The NASPP Blog

Monthly Archives: May 2012

May 31, 2012

Meet Our Members

The stock compensation industry has always felt like a large extended family to me. One of my favorite aspects of attending industry events is the networking – meeting new people and reconnecting with old friends. It seems like once you find stock compensation, you never leave; I rarely find a person who leaves stock compensation for something else. Here at the NASPP, we’ve seen our member family continue to grow over the years as well. That’s why I’m excited to spend today’s blog unveiling our newest NASPP feature: Meet Our Members.

Meet Our Members

Meet Our Members is a chance to get to know more about your industry peers, both professionally and personally. At any given time, there will be a “featured” member profile posted on our NASPP web site in a Q&A interview format. Past features will be available in the Meet our Members archive, so you can browse the profiles at any time. We’ve already posted several profiles to our site, so be sure to take a peek.

Who Do You Know Best?

In browsing through the profiles we’ve received thus far, I found out some really interesting tidbits about many of our members. Can you match the facts with the member?

1. Which member’s profile features him posing with statues during a trip to China to talk about SAFE filings?

2. Which member loves to vacation in Pismo Beach and would likely be working in a medical field if she hadn’t discovered stock compensation?

3. Which member loves the NASPP portals, enjoys waterskiing, and would have likely pursued a dental career if she wasn’t working in stock compensation?

4. Who plays the drums, loves to vacation in Maui, has been an NASPP member for 14 years, and loves the NASPP Advisor newsletter?

5. Can you guess which member loves to read books on American History and cooks? A clue: this member is also the Vice President of the Philadelphia Chapter of the NASPP.

Submit Your Profile

Over the next several months, we’ll be adding more profiles and growing this feature. In the meantime, we are looking for new profiles to add to our inaugural list of featured members. Submitting your profile takes just a few minutes – click here to get started. Note that we are limited in the number of profiles we can initially post, so new submissions will be accepted on a first come, first serve basis. We’re excited to showcase the fantastic membership of our organization.


1. Ken Scully (Facebook); 2. Sandy Hetrick (Guess?, Inc.); 3. Ingrid Freire (Genentech); 4. Brian Stovall (Fidelity); 5. John Hammond (AST Equity Plan Solutions)

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May 30, 2012

Half-Baked Laws and Deal Cubes

Since it is a holiday week, I have a couple of lighter topics for my blog entry.

Behind Every Half-Baked Law Is an Over-Sensationalized Cause
In his May 21 Compensation Blog entry on, Mike Melbinger of Winston & Strawn states “…nearly every bad law in the field is the result of Congressional or agency reaction (or overreaction) to some widely publicized occurrence.” To prove it, Mike created a game in which readers can match each half-baked law (Mike’s phrase) with its cause. So you can join in on the fun, I’ve reproduced it here. Match the law on the left with its cause on the right.

Law Cause
1. 280G A. Enron executives
2. 409A B. Change in control payments made to Bill Agee of Bendix in 1982
3. AMT C. 2007 World Financial Crisis (Wow, was it really that long ago? Shouldn’t my investments have recovered by now?)
4. Dodd-Frank Act D. Enron, Worldcom, Anderson
5. SOX E. Treasury Secretary Joseph Barr testifies that, in 1967, there were a total of 155 individuals with incomes over $200,000 who did not pay any federal income taxes; twenty of them were millionaires.

10 pts to anyone who gets all five right. Answers next week.

Deal Cube Wars
I’m not quite sure what a deal cube is–I guess it is some sort of souped-up paperweight given to lawyers to commemorate a deal they worked on–but that hasn’t stopped me from enjoying the Deal Cube Tournament that Broc Romanek is running in his blog on Check out the cubes (he’s gotten readers to send in pictures of over 130 of them) and vote for your favorites. Some of them are quite clever. Broc’s blog is available for both subscribers and nonsubscribers, so anyone can join in on the fun.

Don’t Miss Out: Conference Early-Bird Expires on Thursday
The early-bird rate for the 20th Annual NASPP Conference expires this Thursday.  You can see by the program that this is going our most informative Conferences ever.  You’re going to want to be there, so make sure you register by Thursday to save on your registration. 

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 we keep an ongoing “to do” list for you here in our blog. 

– Barbara 

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May 24, 2012

Two Plus Two Equals Four

Earlier this week, Barb blogged about her two cents on Facebook’s IPO. I know I’ve said it before, but I’ll say it again – it’s hard not to get caught up in the hype of a hugely anticipated IPO because we do stock compensation for a living. I feel like this is what it’s all about – we’re supposed to be excited about these things – this is the proof that all these dreams of riches from stock compensation can actually pay out. Of course, I do realize that Facebook’s IPO is sort of like winning the stock compensation lottery – this outcome can’t be replicated in every company, and we shouldn’t promote it like that. Yet, we can quietly relish all of the attention and focus on the rewards that stock compensation will generate for Facebook employees. So, in today’s blog, I add my $0.02 as well – bringing the total perspective on Facebook’s IPO to a whopping four cents this week.

