The endless pursuit to optimize accounting dollars without compromising the perceived value of a stock award may finally be over! The capped stock award—an equity arrangement gaining broader traction is one method industry experts believe can achieve this delicate task. Several companies have jumped on the capped stock award bandwagon, and there are indicators that more companies are on track to issue capped stock awards.
Terry Adamson and Daniel Kapinos of Radford, an Aon Hewitt Company, will walk us through how capping the maximum value that a particular stock award can deliver to its recipient can have a significant downward impact on compensation expense and result in high marks with shareholders. Among many other topics, this program will cover:
· What is a capped stock award and why adopt this type of arrangement,
· How capped stock awards minimize expense,
· Examples of the impact on fair value at different expected volatilities and cap levels,
· The perceived value of capped stock awards, Corporate governance benefits to companies,
· Examples of recently implemented capped stock award programs, with a focus on specific case studies and their rationale for choosing this arrangement.
Terry Adamson is a Partner at Aon Hewitt with over 19 years of consulting experience. As National Practice Leader for Aon Hewitt’s employee equity consulting practice, Terry is involved with all phases of equity compensation, including the design, valuation and accounting for stock options, performance equity, and ESPP programs under ASC Topic 718. Terry is a frequent speaker and author regarding equity valuation at various conferences, seminars, and journals. Terry was on the FASB Round Table on Employee Share Options, and is the Chairman of the Society of Actuaries taskforce on stock option valuation. Terry is also a Certified Equity Professional (CEP) and serves on the CEP Advisory Board, and the NASPP Executive Advisory Board. In 2010, Terry received the 2010 Individual Achievement award by the NASPP. Terry graduated from Georgetown University where he obtained a Bachelor of Science degree in Mathematics.
Dan Kapinos is an Associate Director in Philadelphia with Radford Valuation Services, the equity valuation and accounting group for Aon Hewitt that assists over 450 companies with all aspects of ASC Topic 718, ranging from plan design considerations to expense accruals. Specifically, Dan provides industry-leading expertise to companies, covering the valuation and accounting of Employee Stock Options, Employee Stock Purchase Plans, Performance Awards and potential Underwater Stock Option Exchanges. Additionally, Dan has consulted on valuations of compensatory arrangements for purposes of a change-in-control under IRC 280G, valuations and accounting for equity programs in mergers, acquisitions and divestitures under Topic 805, and equity plan designs focusing on maximizing the value delivered to employee while minimizing the associated compensation expense. As leader of Aon Hewitt’s PeerTracker tool, Dan oversees the tracking and communication of performance awards with market conditions to clients, providing cross-functional benefits to Human Resources and Financial Reporting. Before joining Radford, Dan graduated from the Pennsylvania State University with a degree in statistics. In 2009, he obtained the Certified Equity Professional (CEP) designation through Santa Clara University. Dan speaks on a variety of equity compensation topics at industry events in addition to local and national NASPP meetings. Additionally, Dan is a board member on the Alumni Board of Directors for the Eberly College of Science at the Pennsylvania State University.
Continuing Education Credits:
1 CEP (Various)