 21st Annual NASPP Conference in Washington DC September 23rd-26th! SOS will be an exhibitor again this year and Elizabeth Dodge will speak in Auditor Oddities: Emerging Auditor Hot Buttons in Accounting for Equity Comp
  • GEO's NECF October 23rd-25th in Rancho Palos Verdes, California. Barrett Scott in Project Management for the Equity Comp Professional, Elizabeth Dodge will host an Excel Workshop and Marianne Snook will present ROI? How Companies Gauge the Value of Their Equity Plans

Free SOS Educational Webcast:

Nifty Past 60: Dealing with Retirement Eligibility in Stock Plans

 Register Now Button

Please join us for our next educational webcast on September 10 at 11am Pacific Time, 2pm Eastern Time.


Retirement and retirement eligibility provisions in stock plans cause more than a few issues. From their impact on expense under ASC 718 to Code Section 409A issues to collecting tax on shares that have not been delivered, theses provisions are rife with challenges for even the most accomplished stock plan professional.

What are the issues and how are other companies handling them? Join our expert panel for an overview of the issues, a review of some market research data compiled from a recent SOS client survey, and tips and tricks for handling these troublesome provisions most effectively.


(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.)


Have you SEEN the SOS Portal?
(It helped Synopsys win the Best Use of Technology Award from GEO this year!)

SOS Xposé

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

Doors opening... Ken Scully joined the team at Rocket Fuel as the Stock Administration Manager in the Legal Department. Catch him at kscully@rocketfuelinc.com. Emily Del Toro is now working as Equity Programs Manager at Facebook in the Legal Department.

Pulling all nighters... Vanessa Harrison of SOS and her husband Stephen welcomed a baby boy on July 18th, 2013 at 12:59pm and he weighed in at 7 lbs, 2 ounces and was 20.5 inches long. Carter James is doing well and his big sister Charlotte can't get enough of him!

Questions flying... Elizabeth Dodge of SOS was interviewed in The NASPP Advisor in Emerging Hot Button Issues in Accounting for Equity Compensation. If you are a NASPP member check it out here.

Adding three little letters... With a 100% pass rate at Level 3, Fidelity Stock Plan Services is proud to announce 8 new CEPs, James Hayes, Phil Jones, Jeffry Lussier, John Reinekce, Lorraine Savageuax, Charlene Smith-Fadden, Michael Viglione, and Rebecca Walton.

Making a house a home... Shawna Casey of SOS and her husband Branden just bought their first house in South San Jose. Painting, house and garage projects, and planting flowers is all keeping them busy on the weekends along with their two young children who are just loving having a yard and being close to a park! Steven Hom also of SOS and his fiancé Laurie just bought a home in Castro Valley.

The last first kiss... The NASPP's Barbara Baksa tied the knot on August 3 to Andy Spafford in an intimate ceremony at their favorite restaurant in their hometown of Fremont, CA. Here is the pic to prove it!  SOS's Gary Cogger married Ellen Stabinsky on June 6th in Reno, Nevada. The happy couple is here. Daniel Alejo also from SOS jumped on the wedding bandwagon and got married in beautiful Lake Tahoe on August 17th to Frances Mata.  See the pic here. They are shooting for a honeymoon in Japan!

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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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