Google Alert Overdrive

My Google alerts are brimming to the rim with Facebook references. I’m pretty sure that’s been the only topic of discussion this past week. It’s like everywhere I turn – the evening news, my inbox, the newspaper – it’s all Facebook references. Okay, so now I’m guilty of contributing to that, but we have to indulge a little, right? The nice part of receiving Google alerts is that I get snippets of a lot of different information. I wanted to share some of the interesting and fun tidbits that I encountered this week during the overload.

Test Your Knowledge

By now many of us have heard about some of the more “famous” IPO shareholders. Among them is the artist who painted the Facebook headquarters that was brought into the limelight earlier this year because he holds millions in stock options. Who else has won the Facebook lottery? Fast Company magazine had a piece last week, covering the list of “The Facebook IPO Players Club“. So, test your knowledge – who were some of the lesser publicized folks on that list? One is none other than Reid Hoffman, cofounder and Executive Chairman of LinkedIn. Apparently he recognized Facebook’s potential in the early days and is credited with introducing Mark Zuckerberg to Facebook’s first real investor. It’s said that he personally invested $40,000 in Facebook, earning him a rumored 0.5% stake. You can browse the full list for more details.

Senator Levin Gets Involved

What would a stock option windfall be without Senator Levin chiming in about the evils of the corresponding corporate tax deduction? For those who are wondering what I’m talking about, Barb has blogged about Senator Levin’s many efforts to repeal the corporate tax deduction that companies receive relative to stock options. Facebook’s IPO certainly did not escape Senator Levin’s watchful eye; in fact, in a statement from the Senate floor, he labeled Facebook as another example of why the “tax loophole” that allows companies to take stock related tax deductions should be closed. Will he ever give up? Not this week, and not this IPO.

Lawsuits Already? Really?

With so much hype around the IPO, the unfortunate thing is that there is room for failed expectations. As this blog goes to print, word is emerging that shareholders are already filing lawsuits. I won’t go into the publicized details (or speculative details) about why in today’s blog. I can’t help but think, though, about all those Facebook employees who still can’t touch their stock compensation for several months, and wonder how bumpy the ride to riches will be. Lock ups can certainly put a damper on the stock compensation windfall dream; we’ve seen it before – paper windfalls obliterated overnight by a declining stock price. Hopefully Facebook won’t face too much turmoil and it will only be a matter of time before employees convert their paper gains into reality. After all, we all love a good fairy tale and I, for one, would love to see a happy ending.


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May 22, 2012

My Two Cents on Facebook

Important Reminder
This is the last week to participate in the NASPP-PwC Global Equity Incentives Survey.  Issuers must participate to access the full survey results; you’re going to be sorry if you miss out.  You must complete the survey by May 25; I would not count on this date being extended.

My $.02 on Facebook
Facebook’s IPO is all over my Google alerts these days, so it feels like I ought to say something about it. Earlier this year, Jenn covered the painting contractor that was paid in Facebook stock and stands to make a bundle in the IPO (see “Tax Cuts and IPOs: Part II,” February 16, 2012). And he’s not the only one. Based on what I’ve been reading, many Facebook employees are going to do quite well–but not for another six months, when the lock-up ends.

Here are a few interesting tidbits about Facebook that I’ve read:

  • Facebook has a broad-based RSU plan. While RSUs have been commonly used at public companies for years now, they are relatively new for Silicon Valley start-ups, which have traditionally offered only stock options. Facebook is definitely a groundbreaker here–other start-ups have followed suit (e.g., Twitter).
  • Even more unusual, the RSUs won’t pay out until six months after the IPO (typically RSUs pay out upon vesting). From an administrative standpoint, the delayed payout makes a lot of sense. You wouldn’t want the RSUs to pay out while the company was still private because then employees would have a taxable event before the shares were liquid–I could write a whole blog entry on why this is something to avoid. Plus, in the pre-JOBS era, the employees would have counted as shareholders, which could have forced Facebook into registration with the SEC earlier than they wanted.
  • Here in the US, Facebook is looking at a pretty hefty tax deposit–Facebook estimates the deposit liability at over $4 billion–that will most likely have to be made within one business day after the awards pay out. Facebook is planning to use share withholding to cover employee tax liabilities, making cash flow an important consideration. Facebook’s S-1 states that they intend to sell shares to raise the capital to make this deposit, but may use some of the IPO proceeds or may draw on a credit arrangement that they have in place. If Facebook sells stock to raise the capital, the stock that is sold would have to be registered and could, of course, impact their stock price.
  • Facebook estimates the tax withholding rate to be 45%. I’m not completely sure how they are arriving at this rate. It’s possible they are going to withhold using W-4 rates or, perhaps, the payouts will be so large that most employees will be receiving more than $1,000,000 in supplemental payments for the year and they are going to have to withhold Federal income tax at 35%. Where a payment, such as payout of an RSU, straddles the $1 million threshold, the company can choose to apply the 35% rate to the entire payment (35% + the applicable CA tax rate = about 45%).

