The NASPP Blog

Monthly Archives: November 2009

November 24, 2009

Anapestic Ballad for 83(b)

Since it’s a holiday week, I thought I’d do something a little lighter with the blog. Today I’m featuring a poem by John Hammond of Computershare (and poet laureate of the NASPP blog).

There won’t be a blog on Thursday, since it’s Thanksgiving and I hope you all will be spending time with your friends and families, giving thanks, doing whatever you do to celebrate national holidays, and not reading blogs about stock compensation.

Anapestic Ballad for 83(b)
By John Hammond

         “We don’t allow the use of 83(b)”
You don’t?
         No, we don’t
But how can that be?
It’s tax code my friend, it’s a natural thing
It’s the essence of harmony – it’s the I Ching
Messing with tax? It’s like building a dam
to steal all the water – then flooding your land
The consequences are never as you intended
Just wait ’til it’s the CEO you’ve offended
And what would you do if a person – just one
You the tax police now with your little tax gun?
And he blinked his eyes slowly with a slight roll toward the back
To begin his retort of my little attack
         It’s all in our plan… it’s as we intended
         To change it would require it to be amended…
I certainly won’t argue what’s in your plans
Your plans are your plans and that’s just how it stands
But I am curious to know all the whys and the whats
More than one plan design has been done by a yutz
         We don’t believe in them
You don’t believe?
It ain’t Santa Claus and this ain’t Christmas Eve
The 83(b) has been a wonderful code
For those who have used it – sure, you have to be bold
My favorite use was with AMT
When companies use to grant ISOs… before one twenty three
It took an early exercise on repurchaseable shares
And the AMT gods had to sit back and stare 
         and say “Well done!”
Well Done!? Perfect, I say!
I have accelerated nothing, so nothing I’ll pay
There has to be more…more than “I don’t believe”
To abolish the code of 83(b)
         Our vendor can’t handle the process today
         We would track offline ’til systems were changed
         It’s not worth the risk or the mess or the fuss
         To handle the manual process of this stuff
Have you considered RSUs an alternative way
Versus saying you don’t and walking away
With an RSU you could say, “we would, but cannot
There is no transfer ‘cos property it’s not”
It may just be diction… but diction’s a lot
         We’ll consider your advice when we make our next plan
         But it won’t change the past and it won’t change those grants
         Which at our burn rate, will be 2010
And I left my friend and I went on my way
And thought of the thoughts we had thought of that day
And I didn’t like it as friend or as foe
Or as tax code groupie – I’m weird… yeah, I know
In his shoes, I would have hoped I’d stood strong
‘Cos messin’ with tax code is really just wrong.

John Hammond is a VP of Sales with Computershare.

NASPP Conference Audio Now Available

If you weren’t able to attend the NASPP Conference–or if you attended but weren’t able to get to all the sessions you were interested in–the recorded Conference audio is now available.  You can purchase just the session(s) you are interested in, save by purchasing a five-session package, or save even more by purchasing the audio for the entire Conference.  Purchase the audio today!

Conference attendees can access the full Conference materials, including any last-minute updates, as well as the audio for the 6th Annual Executive Compensation Conference at the NASPP Conference Materials Website.   

NASPP Quick Survey on Tax Reporting and Collection Procedures

Don’t forget to complete the NASPP’s most recent quick survey on tax reporting and collection procedures.  The survey has less than ten questions; you can complete it in less than five minutes!

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 

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November 19, 2009

Top Shortcuts for Word 2007

A couple weeks ago, I shared my top tips for using Excel. I thought I’d follow up with my favorite shortcut tips for Word. These will help you save not only time, but also your wrists by minimizing the use of the mouse. These tips are for Microsoft Word 2007, which is merely a reflection of my own experience (not an endorsement).

Add hotkeys to your Quick Access Toolbar

The Quick Access Toolbar is below the tabbed ribbon at the top of your Word document. You can stick with the basics like print, save, and save-as, or really personalize it with buttons that you use most often. Even if the command you use the most is something that already exists on the ribbon, you can add it to your Quick Access Toolbar and eliminate the need to go find the command. You can find new commands to add to your toolbar by either activating the drop-down menu or by right-clicking on the command within the ribbon and selecting “Add to Quick Access Toolbar.”

Toolbar tip: One thing that frustrated me when I first started using Word is that the “Save As” command icon is not listed under “Popular Commands” in the add menu. You can expand the selectable icons to include all available commands, which is where I found the “Save As” icon.

