The NASPP Blog

Monthly Archives: October 2009

October 29, 2009

Top Five Tips for Using Excel

In an ideal world, stock plan managers would have so much automation that they would rarely, if ever, need to use Excel. The reality is that Excel is probably an essential part of everyday life for most stock plan management teams. If you haven’t already, it’s a great idea to take a course in Excel. Excel is an amazing tool, and has a lot more functionality than most of us will ever know. I find it especially helpful when other users share with me their favorite tips and which functions they are using regularly. In that spirit, here are my top five tips for using Excel:

Tip #1: When writing a complex formula, write each function separately first before combining them.

Often, the function that will bring you the results you are looking for in Excel isn’t one function at all; it’s several combined together. When you are writing a complex formula with multiple functions, keeping track of where you are (especially making sure you have the right number of parentheses) can get confusing. In order to make sure that the result you are getting is based on the correct formula assumptions, or to avoid an error that may be difficult to pick apart, build your formula piece by piece the first time. Put each function within the formula in a different field and check that it returns the correct result. Then, combine them and confirm that your combined formula brings back the same result before you populate the rest of the fields where that formula will be used.

Tip #2: Reference the entire column when using functions like Vlookup.

One of the steps in creating a Vlookup function is to indicate where the function should look to find the results you want populated in the function field. If you highlight just the area you want the formula to search in and then copy that formula down the entire column, you run the risk of it returning an error message after a certain point because Excel will automatically move the search area down as well. By far the quickest and easiest way to keep this from happening is to simply build your formula so that it searches the entire column (or columns) that contain the data set you want to search in. Not only does this eliminate the problem of moving search areas, it is also much faster to highlight an entire column than to highlight just the area you are looking for!

Tip #3: When you are working with a lot of data, remove the actual formula from your worksheets.

When you use a function in Excel, it doesn’t just store the results of that function; it stores the function process. If you need to reference a field that has a formula in it, then Excel must recalculate the original function and your new function simultaneously. This isn’t a big deal until you are working with a spreadsheet that has a lot of data. Excel will let you know that there is “too much” data by freezing up. To avoid this, remove the actual formula from the fields by copying the column and pasting back just the values. You do not want to lose that formula, so create a row above your data rows and copy in just the formula by itself. That way, you can go back and check the accuracy of the formula or update it if you need to.

Tip #4: Color-code any fields that should have formulas in them.

I know it sounds very low-tech, but keeping track of which fields in your worksheets are intended to be data points and which are the result of a formula is an essential part of auditing your work. The simple way to do this is to use a specific color to highlight any fields where the data is the result of a formula. If you are removing the formula (see tip #3), this will alert you to the fact that the data in those fields is not a part of the original data, but rather from a formula that you created. The color-coding is also very helpful if another person is checking the accuracy of the spreadsheet (which is always a good idea, no matter how skilled you are in Excel).

Tip #5: Use the Compare and Merge Worksheets feature to find data that has changed between two versions of the same report.

If you have run the same report from your stock plan database at different times and come up with different results, it can be a daunting task to find the exact pieces of data that have changed or been deleted. One particularly clever way to find the changes is to use the Compare and Merge Worksheets feature. In Excel 2007, you may need to add this feature to your quick access toolbar. This feature is intended to compare different versions of a shared worksheet, so you will need to make sure that the two reports are saved with the same exact name and are marked as “being shared”. The first step to merging the two reports is to compare them and contrast their differences. You can use this step to find all your data points that have changed.

Only 11 days until the 17th Annual NASPP Conference!
The Conference is sold out, but you can still sign up for the live nationwide video webcasts of the 4th Annual Proxy Disclosure Conference and the 6th Annual Executive Compensation Conference–you get both webcasts for the price of one. 

You can hear any–and all–of the NASPP Conference sessions by purchasing the downloadable audio.  Purchase just the sessions you want or save by purchasing one of the package deals.

Registration is also still open for the Restricted Stock Essentials.


October 27, 2009

No Change in Social Security Wage Base

Social Security Wage Base for 2010
You have one less “to do” item on your checklist of year-end procedures: no need to update the Social Security wage base for next year because the limit will remain the same in 2010. See the NASPP’s alert for more information and a link to the Social Security Administration press release.

BTW–keep an eye on the NASPP’s Year-End Procedures Portal for end of the year tax updates and other year-end items.

