August 27, 2014
Volume 7, No. 4

In this issue:

IPOs...Still Hot, Hot, Hot

Aspirations Sneak Peek

Product Spotlight:SOS ADP Xpress

Free SOS Educational Webcast: Cost Basis Conundrums- Crafting Clear Communications

August Market Research Survey

Consultant Corner: Writing Footnotes for Form 4's

SOS Online Demo: SUMIFS Excel Function

SOS Xposé

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Stock Plan Vendor Analysis

From the SOS Webcast Archive-

Demystifying and Determining DTA Balances

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IPOs...Still Hot, Hot, Hot

What an exciting time! According to PricewaterhouseCoopers, this year is on track for the highest IPO volume since the dotcom era.  From equity plan administrators to brokerage firms to software providers to consultants, this boom is creating a lot of opportunity, and more than a few challenges, for those of us in the equity compensation industry.

The dream of being able to start with a pristine database, set up best-practice processes, select the vendors you want to work with, and be a part of the foundation of an aspiring or newly-public company is however, not a reality.  Most of the time when you start at a pre-IPO company, you end up inheriting a cap table spreadsheet with no participant IDs, no grant IDs and little to no vesting details. It's your job to find a vendor/broker, transfer agent, clean up and convert the data and change the current processes and procedures to implement best practices all while holding down your day job. Despite these challenges (that SOS can easily assist with at anytime), we are seeing an exodus of equity administrators who have been comfortable in their large, public company jobs towards this new, exciting and demanding world of pre-IPO to IPO or newly IPO companies.

With all of this activity, SOS is more excited than ever for our upcoming Aspirations Conference.  We have a fantastic line-up of presenters who will share their knowledge on plan management, securities law, accounting standards, taxation and international topics.  Whether this role has just been delegated to you, you're new to the equity plan industry, you are transitioning into the pre/ newly IPO world or just aspire to know more - the information you will garner at Aspirations will be invaluable.

I look forward to seeing you on November 4, 2014.

Marianne Snook, CEP
Chief Executive Officer
Stock & Option Solutions

Aspirations Sneak Peek

The highly-anticipated speaker and session lineup is in the final stages and we couldn't be more excited to offer two amazing general sessions in the morning and in the afternoon. This will be our second year at the conveniently located and spacious Villa Ragusa, where we plan to inform you with 11 terrific educational sessions. This year's Aspirations will be held again from 8:15am until 6:15pm which includes a cocktail hour you won't want to miss. You can look forward to raffles, drinks, good food, networking, and more.    

The schedule we have lined up is busting at the seams with unrivaled and sought-after speakers and some captivating new topics including:

  • Stock Comp and the SEC: A study of SEC comment letter trends related to stock compensation
  • Trials and Tribulations of Running a Private Global Company Stock Plan
  • Top Ten Mistakes Private Companies Make
  • Failure to Communicate? Equity Plan Communications Best Practices
  • and many more...  

Speakers will include presenters from:

  • Baker & McKenzie LLP
  • Computershare
  • The National Association of Stock Plan Professionals (NASPP)
  • Pearl Meyer & Partners
  • Perkins Coie LLP
  • PwC
  • RocketFuel
  • And many more...

This is an event you won't want to miss. Whether you are looking for CEP, CPE, or CLE, you will find it all. The relevant and timely topics will help to answer questions you didn't know you had. And don't forget to come by the SOS booth for fun giveaways and more! 

Shawna Casey
Associate Director, Marketing
Stock & Option Solutions

SOS's Andrea Best shares 6 interview tips in her NASPP Equity Expert Podcast

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Suggestions for articles and webcasts are welcome. Please email us at xtra@sos-team.com.

