The NASPP Blog

August 24, 2016

NASPP To Do List

Time Is Running Out!
You have just two weeks left to take advantage of the early-bird pricing on the 24th Annual NASPP Conference. The Conference will be held from October 24-27 in Houston. Register today!

New Podcast on Proposed 409A Regs
Our newest addition to the Equity Expert Podcast series features an interview with Mike Melbinger of Winston & Strawn on the newly proposed regs under Section 409A.  Listen to the podcast to find out:

  • How the regs will make it easier to grant to newly hired employees
  • The one thing you should never do with restricted stock
  • Proposed simplifications that will ease adjustment of awards when participants die (and when their beneficiaries die as well)

NASPP To Do List
Here’s your NASPP To Do List for the week:

Tags:

August 23, 2016

Around the World in 60 Minutes: Key International Updates

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 24th Annual NASPP Conference, is great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature Valerie Diamond of Baker & McKenzie, who will lead the session “Around the World in 60 Minutes: Key International Updates

Here is what Valerie had to say:

NASPP: Why is your session, which is a perennial favorite among Conference attendees, always relevant and timely?

Valerie: As we have seen in recent weeks with Brexit, the geo-political and economic landscape is constantly changing and to stay on top of international equity compliance is challenging.  Baker & McKenzie and E&Y do our best to address the latest changes effecting global equity during our session on international updates.  That said, we never know until the day we present what exactly we are going to cover, so in recent years, we have prepared slides that we end up skipping over, editing or moving to an appendix because they are out of date on the day of the session.  For this reason, it’s important to come to the session; you never know what might be new!

NASPP: What is one best practice companies should implement to keep their global stock plans in compliance with local laws?

Valerie: I recommend that companies have a regular process for staying on top of changes to the global tax and compliance rules.  Tax rules need to be checked at least once per year as rates and requirements change annually. Companies should be aware that not all countries have a calendar year as their tax year, so knowing when the tax year is for the country and making sure that the company checks any changes to the tax requirements taking effect in the tax year is a good idea.  With regard to regulatory issues, I have quarterly calls with clients to go over the new developments effecting their equity offerings and to strategize as to whether the company needs to do something to comply with a new rule now or can wait until the next focal grant or ESPP offering.  Another tip here is to think about whether updates need to go to the board/compensation committee and if so, to time any updates accordingly.

NASPP: What is the silver lining to managing compliance for global stock plans?

Valerie:  It’s never boring.

NASPP: What is your favorite restaurant in Houston?

Valerie: If you like pork, then I would try Underbelly Restaurant.  A couple of my colleagues from our Houston office took me to dinner there and we had a great meal.

Don’t miss Valerie’s session, “Around the World in 60 Min: Key International Updates,” at the NASPP Conference!

About the NASPP Conference

The 24th Annual NASPP Conference will be held from October 24-27 in Houston. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!

Tags: ,

August 22, 2016

NASPP Chapter Meetings

Here’s what’s happening at your local NASPP chapter this week:

San Diego: Lenka Haase and Robert Slaughter of E*TRADE Financial Corporate Services present “Your Equity Awards Under a Hot Iron.” (Tuesday, August 23, 11:30 a.m.)

Pheonix: WEBINAR ALERT! Join John Hammond and Elizabeth Dodge as they discuss “The Future of Stock Plan Education—Using Video to Reach Your Employees.” (Wednesday, August 24, 1:00 p.m. PT)

Tags:

August 18, 2016

10 Golden Rules for Global Stock Plan Governance

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 24th Annual NASPP Conference, is great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature Aimee Soodan of Baker & McKenzie, who will lead the session “10 Golden Rules for Global Stock Plan Governance

Here is what Aimee had to say:

NASPP: Why is governance of global stock plans a particularly timely topic right now?

Aimee: Companies are facing increased scrutiny with respect to corporate governance and compensation practices.  Coupled with constantly evolving laws in the U.S. and abroad, this makes for an increasingly complex environment when granting equity around the world.