Tax Planning for the Rest of 2009
Tax rates are expected to increase in the next year or so, including possibly even elimination of the wage cap on Social Security.  In light of this, the recent issue of The Corporate Executive, with assistance from Mike Melbinger of Winston & Strawn, offers a few suggestions on actions companies and employees might want to take now–before tax rates increase–with respect to stock compensation:

  • Exercise non-qualified stock options–for employees that aren’t ready to sell, net exercise would be a great alternative.
  • File Section 83(b) elections for any new restricted stock grants.
  • Accelerate vesting of restricted stock/units so that taxation occurs now, while tax rates are still low.

The article also discusses tax planning opportunities for non-qualified deferred compensation plans, including split-dollar life insurance, use of secular trusts, and Roth IRAs and 401(k) plans. It’s definitely worth a read if you haven’t thought about the planning considerations here.

Only 13 days until the 17th Annual NASPP Conference!
The Conference is sold out, but you can still hear any–and all–of the Conference sessions by purchasing the downloadable audio.  Purchase just the sessions you want or save by purchasing one of the package deals.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara 

October 22, 2009

Sneak Preview! Top Five Ways to Encourage ESPP Participation

As you know, this year’s NASPP Conference is completely sold out! It’s a first for the NASPP. Luckily, this year not only can you purchase the audio online with the course materials; you can even choose how much of the Conference you would like to receive! Of course you won’t want to miss out on any of the spectacular sessions we have for this year, but if your budget is limited, you can opt for a single-session or five-session package. If you order before the Conference, you will receive a 10% discount off the standard pricing!

Barbara Baksa, Robyn Shutak, and I will be hosting a timely session on encouraging ESPP participation in a down market. Now is the perfect time to get your employees excited about your company’s ESPP program! In the spirit of that, I’d like to offer you my top five ways you could be drumming up participation for your ESPP, but probably aren’t.

Tip #1: Put notices in employee paystubs.

This is a great way to reach all employees, especially those that do not spend time at a computer and won’t be able to access your more technology-driven approaches to ESPP communications. Congratulate those that are participating in the ESPP, announce your open enrollment, or distribute an FAQ.

Tip #2: Get managers involved in your enrollment campaign.

Circle the wagons and get all your managers on a unified message! Provide managers with talking points and require them to spend time with the employees on their team promoting your ESPP program.

Tip #3: Create employee focus groups to test new communications strategies.

Your ESPP campaign is a marketing campaign; why not treat it like one? As you brainstorm ideas, get focus groups of employees from different segments of your employee population together and run your ideas past them. This is especially helpful when trying to explain your ESPP to employees and offers you a perfect opportunity for feedback in a personal and dynamic setting.

Tip #4: Publish or record short interviews with ESPP participants.

You have employees who are excited about the ESPP, who understand it and value it. Let them tell their peers in their own words why they participate, how long they’ve held their stock from ESPP purchases, what they’ve done with their sale proceeds, or how the return from the ESPP compares to their other investments. Once you have enough interviews, put together a short advertisement with an inspiring soundtrack with a clip from each interview!

Tip #5: Get creative – Blog it!

I’m sure you know that we’re a fan of blogging here at the NASPP. Don’t be shy; you can get out there and blog, too! You can include questions you get from employees, participation increases you are excited about, announce when purchases are complete, and include quotes from happy participants.

Want more? This is just the tip of the iceberg on all we have in store for you at our session, Leveraging Your ESPP in a Down Market. We also have great supplemental materials for this session including a second slide deck on communicating your ESPP to your employees. I’m really excited to get my hands on the final Conference materials this year! Almost all of our sessions include supplemental information you can’t get anywhere else–like sample documents, extended outlines, additional slide decks, checklists, and articles. If you made the cut-off and you’ve already registered, I’ll see you in San Francisco!


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October 20, 2009

The Next Big Options Scandal….or Not

M&A Spring-loading: Scandal or Snore?
Last week, the Wall Street Journal ran a front-page story on what it believes may be the next big option scandal: companies granting options to executives in advance of business combinations (“Option Grants Draw Scrutiny,” October 12). The Journal reports on a study (presented at academic conferences but as yet unpublished) that analyzed more than 100 mergers and acquisitions in which target company CEOs received unscheduled stock options prior to the public announcement of the merger or acquisition, which proved to be very valuable to the CEOs once the deals closed. It’s also possible the grants may have avoided some 280(g) taxation, but I can’t quite figure that bit out because I’ve never really understood that section of the tax code (turns out that you can pass the CEP Level III exam without understanding 280(g)–or at least you could when I took the exam).