Product Spotlight - SOS ADP Xpress

Each payroll period, stock plans should be sending information on taxable stock plan transactions (exercises, dispositions (ISO and ESPP qualified ESPP disqualified, releases, etc.)) to payroll, both so that taxable income is correct on the paystub and also since the income must be included on employee (and former employee) W-2 forms. If you use ADP for payroll, then either you must key the data in manually, or you must manipulate the data into a specific and difficult ADP importable format. ADP provides sample templates that you can download and fill in the data manually. The templates are mostly XML formatted. CSV is another format that ADP accepts. It takes a significant amount of time and effort to manually generate the file depending on the number of transactions.

As with all manual processes, this is time-consuming and error prone, SOS continues to focus on designing and developing products that automate processes, reduce errors, increase data integrity and generate valuable audit checks.  SOS ADP Xpress has been developed to assist Stock departments by instantly generating ADP-importable files and provide audit reports for review prior to loading the data into ADP.

The SOS ADP Xpress application has been designed, developed and implemented at several client locations. The application is capable of generating the ADP files in both CSV and XML depending on the preferred format. SOS ADP Xpress is an MS Access application which does not require any installation. A few setup steps quickly automate the process of generating the ADP files.

The above screen is a simple, user-friendly screen that has the capability of configuring the application and generating the ADP files for the client.
SOS ADP Xpress Features and Benefits
  • SOS ADP Xpress is an MS Access application and therefore does not require any installation as long as you already have MS Access installed. With minimal IT Support this application can be easily deployed on your network
  • Since the application is deployed at your site, data security is ensured since data never passes beyond your firewall
  • Reports generated by the current equity system provide the data for the application
  • SOS ADP Xpress currently supports standard reports from two of the most popular equity systems
  • SOS ADP Xpress can be easily customized to support source reports from other systems
  • SOS will assist and directly work with the client's stock administrators to implement the application
  • Data diagnostics generated by the application can be used to review and correct any data issues prior to sending the data to ADP
  • Automatic generation of the import files ensures data accuracy with no manual intervention
  • Since the application supports standard reports from equity systems, data preparation time is limited to generating the required source reports

Steve Gaylord, Chief Technology Officer
Stock & Option Solutions


Free SOS Educational Webcast:

Cost Basis Conundrums- Crafting Clear Communications

Please join us for our next educational webcast on September 16, at 11am Pacific Time, 2pm Eastern Time.


Under finalized cost basis regulations for employee equity plans, the IRS no longer allows brokers and transfer agents to include the "compensatory income" component in the cost basis on Form 1099-B when employees sell shares. This creates a substantial risk that employees will overpay their taxes on these awards. These regulations affect all stock option, SAR, ESPP, and restricted stock awards. Join our experts to learn what various industry practitioners are doing to help employees mitigate this risk.


(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.)


August Market Research Survey

Complete the survey and be entered into a drawing for $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 10 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!

SOS Consultant Corner - Writing Footnotes for Form 4's

I was a Journalism major in high school and college. So I'm used to having stories I have submitted for publication edited, shortened and even completely re-written.

I thought that Journalism would be my career. When I discovered that it wasn't for me, I still knew my writing skills and experience would be beneficial in whatever career I chose. But I never thought I'd use those skills to write footnotes on Form 4's filed with a government agency and disseminated to the investing public. And I never expected to have so few changes made to some of the language I've suggested or written myself.

In my career working in-house and consulting, I've seen a variety of styles and levels of complexity of Form 4 footnotes. I've also seen various levels of review before the forms are filed, and at times I've been surprised by both.

At one client, the footnotes were merely the number assigned by the administration software to the grant or award.  At another client, I drafted the footnote language with no changes from in-house legal.

At the other end of the spectrum are footnotes that must have been written by outside counsel who get paid by the word. These footnotes had explicit details on the exact dates of the vestings, even if it was just on the anniversary of the grant date over a particular period of time. These footnotes are even longer when Restricted Stock Units (RSUs) are reported on Table 1 as wholly beneficially owned. Then the footnote has spelled out the exact number of shares and the exact vesting dates. They're even longer when several years' of RSUs are reported, because the same detail is given on previous year's awards. These footnotes have ranged well beyond EDGAR's 1,000 character limit, so the footnotes are continued, sometimes taking 2 or 3 footnotes to explain everything.