NASPP: What is a common mistake companies make with their stock plan governance and how can they avoid this?

Aimee: A common mistake I see companies make is being overly zealous with delegations of authority (e.g., delegating authority to make grants under a plan, amend grants, adopt a sub-plan or take other administrative actions).  Without an effective delegation of authority, a company could find itself having to unwind unauthorized actions—resulting in a whole host of legal, tax and accounting issues.  To avoid this, a company should regularly review and refresh on applicable state law requirements in its state of incorporation, its compensation committee charter, SEC rules and plan terms.  (You’ll be surprised how many decisions are supposed to be made by the board of directors or compensation committee!)

NASPP: What is the silver lining here?

Aimee:  Armed with our 10 Golden Rules, companies will be well on their way to good stock plan governance, mitigating risk to the company (and hopefully resulting in a better night’s sleep).

NASPP: What is something people don’t know about you?

Aimee: I’m originally from Albuquerque, New Mexico and Hatch green chile (which is difficult to find outside of New Mexico) is one of my favorite foods.

Don’t miss Aimee’s session, “10 Golden Rules for Global Stock Plan Governance,” at the NASPP Conference!

About the NASPP Conference

The 24th Annual NASPP Conference will be held from October 24-27 in Houston. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!

Tags: ,

August 17, 2016

NASPP To Do List

Conference Hotel Is Filling Up
Don’t wait any longer to register for the 24th Annual NASPP Conference—the Conference hotel is quickly filling up. Register today while rooms are still available.

Attracting Top Talent
Check out Andrea Best of SOS’s new blog in the NASPP Career Center on four ways to attract top talent. Andrea notes that one of the things top performers look for is to know that they can contribute to the organization:

Expect “A” players to inquire about vision and purpose and how they, with their specific skills and experiences, can contribute to the growth and future of your company.

Read Andrea’s blog to find out the other three things top performers look for in an employer.

What Do You Think ISS’s Policies Should Be?
Did you miss the polls about ISS’s 2017 corporate governance policy in last Thursday’s blog?  There’s still time to tell us what you think!

NASPP To Do List
Here’s your NASPP To Do List for the week:

Tags:

August 16, 2016

Globe Trotting, Equity Compensation Style!

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 24th Annual NASPP Conference, is great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature Aaron Oberg of E*TRADE Financial Corporate Services, who will lead the session “Globe Trotting, Equity Compensation Style!

Here is what Aaron had to say:

NASPP: What is the most critical thing NASPP Conference attendees need to know about administering global stock plans?

Aaron: Administration of a global stock plan can seem overwhelming. There is no doubt that complexity with offering equity in multiple jurisdictions grows exponentially with the number of locations that are added. The constantly changing arena is also hard to keep up with. Our session is designed to break it down into manageable chunks that focus on what you need know and do, as well as how you can do it with tools, partners and processes accessible to you today. We will discuss the complexities, but our goal is to give you practical knowledge on how to apply workable strategies that you can start with today.

NASPP: What is a common mistake companies make when administering their global plan and how can they avoid this?

Aaron: A common mistake we see is inaction or inadequate action caused by fragmentation within a company. This mistake is also one of the easier ones to solve through building a more cohesive cross-functional team. Many times we see that there is not one single group or person that has the entire picture in view. This causes either the lack of implementing any process, or implementing a solution piecemeal that does not provide an optimized process. The most successful engagements we have seen include a combination of collaboration, accountability, and access to tools and resources required for an efficient and controlled operation.

NASPP: What is the silver lining to your topic?

Aaron:  The global landscape is not all doom and gloom, but it can be intimidating. The silver lining to our topic is arguably that equity compensation is becoming more complex and prevalent. While this creates new challenges for stock plan professionals every day, it also makes it more and more visible beyond the industry. This attention to it is making it easier to get the help and backing needed to tackle it all. This can be managed, and we see companies do it all the time.

NASPP: What is something people don’t know about you?

Aaron: Most people don’t know that I originally worked at ski resorts to get through aviation school. However, after I saw the exciting world of equity compensation, I quickly left all that behind for a more fun career in stock plan administration.