The Journal views this as similar to option backdating and there are certainly folks that agree with them. But others aren’t so sure. For one thing, it isn’t clear that spring-loading, i.e., granting options in advance of positive company announcements, is really illegal. Spring-loading is generally discouraged because it has the appearance of manipulation and it irks shareholders, who could later retaliate by withholding votes for directors or stock plans (or, once say-on-pay goes into effect, executive pay packages). And there may be fiduciary concerns but it isn’t clear that spring-loading constitutes fraud, a la backdating, or insider trading.

It also isn’t clear that these grants constitute poor corporate governance. The study assumes the deals would have closed even if the CEOs hadn’t received the grants and that, as a result, shareholders realized less on the mergers. But another theory holds that the grants might have been necessary to convince the executives to agree to the merger or acquisition, since, in most cases, execs are out of a job once their company is acquired.

How to Play Cricket
Last week I blogged about a cricket team in India that is considering granting stock options to its players. Ten points to Mike Albert of Fidelity (and president of the Boston NASPP chapter) for cobbling together a 98-word explanation of cricket (with a little help from Wikipedia):

A cricket match is played on a cricket field at the center of which is a pitch. The match is contested between two teams of eleven players each. One team bats, trying to score as many runs as possible without being dismissed (“out”) while the other team bowls and fields, trying to dismiss the other team’s batsmen and limit the runs being scored. When the batting team has used all its available overs or has no remaining batsmen, the roles become reversed and it is now the fielding team’s turn to bat and try to outscore the opposition.

Hmmm, I’m still not sure I understand it. I think I’ll stick with baseball.

NASPP Conference is Sold Out!
While other conferences are struggling for attendees, the NASPP Conference is sold out. I think this may be the first time in our 17-year history that we’ve had to cut off registration. If you wanted to attend but haven’t registered yet, it’s too late to attend live in San Francisco but you can still purchase the Conference audio. Purchase just the sessions you want or save by purchasing one of the package deals.

For our service provider members, if you were thinking of skipping the NASPP Conference this year, you might want to rethink that decision. We’re going to have a big crowd in San Francisco. If business has been down lately, this is a great chance to promote your services. Companies that have money to spend on attending our Conference probably also have money to spend on products and services. Contact us at for more information about exhibiting or sponsoring.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara

October 15, 2009

New on the NASPP Site

We have a lot of great new content on our NASPP site! I want to take the opportunity this week to let you know about some of the new features.

First, we have a new Quick Survey out on Global Stock Plans. Don’t forget to take a moment and complete this survey! It’s your opportunity to find out how other companies are dealing with some of the more difficult issues with global stock plans.

New Portals:

The NASPP portals provide a way to find consolidated information on the issues that matter most in stock plan management. Today, we have 26 portals listed; expect to see more in the future! You can access the NASPP portals from the list on the lower left side of the homepage, or through the drop-down menu on the navigation bar at the top of the site. The newest additions to our list of portals are:

Incentive Stock Options: Need a quick reference on the grant requirements for ISOs? Want to find the latest on Section 6039 Information Statements? The Incentive Stock Options portal not only has the comprehensive NASPP article on ISOs, it has final ISO regulations, articles, surveys, and sample documents.

Say on Pay: The Treasury, Congress, and the SEC have all proposed some form of say on pay requirements for companies. Our new Say on Pay Portal contains the proposed regulations along with memos and analysis on each. You can also find sample proxy statements from companies that have already taken steps to add a shareholder vote on compensation practices.

Surveys & Studies: I’m sure you all know that the NASPP publishes all Quick Survey, Stock Plan Design and Administration Survey, and Salary Survey results in the Surveys section of the Member Area drop-down menu on the navigation bar. But, did you know that we also have available comprehensive surveys and studies conducted by some of the best names in the industry? We’ve put them all together for you in our new Surveys & Studies portal. We’ve arranged this portal in a three-tab format so that you can find the study or survey you’re looking for by topic, year produced, or by the company publishing the information.

Updated Portals:

In addition to adding new portals, we’ve also gone back and reorganized some of our existing ones so that new developments and content are easier to find. Check out the updated 409A/Deferred Compensation portals and Executive Compensation Disclosures portal!