Alternate (Alt)

To find all the keyboard shortcuts used in combination with Alt, including those that you’ve added to your own toolbar, just hit the Alt key once. All the Alt commands will show up for you. The commands you’ve added to your toolbar will be in numerical order from left to right, starting with Alt-1 assigned to your first icon. You can use this as a quick reference to help you remember the keyboard shortcuts without searching through the help menu. Don’t worry–if you are one of those mad shortcutters who memorized your favorite commands in Word 2003, you can still use the old commands. The only difference is that Word asks you if you are sure you want to continue using the old keyboard shortcuts.

Alt+ tip: Alt+numbers from your number pad (not the numbers above the letters) will insert symbols. Ever want to get the section symbol (§) used in regulations? Alt+0167 will get that for you. (Thanks to Elizabeth Dodge!)

Control (Ctrl)

To see any command that requires a combination with the Control key, hold your curser over the command icon in the ribbon or your toolbar. If there is a Control key shortcut for that command, it will show up in the pop-up window.

Cntl+ tip(s): Ok – I couldn’t pick just one. These are my top five of the lesser known formatting shortcuts using the Cntl key.

  1. You all know Cntl+C is “copy” and Cntl+V is “paste”…well Cntl+Shift+C copies just the formatting, while Cntl+Shift+V pastes it (determines what section of your text you want to format).
  2. Cntl+Enter inserts a page break into your document.
  3. Cntl+Z undos an action, while Cntl+Y redoes an action.
  4. Cntl+1 over a highlighted area changes the area to single line spacing (on that note, Cntl+2 creates double line spacing and Cntl+5 creates 1.5 line spacing). Want to add or remove one line spacing before your paragraph? Cntl+0 does that.
  5. Cntl+M creates a first-line indent for your paragraph. Removing that same indent can be done with Cntl+Shift+M.

Want more help with Word? Our Document Library hosts a handy Shortcut List and Mail Merge Guide from Stock & Option Solutions.


November 17, 2009

Final Regs on 6039 and 423

The IRS issued final regs on Sections 6039 and 423 yesterday, just in time for year-end.

NASPP Conference Impetus for Release of Final Regs
Helen Morrison from Treasury discussed both sets of regs in detail at this year’s NASPP Conference, during the session “The IRS and Treasury Speak: Hot Tax Topics and Updates” on Wednesday, November 11. She also mentioned that she pushed to have the regs released in time for our Conference, since she knew they are of high interest to our attendees. Had it not been for the Veterans’ Day holiday (yes, we scheduled the IRS and Treasury speakers to present on a government holiday–oops, sorry about that Helen and Stephen), the final regs might have premiered at the Conference (we could have had a “premier” party, with a red carpet and tax paparazzi). If you are interested in listening to Helen’s comments, we recorded the session and you can purchase the audio in MP3 format.

The NASPP has been following both sets of regs closely; we met with staff from the IRS and Treasury at last year’s Conference to offer input on them and I spent countless hours drafting our rather lengthy comment letters. I’m pleased to see that our efforts were not for naught; a number of our suggestions were incorporated into the final regs.

Section 6039: Yet Another Reprieve

Perhaps the best news of the day was that companies will not be required to file Section 6039 returns for transactions occurring in 2009. This means you have until early 2011–a whole extra year–to prepare for filing the returns. For electronic filers, which will be most of you (see my blog “Electronic Filing of Section 6039 Returns“), the first round of returns won’t be due until March 31, 2011.

Note, however, that you do still have to provide information statements to employees for transactions occurring in 2009.

ESPPs and Section 6039

The regs also clarify which transactions trigger the 6039 reporting requirements for ESPPs, a matter of ongoing confusion for many years. Under the regs, the triggering event is, for most practical purposes, the purchase date. This aligns the treatment of ISOs and ESPPs and should make 6039 compliance quite a bit easier in the long term.

Liberal Take on the $25K Limit

The final regs on Section 423 completely reverse the position the proposed regs took on the $25,000 limit, codifying the more liberal interpretation that allows employees to purchase $25,000 worth of stock for each calendar year under an offering, regardless of whether purchases are permitted during that year. This will surely come as a relief to companies in Silicon Valley, which have relied on this interpretation for decades.

Non-US Employees

On a less happy note, the final regs don’t provide all the flexibility we were hoping for in terms of excluding non-US employees from ESPPs. Some additional flexibility is provided, but not enough.

Grant Date Under Section 423

I think the biggest “gotcha” under the final regs are the requirements relating to grant date. For the beginning of the offering to be considered the grant date, the maximum number of shares that employees can purchase must be established at the start of the offering–the $25,000 limit is not sufficient for this purpose, the plan must include another limit. The regs are effective for offerings beginning after January 1, 2010, so companies with plans that don’t have these limits may have only a short time to amend their plans.