Don’t miss Aaron’s session, “Globe Trotting, Equity Compensation Style!,” at the NASPP Conference!

About the NASPP Conference

The 24th Annual NASPP Conference will be held from October 24-27 in Houston. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!

Tags: ,

August 15, 2016

NASPP Chapter Meetings

Here’s what’s happening at your local NASPP chapter this week:

Salt Lake City: Nathan O’Connor and Daniel Hunninghake of Equity Methods present “Current Trends in Stock Compensation: What to Expect in 2017.” (Wednesday, August 17, 12:00 p.m.)

Silicon Valley: Mike Andresino of Posternak Blankstein & Lund, Christine Cognetti McCasland of Morgan Stanley and Melanie Vinson of Workday present “10b5-1 Trading Plans: Recent Survey Results.” (Wednesday, August 17, 12:00 p.m.)

Carolinas: Mark Rosen and Matt Depp of Pearl Meyer present “Trends in Executive Compensation and Long-term Incentive Plan Design.” (Thursday, August 18, 11:30 a.m.)

Denver: Morgan Stanley presents the results of the 2015 Morgan Stanley /Shearman & Sterling 10b5-1 Practices Survey. (Thursday, August 18, 12:00 p.m.)

Kansas/Missouri: WEBINAR ALERT! Please join PwC for the latest global developments affecting us in the equity compensation space, including Brexit. (Thursday, August 18, 9:00 a.m. CT)

New York/New Jersey: WEBINAR ALERT! Please join PwC for the latest global developments affecting us in the equity compensation space, including Brexit. (Thursday, August 18, 10:00 a.m. ET)

San Francisco: Lunch and two presentations! First, Andrea Kagan of Solium Global Compliance Team will break down the black box of regulatory compliance to four key areas—securities law, exchange control regulations, data protection and employment law. Then, John Wolff of GuideSpark  will hold an interactive discussion about communication strategies to better educate your employees about equity compensation. (Thursday, August 18 11:30 a.m.)

Tags:

August 11, 2016

2017 ISS Policy Survey

Every year, ISS conducts a survey in advance of updating its corporate governance policy. The survey is open not only to ISS clients and institutional investors but also to entities that are often the subject of ISS recommendations, including both companies and corporate directors, as well as other market participants, such as those that advise companies. There are a couple of questions in this year’s survey that caught my eye.

Frequency of Say-on-Pay Votes

Although most companies currently hold Say-on-Pay votes every year, the SEC’s final regulations allow these votes to be held every one, two, or three years, at the election of shareholders. The “Say-on-Pay frequency vote” must be held at least once every six years.  In 2017, for the first time since Say-on-Pay went into effect, most companies will once again give shareholders an opportunity to vote on how often their Say-on-Pay vote should be held.

In anticipation of this, ISS has included a couple of questions on the frequency of Say-on-Pay votes in this year’s survey. Currently, ISS’s policy recommends an annual Say-on-Pay vote. The survey contemplates a different recommendation, possibly one that is dependent on company circumstances, such as company size, performance, problematic pay practices, and/or past Say-on-Pay vote results.


 

P4P Analysis

As part of its evaluation of CEO pay, ISS performs a “Pay-for-Performance Evaluation.” This consists of a quantitative analysis in which the company’s TSR performance is compared to the CEO’s pay and both metrics are ranked against the company’s peers.  If the company performs poorly in the quantitative analysis, the next step is a qualitative analysis, in which ISS looks at the company’s specific pay practices.

The survey focuses on the quantitative analysis, asking if this analysis should be based on other metrics, in addition to TSR, and, if yes, what other metrics should be included.

In the past decade, we’ve seen a significant increase in the use of TSR targets in performance awards.  In the NASPP/Deloitte Consulting 2013 Domestic Stock Plan Design Survey, use of TSR had increased to 43% of respondents, up 48% from the 2010 survey. I expect usage will be even higher in this year’s survey—possibly nearing or exceeding 50% of respondents. No other metric comes close, in terms of prevalence.