New content:

Our latest alerts on stock plan management practices, legislative and regulatory development, and global stock plans are always available on the NASPP homepage as well the corresponding portal. These are a few of the most recent additions:

New Practice Alerts

Relative TSR Plans: The Low-Hanging Fruit of Optimal Performance-Based Equity Design – Radford (9/09)
Relative TSR Plans: Valuation 101 – Radford (9/09)

New Legislative and Regulatory Development Alerts

FASB Launches New Accounting Standards Codification
Back-Dated Options Not Performance-Based Compensation Under Section 162(m)

New International Alerts

There have been a lot of changes in global stock plan management. Don’t get left behind; sign up to have the latest alerts from specific countries send directly to your e-mail. In the past month alone, we’ve posted multiple alerts on Australia, the European Union, Portugal, Ireland, India and China. Don’t forget that you can search our global stock plan alert archives by country.

We’re not done, yet! You won’t want to miss out on what we have in store for next year. Renew your NASPP membership for 2010. If you aren’t an NASPP member, take advantage of our special offer and join today!


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October 13, 2009

Cricket Players and Stock Options

I have a smorgasbord of stock-option tidbits for you this morning, including a tax withholding rate increase in CA, a directory of financial advisors for employees, and a cricket team that is considering granting stock options to its players.

Withholding Rate Increases in California
Effective November 1, the withholding rate applicable to stock options and bonuses will increase to 10.23% (from 9.3%). Restricted stock and units are also subject to this rate.

The increase is part of the 2009-2010 fiscal budget changes. Personal income tax rates have remained the same in CA, so this doesn’t change the amount of CA income tax employees have to pay on their stock options and awards, it merely increases the amount that is paid up front, at the time a transaction occurs (via withholding). If the extra withholding results in an overpayment, employees will be entitled to a refund when they file their CA tax returns.

See the CA Employment Development Department’s press release on the increase.

Thanks to Raul Fajardo of Qualcomm for bringing this to our attention.

Financial, Et. Al., Advice for Employees
We’ve all had to tell employees that they should discuss their stock compensation with a financial advisor and then been at a loss to tell them where to go to find one. Now is offering a solution–a specialized directory of financial, legal, and tax advisors with an expertise in stock compensation.

The directory is free for employees and executives and can be searched by region, fee structure, minimum portfolio, experience, and type of advice offered (legal, financial, or tax).

Stock Options Where You Least Expect Them
I get a daily Google alert on the phrase “stock options” (which sometimes yields some odd results, but that’s for another blog) that always includes several stories on companies granting stock options to their employees. I usually just skim over them, but one caught my eye recently: “Deccan Chargers indicates IPO, stock options.” The Deccan Chargers are a professional cricket team in India; apparently they are considering an IPO and, if they go through with it, they would offer stock options to their players. Cricket players and stock options, who would have guessed?

10 pts to anyone who can explain how the game of cricket is played in 100 words or less.

Quick Survey on Global Stock Plans
Take a moment to complete the NASPP’s quick survey on global stock plans. With less than ten questions, you can complete the survey in just five minutes!

NASPP Conference Workshop of the Week
This week’s workshop is “Bullseye! Ensuring Your Performance Plan is On Target.” This panel will explore the conflicting considerations that companies face when designing performance plans as well as highlight practical strategies for resolving challenges such as the CD&A requirement to disclose targets versus the desire to maintain confidentiality; maximizing tax deductions under Section 162(m) at the expense of committee discretion; and the yearning for simplicity in drafting, while still anticipating contingencies that can spoil the best laid plans.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara  

October 8, 2009

Are You Ready to Talk About Risk?

The writing is on the wall; risk management through effective compensation practices is a hot topic right now. Recent regulatory developments and government initiatives indicate that all pubic companies may eventually need to explain to shareholders and investors how their compensation practices help align employee performance with shareholder interests and safeguard the company against excessive risk. I’m not just talking about your executive compensation, either. Now is the perfect time to take another look at your company’s equity compensation practices and decide if they are motivating employees to take reasonable risks that will help your company grow without encouraging excessive risk-taking behavior.

Shareholder Bill of Rights Act of 2009

This Senate Bill, introduced on May 19th of this year, would require companies to create a board committee to oversee company risk management. Specifically, it calls for companies’ risk management committees to be independent of their audit committees. While this bill does not call for publication of risk management in compensation practices, it does put a focus on the importance of managing risk.