Then there is the legal review process. Sometimes the forms are sent to outside counsel for review, sometimes even to the outside counsel who were paid by the word. I've also seen forms reviewed by managers with little or no securities law experience, and another where the Counsel for M&A activity reviewed them.

But the best was a new Corporate Counsel who was confident enough that he wasn't familiar with the exact statute and pulled out his SEC Handbook and the Romeo & Dye handbook to look for the exact language to fit the situation.

Form 4's are important documents. They tell the investing public what's going on with your company and the executives and their decisions about the value, worth and potential of the company. It seems like many companies view them as a formality, a requirement that no one wants to miss the deadline for, or something that requires very little thought. If that's the case at your company, this might be an area that could use a little more focus or attention. Strong, well-written footnotes can alter the investing public's perception of your company and its compensation policies. And we all know the importance of that in this era of say-on-pay. 

Laura Shields, Equity Compensation Consultant
Stock & Option Solutions, Inc.
This is Laura's 3rd term with SOS, having previously worked for SOS in 2006, 2007 and recently since March 2013. She has over 15 years experience, both in-house and consulting, in stock administration. Her experience includes managing Employee Stock Purchase Plans, Stock Option Plans and Restricted Stock Unit Plans. She is experienced with filing Forms 3, 4 and 5, managing 10b5-1 plans and black-out windows and trading restrictions. She is passionate about employee education and communication, and uses her journalism background and talent to explain complex equity concepts in plain English. She has a Bachelor's degree in Applied Liberal Arts, Business emphasis, from Concordia University in Irvine California and an Associate's degree in Journalism from Cerritos College in Norwalk California.

SOS Online Demo: SUMIFS Excel Function

SOS's Julie Kenia breaks down SUMIFS for Stock Plan Professionals. This may be better than our last article on Excel, on index/match.

SOS Xposé

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

Only this little once...Sheila Frierson of Computershare and her husband, Chris, welcomed their son, Holland Michael Frierson, on April 15th. He weighed 9 pounds, 3 ounces and here is his picture . His big sister Maggie is so excited to have a little brother! Jon Burg from Radford, An Aon Hewitt Company, is a new daddy! He and his wife, Cindy, brought Sebastian William Burg into the world on July 17 at 10:58am. He weighed 8lbs, 6 ounces and was 20.5 inches in length.

Got ice?...A few members of the SOS Team took the Ice Bucket Challenge AND donated to The ALS Association (this challenge has raised $53.3 million!).Rachel Meyers took the challenge (sorry no video!) but watch Christine Zwerling, Elizabeth Dodge, and Julie Kenia do the challenge.

Summer vacation...Shawna Casey of SOS and her family visited Zeypher Cove this summer on Lake Tahoe.

SOS is hiring and here are our recent additions:

Sorrell Johnson (Strategic Team)
Darrin Robb (People Solutions)
Industry News... Susan Garvin, formerly a member of the SOS Strategic Solutions team, has taken an in-house administration position with a newly public company, GoPro. For anyone who knows Susan, you will know how deeply we feel the loss of her from our team. Not only will we miss her professionally, but also personally. "She is one of the brightest and most knowledgeable stock plan professionals with whom I've ever had the privilege of working. And she has a terrific sense of humor to boot. We will miss her, but we wish her nothing but the best!" said Elizabeth Dodge, manager of the Strategic Solutions team.

Meet GEO's 2014-2015 Board of Directors. GEO's NECF New York is September 9th, 2014 and GEO's NECF San Diego is September 11th, 2014

Don't miss SOS in Las Vegas for the 22nd Annual NASPP Conference! Come by booth #405 during the opening reception to get your Vegas Survival Kit. Also be sure to check out one (or more) of our 5 sessions!

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
SOS Xtra Editor: Shawna Casey