But, TSR is not without its critics. For example, see the article we just posted by Brett Herand of Pearl Meyer, “Re-Evaluating Total Shareholder Return as an Incentive.” It is interesting to see that the TSR backlash has reached enough of crescendo that ISS is considering changing its policy.


 

Survey Closes August 30

If you want to participate in ISS’s survey, you don’t have much time.  The survey closes on August 30.

– Barbara

Tags: , , ,

August 10, 2016

NASPP To Do List

Conference Hotel Is Filling Up
Don’t wait any longer to register for the 24th Annual NASPP Conference—the Conference hotel is quickly filling up. Register today while rooms are still available.

Equity Expert Podcast: Balancing Expense with Perceived Value
Check out our latest Equity Expert Podcast featuring Dan Kapinos of Aon Hewitt and Mike Palermo of Fidelity on making your equity awards as efficient as possible when it comes to plan cost and incenting employees. A few of their suggestions:

  • Using a more nuanced version of the Black-Scholes model
  • Not paying dividends on unvested awards
  • Post-vesting holding periods
  • Payout caps on performance awards

Listen to the podcast to learn more about these suggestions and hear Dan and Mike’s other ideas.

Re-Evaluating TSR
The article “Re-Evaluating Total Shareholder Return as an Incentive,” by Brett Herand of Pearl Meyer (originally published in workspan) takes another look at the use of relative TSR as a performance metric for equity awards. Herand discusses recent research demonstrating weaknesses in the effectiveness of TSR as an incentive.  He notes:

By shifting from an rTSR plan to a plan based on financial and/or operational performance, telling employees that they will be given additional control over their own compensation destiny, as opposed to being overly exposed to market vagaries, can be powerful.

NASPP To Do List
Here’s your NASPP To Do List for the week:

Tags:

August 9, 2016

Our Company Is In Play: What To Do Before and After The Transaction

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 24th Annual NASPP Conference, is great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature Alan Nadel of Strategic Apex Group LLC, who will lead the session “Our Company Is In Play: What To Do Before and After The Transaction

Here is what Alan had to say:

NASPP: What is the most critical thing NASPP Conference attendees need to know about your topic?

Alan: Corporate events, such as a merger with or acquisition of another company, occur frequently.  Whether a company is on the buy or sell side, there are a number of issues affecting equity compensation plans that must be addressed.  Most of these issues require decisions and actions that must be made prior to the occurrence of the transaction.  Similar events, such as a spin-off or intial public offering, also impact equity compensation and require timely action.

NASPP: What is one best practice companies should implement?

Alan: Corporate folks who work with equity compensation should be brought into the loop as soon as possible. The legal and finance teams are usually the lead people and thus are involved from the beginning.  Executive compensation and equity plans often play a big role in many transactions because of the public attention they draw as well as the financial impact on shareholders and the metrics of the deal.  For these reasons, it is important to get HR and the equity compensation director on board sooner rather than later.

NASPP: What is the silver lining to your topic?

Alan:  Our presentation covers a broad array of equity pay issues that arise during a corporate event and that require appropriate planning and action.  Oftentimes, not all of these issues are properly addressed in a timely fashion, which may result in unhappy employees, unanticipated costs, legal liability and even lawsuits.  Our session will help participants identify the issues they should thinking about in various situations.  Our focus will be more about the actions they should taking rather than a detailed analysis of the technical issues.

NASPP: What is something people don’t know about you?

Alan: I grew up in Cleveland and attended John Carroll University, a Jesuit college.  That might seem strange because we were Orthodox Jews, but the Jesuits provide a great education and the school was only a few blocks from my home.  I am probably the only guy who worked his way through a Jesuit college giving Bar Mitzvah lessons.

Don’t miss Alan’s session, “Our Company Is In Play: What To Do Before and After The Transaction,” at the NASPP Conference!

About the NASPP Conference

The 24th Annual NASPP Conference will be held from October 24-27 in Houston. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!

Tags: ,