Treasury Department Press Release

On June 10th of this year, Treasury Secretary Tim Geithner made a statement outlining the measures the Treasury Department will be promoting to help create financial stability. Among the focal points in this press release are several statements about how companies should be dealing with risk management. First, the Treasury encourages all company compensation committees to not only conduct, but also publish risk assessment of pay packages. Additionally, it calls for companies to ensure that compensation is structured in a way that fixes an appropriate time horizon for risks. To do this, the Treasury asks that companies provide their risk managers with the “appropriate tools and authority to improve their effectiveness at managing the complex relationship between incentives and risk-taking.”

SEC Proposed Regulation

On July 1 of this year, the SEC submitted its proposal on changes to compensation disclosures. In particular, this proposal includes requiring companies to discuss how they are managing risk-taking through compensation practices. The proposal doesn’t necessarily require this discussion for all companies; it is only required if the risks may have a “material effect” on the company.

Get Involved!

This trend of focusing on risk management encompasses your company’s broader compensation practices. It is important for your company to review its compensation practices (especially in light of the current economic situation) and stock plan administrators should be getting involved in what this will mean for equity compensation.

When it comes to managing risk, the most obvious way to tackle the issue is through performance-based incentives. Effective performance grants are good for everyone, and the economic conditions have made it clear that a review of performance metrics is warranted. Make sure that your stock plan team is involved in conversations on how to improve your performance metrics; not only to help make them more effective, but also to make sure you will be ready to administer the grants when they are awarded.

One of the most important points to make about performance grants is the need for a well-balanced mix of performance goals. When awarding performance grants to your executives and other key employees, using just a single metric (like share price or revenue) puts too much emphasis on just one target and potentially increases inappropriate risk taking by key employees. A good mix includes both short-term and long-term goals so that strong performance must be met and maintained. Even better, including both internal and external goals helps promote behavior that not only meets your company’s internal targets, but also keeps it competitive in the marketplace. For ideas on how to create effective performance-based compensation, check out our Performance Plans Portal.

Another great way to encourage sustained growth and effective risk taking is to put a long-term focus of at least a portion of equity compensation for your key employees. This can be done by requiring key employees to maintain a meaningful position in your company’s stock. What we’ve seen recently that has shareholders (and employees) in an uproar are executives who can leave the company and cash-out on huge equity compensation packages, but leave behind a company that is poised to fail because of ineffective risk management on the part of those executives. Companies are dealing with this by establishing hold-through-retirement policies, ownership guidelines, and claw-back or forfeiture provisions. Be sure to check with your risk manager, compensation committee, or head of compensation to see if any of these strategies are in store for your company’s equity compensation program.

Stay Informed!

Don’t miss out on the Executive Compensation session, “The Consultants and Counsel Speak on Say-On-Pay and Plan Design; Risk Assessment & Pay; and Hold-Through-Retirement, Clawbacks, and Litigation Issues, at our annual Conference this year. This fantastic panel of compensation experts are ready to equip you with all the latest on executive compensation best practices and necessary actions. Additionally, the 6th Annual Executive Compensation Conference (which is included with your NASPP Conference registration) includes the session “Risk Assessment and Executive Pay.”

Don’t forget, if you are not able to attend in person, you can listen in from your desk. The NASPP keynote address and the full Executive Compensation Conference will both be available live, and the entire NASPP Conference will be available on video archive. Sign up now, and take advantage of the 10% discount on the audio archive!


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October 6, 2009

More on the 6039 and 423 regs

More from Ed and Ellie
Last week, I gave an update on the status of the proposed regulations for Sections 6039 and 423.  As promised, this week I have more on the proposed regs, from the presentation Ed Burmeister of Baker & McKenzie and Ellie Kehmeier of Deloitte Tax gave at the Silicon Valley NASPP September chapter meeting.

6039 Triggering Event for ESPPs

Ed thinks there is a reasonable chance that the final regs will define the triggering event for 6039 statements for shares purchased under an ESPP to be the date of purchase. Under the statute, the triggering event is the transfer of legal title of the shares acquired under the plan. If you’re confused by that language, you’re not alone. No one, including staffers at the IRS and Treasury, seems to really know what that means. We suggested in our comment letter (as did Baker & McKenzie in their comment letter) that it would be best for all concerned (employees, company, government) if the triggering event is the purchase.

$25,000 Limit

Probably the other most significant issue, at least for San Francisco Bay area companies, is the interpretation of the $25,000 limit in the proposed regs for Section 423, which is much more conservative than how that limit is typically applied by companies in this area. Ed also has hope that the final regs will be more liberal in this regard. 