Where there is no additional limit on purchase, the purchase date will be considered the grant date. This impacts more than just the statutory holding period for preferential tax treatment: it also impacts the minimum required purchase price and the $25,000 limitation.

More Information

See the following NASPP alerts for more information:

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 

November 13, 2009

More Scenes from the NASPP Conference

What a fantastic Conference! It’s hard to believe that the week went by so quickly.

I was really impressed with the content in each of the sessions I was able to attend, and I wished I could have been in several places at once. I will absolutely be listening to the recorded sessions to catch up on what I missed! Don’t forget, this isn’t a special privilege for NASPP employees only–this year you can opt to purchase all the audio or just your top sessions and listen in at your own computer. Since the session audio is in MP3 format this year, you could even download it to your iPod and listen on the way to work!

I’d like to share some highlights with you (Click each thumbnail to see a full-size version of the picture.)…


Conference participation was so high that every session was well-attended. Some were even “standing-room” only even after we added repeat session times for them. This is the “You Really Asked for It! Hot Topics From the NASPP’s “Global Stock Plans Q&A Discussion Forum” session.




One of the best perks of attending the Conference is the opportunity to ask the expert speakers questions after their session. These attendees are talking to the panelist from the “IFRS–A Lesson in Implementation” session.






Our Exhibitor Hall was full of the top service providers for all facets of equity compensation. It is the perfect chance to meet with them and find out more about the services they offer or even get a demo of the latest software developments. And, everyone loves to collect the really cool tchotchkes that are available! These fabulous wine bottle bags (perfect for a visit to San Francisco) from Morgan Stanley Smith Barney.




PICT0008.JPGThe fun never stops in the Exhibitor Hall! With special drawings, competitions, and prizes, there’s always something fun to see. This is the Relative TSR pig race at the Radford/Aon booth. Ten extra points to anyone who can name the movie or TV show that each of the companies represented by these little racers can be found on. To save your eyes, I’ll list them for you: Initech (green), Duke & Duke (red), Vandelay Industries (blue), Acme (purple), and Duff Beer (pink). What’s the relevance of a relative TSR pig race, you ask? Well, join us on our webcast planned for next March, “A Closer Look at Leading-Edge Performance-Based Plans.”



img077.jpgAnd, speaking of fun, the after-hours events offer attendees the chance to network while enjoying fantastic food and fun. Deloitte treated clients to an evening of cabaret and great food at Teatro ZinZanni. Here Mark “Boris” Miller of Deloitte Tax participates in the show by acting the part of a Russian waiter. Mark gave one of the best presentations we’ve seen on recharge arrangements at a recent NASPP chapter meeting, but we never knew he was “charged” with such great acting skills.


 It was great to see everyone who was able to attend this year–I’m already looking forward to next year!



November 10, 2009

Scenes from the NASPP Conference

I’m blogging live from the “17th Annual NASPP Conference,” which is a huge success. We have a lot of people here in San Francisco this year and a lot of great speakers and sessions. Today is the first day of the Conference, so I thought I would share some scenes from the pre-Conference programs and last night’s opening reception with my readers.

The Conference started off this morning with a keynote presentation that included an address by J. Mark Iwry, who is the Senior Advisor to US Treasury Secretary and Deputy Assistant Secretary. We all know that executive compensation is a key focus of Treasury right now (for example, see Rachel’s blog from last week on “Everybody Loves Equity“). I was excited to hear Mr. Iwry announce that Treasury staffers are attending the nationwide live vide webcast of CompensationStandards’ “6th Annual Executive Compensation Conference.”

I’m also impressed by the sheer heft of the Conference books.  We asked speakers to submit more substantive materials this year and they really came through for us. The books are 1,200 pages and filled with articles, memos, checklists, sample documents, and other great resources.

Here are a few pictures so you can see all the excitement.  (Click each thumbnail to see a full-size version of the picture.)

Bruce and Emily.jpg

Bruce Brumberg of and Emily Cervino of the CEP Institute presented a rousing session on plan design at the “Restricted Stock Essentials” program.  I know you’re wondering just how rousing plan design for restricted stock can really be, but I think you’d be surprised if you saw their presentation.



Mark and Keith.jpg Mark Borges of Compensia and Keith Higgins of Ropes & Gray present during CompensationStandards “4th Annual Proxy Disclosure Conference.”  The Conference was videocast live nationwide in addition to the presentation here in San Francisco.



Control room.jpgMission control for the nationwide live video webcast.  It’s pretty complicated to videocast presentations live via the internet.





Computershare sponsored the Conference registration area.  They handed out packages of Integral OTC, a new drug that is an all-purpose remedy for equity ailments (and, amazingly, tastes like chewing gum) and had a medical theme to their booth, complete with all their staff in scrubs and white coats.