If the regs do adopt the more conservative approach, the IRS isn’t expected to question the qualified status of past purchases where companies applied the more liberal approach.   

Other Relief in the Section 423 Regs

It does seem like the final regs may be a little more liberal in what they allow in terms of excluding non-U.S. employees from an ESPP, but probably not as liberal as what we asked for in our comment letter.

It doesn’t seem like there will be any relief on the requirement that the plan specify (by absolute number or by formula) a maximum number of shares that employees can purchase for the beginning of the offering/enrollment date to be considered the grant date. So if your plan doesn’t have this limit (or if the limit is discretionary and you haven’t been applying it), you should look at implementing it.

Stay Tuned

I am monitoring developments on these regs closely and will blog about them as soon as I hear anything. You can also be sure that I’ll be cornering Helen Morrison from Treasury and Stephen Tackney from the IRS during their session, “The IRS and Treasury Speak: Hot Tax Topics and Updates,” at the NASPP Conference, to see if I can get more information for our readers.

NASPP Conference Workshop of the Week
This week’s workshop is The Economic Meltdown–The Impact on Global Stock Plans. The economic meltdown has had a significant impact on global stock plans, from increased regulatory pressure to down-spiraling employee morale. Our panelists will discuss the global aspects of option exchange programs and reductions-in-force, tax challenges resulting from declining stock prices, stepped up enforcement efforts by regulators and repatriation of profits tax-free via stock options. Special attention will be given to ESPPs, including global impacts of share shortfalls and freefalling employee participation rates.

Renew Your NASPP Membership for 2010
If you’re the kind of organized, go-getter, non-procrastinator that likes to take care of these things early (or if you just want to get next year’s membership into this year’s budget), you can now renew your NASPP membership for 2010

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara 

October 1, 2009

Proposed Changes to Prospectus Directive

EU Prospectus Directive

The European Parliament published the Prospectus Directive in 2003; EU member states were required to implement it by July 1, 2005. The Prospectus Directive requires companies to publish a prospectus before making a public offer of non-transferable securities, unless the offer falls within an available exclusion or exemption. For example, offers of securities with an aggregate value that is less than €2,500,000 within a 12-month period may be excluded from coverage under the Prospectus Directive. Offers to fewer than 100 individuals in a member state, while still covered under the Prospectus Directive, may be exempt from the prospectus filing requirement. For a more details on potential exclusions and exemptions, see the European Union Guide posted to the NASPP Global Stock Plans Portal. There is also a partial exemption for offers made to employees by companies that are listed on a European Economic Area (EEA) market. For these offers, only a short statement containing the details of the offer must be provided to participants. The full Prospectus itself can be quite onerous and expensive to produce.

Short-Form Prospectus Regime

Earlier this year, the Committee of European Securities Regulators (CESR) introduced a short-form Prospectus that may be used for employee stock plan offers from companies whose shares are listed on a public market (not just those listed on an EEA market). The short-form Prospectus relieves some of the burden of reporting detailed financial information, but must still be approved (whereas the statement for EEA listed companies is not). You can find more details on the short-form Prospectus in this alert from Deloitte.

Consultation and Review of Prospectus Directive

The European Commission began a consultation process to review the Prospectus Directive this year (see this alert from Mayer Brown). This consultation was not only in response to feedback from stakeholders, but also part of a larger simplification program underway in the EU at this time. Of particular interest to U.S. companies in this consultation and review process is the possibility that companies with shares listed on a non-EEA market may qualify for the same partial exception to the Prospectus Directive as companies with shares listed in the EEA.

On September 24th, the European Commission submitted a proposal that confirms this position on companies with shares listed on non-EEA markets. This could be great news for listed U.S. companies that offer equity compensation to employees in the EU.

Some other changes that are in the proposal include uniformity for some definitions and applications of the Prospectus Directive, including clarification of the consideration of offers for the purposes of calculating the €2,5000,000 limit exclusion. Additionally, for companies that still find they have to file a Prospectus, some of the information required is expected to be simplified.

What to do Now?

Unfortunately, as exciting as this news is, the proposal by the European Commission is just the first stop for this regulatory change. Next, it heads to the European Parliament and the Council of Ministers for consideration. According to our latest alert on the subject from PricewaterhouseCoopers, it could be a couple of years before it is finalized. In the meantime, the short-form prospectus is still available.


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