Baker & McKenzie went with an Alcatraz theme, with all of their staff in t-shirts that read “Avoid the Island” and hand-cuffs (luckily with keys) as giveaways.




Look for more scenes from the NASPP Conference in the next blog entry.  If you aren’t here live, you can still get in on the great content and presentations by purchasing the Conference audio and materials.

– Barbara 

November 5, 2009

Everybody Loves Equity


On October 22nd, the Treasury’s Special Master for TARP Executive Compensation announced his determinations on the compensation packages of the executive officers and most highly paid employees at the seven companies under his review. Some of the changes that he requires of these companies are surprisingly significant.

Aligning with Shareholder Interests

We’ve seen a real push recently to encourage companies to structure compensation, for executives in particular, in a way that better protects shareholder interests. Government initiatives include say on pay, compensation committee independence, and assessment of how compensation programs may lead to excessive risk-taking. What truly stands out about these determinations is that when the government is given the opportunity to directly influence compensation structure, it has turned to equity compensation as the solution.

Cash is not King

The Special Master’s rulings drastically reduced the cash compensation received by the most highly paid individuals at the companies under his review. For AIG, Bank of America, and General Motors, cash compensation was reduced by more than 90%! In lieu of cash, these employees will receive vested stock that comes with very specific holding requirements intended to ensure repayment of TARP funds and continued financial stability for these companies. These percentages are so high because cash compensation is capped at $500,000 for most of the relevant employees.

Performance and Holding Requirements

In addition to this major shift from cash to equity in base salary, the Special Master’s determinations also impose a pretty specific structure for incentive compensation. He looks to performance-based restricted stock with minimum vesting periods as well as holding requirements on the vested stock. This two-pronged approach is designed to encourage specific outcomes in company performance as well as adjust the focus of top employees from short-term gain to long-term growth.

The Big Picture

Companies will be taking a look at how the Treasury has dealt with executive compensation at these seven companies and trying to decide what that means to them directly. What these determinations do is give us a window into exactly what the Treasury feels is a compensation structure that aligns executives with shareholder interest and discourages excessive risk-taking for short-term gain. Other companies will want to keep that in mind as they review their own executive compensation structures.

For the Equity Compensation Professional

These determinations mean that more companies will be reviewing their own compensation practices. The savvy stock plan administrator will be looking for a way to at least be a part of the conversation so that the grants come out of any new compensation structure can be managed without exposing the company to additional risk due to excessively complex features. Get some guidance on how to do this at our NASPP Conference Session, Wagging the Dog: Stock Plan Administrator Meets Compensation Consultant. Since it’s pretty clear that restricted stock, performance-based vesting, and some way to encourage top employees to hold onto their company stock as a long-term investment are looked upon as favorable practices, stock plan managers will want to reach out and learn as much as they can about administering plans with these features.

Only 4 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.


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November 3, 2009

Frederic W. Cook’s 2009 Top 250 Report

Frederic W. Cook & Co. recently issued The 2009 Top 250 Report, on long-term incentive grant practices currently in place for executives of the 250 largest U.S. companies in the Standard & Poor’s 500 Index. Here is a quick summary of what I found most interesting in the report.

Nothing Very Newsworthy for Stock Options or Restricted Stock

Stock options continue to be the predominant form of incentive compensation used by the companies surveyed; however, stock option usage has declined gradually each year since 2003. For example, from 2006 to 2009, stock option usage declined by 10% (from 88% to 77%).

Restricted stock continues to be another leading form of long term equity compensation with (57%) of companies issuing or beginning to issue restricted stock last year.

Most Interesting Trends are in Performance Awards

• Performance shares increased slightly in usage by survey respondents (63%, up from 60%).
• The use of performance units (cash or stock-settled) has been stagnant, and the survey indicates that up to ten companies have or will be eliminating performance units from their compensation programs. (I wonder why? This is disappointing to read.)
• The majority of companies surveyed (57%) use a profit metric, such as EPS or net income, as the basis for their performance award payout. Total shareholder return came in a distant second (35%).
• Half of the survey respondents indicated that they use only one performance measure and the majority of the remaining respondents indicated that they use two performance metrics to determine their award payout.
• Most survey respondents (72%) are using a three-year performance period.
• Over half of the survey respondents (52%) set a maximum payout level under their plan at 200% of target. The other half of respondents are evenly split between payouts ranging from 100 to 150% and 250% and beyond.

The takeaway I got from this survey is that the gap between the use of performance award programs and the use of stock options as a long term incentive is narrowing, and odds are that this trend will continue.

Only 6 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.