All of these employees making lots of money creates problems beyond the tax considerations. As other highly successful high-tech IPOs have experienced, employees may decide they don’t need to work anymore and end up leaving. Those that do stick around, may not be so motivated anymore–maybe I’m wrong but it seems like a millionaire employee is an attitude problem waiting to happen. And there will be the pay disparity to deal with as well; employees that were hired more recently may not do so well in the IPO (and those that are hired after the IPO will really be at a disadvantage).

More at the NASPP Conference

Facebook is presenting on a panel at the 20th Annual NASPP Conference (“Liking Global Equity: Learning from Facebook’s Successful Communication and Compliance Strategies”); while none of the problems I’ve described here are new, Facebook is a company known for innovation and I’m excited to hear their approaches, as well as new ideas they have to offer in other areas of stock plan administration.  Register for the Conference by May 31 for the early-bird rate.

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 we keep an ongoing “to do” list for you here in our blog. 

– Barbara 

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May 17, 2012

Can You Stump Your Peers?

I’ve always felt that stock compensation was a unique field to work within, one like no other. The sheer volume of regulations, requirements, and facets keeps us in the trenches of learning. It seems like there’s always something new to grasp, understand and implement. That’s why I love the Question of the Week quiz challenge that we post each week to the NASPP web site. Not only do we post a new industry related question each week, but to keep things fun we’ve made this a contest, where you can see how you rank against your peers who are also participating.

Stump Your Peers

This year we’ve implemented a new component to our Question of the Week challenge: Stump Your Peers. Quiz participants can now create their own question to be used for one of our weekly contests. If we use your question, you’ll get the acknowledgement, and, you can still play the game that week. This will put you at an advantage since you’ll know the answer to that week’s question. If your scores are behind this year, now would be the perfect time to play catch up by submitting (and answering) your own question. We’ve recently published two great Stump Your Peers questions, submitted by Mike Albert of Fidelity and Elizabeth Dodge of Stock & Option Solutions. Take a few minutes today to submit your own Stump Your Peers question.

I offer a couple of strategies to coming up with a fantastic question. First, start with the answer to the question. Yes, that seems backwards, but it’s actually much easier to build a question around a fact or “answer” than it is to start with the reverse (coming up with a question and then figuring out the sources on the NASPP site that will provide the answer). Also, this contest is for fun and there are no formal rules for how the questions or answers must be worded (even trick questions are welcome). So have fun with it, knowing you don’t need to stress about the detailed formatting.

Final Top Tips

The purpose behind the Question of the Week is to get your mind thinking. Some questions are easy, others harder to answer. In closing I list a few tips to help you play the game so that you can find that correct answer every time!

1. The answer is on the NASPP web site. Every question is answered using a source from the NASPP web site, so rest assured that if you don’t know the answer off the top of your head, it’s somewhere on the site.

2. Check the NASPP portal that most closely matches the topic.
If the weekly question is on ESPP, the answer to that question is more likely than not to be sourced from a document that’s in the ESPP portal. Ask yourself what “topic” this quiz relates to and then head to the portals to see if your answer is there.

3. Don’t forget the webcasts and educational materials.
Not seeing what you’re looking for in a portal? Our webcast transcripts and materials are also great possible sources for question answers.

If you’re not participating in the Question of the Week challenge, now is a great time to start. Whether you’re new to the game or a long time player, why not step up your game today by submitting a Stump Your Peers question?


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May 15, 2012

A Gap in NASPP Research?

Normally I like to highlight benefits that we offer to NASPP members, but today I’m writing about something we don’t have: data on grant sizes. It’s something I get asked about occasionally, just frequently enough that I think it would be nice to have blog entry I could point to that explains why we don’t have this data.

Why Doesn’t the NASPP Offer Benchmarking Data on Grant Sizes

We don’t offer this data because you can’t look at award sizes in a vacuum. You need to look at awards as part of the company’s overall compensation package and include cash-based compensation and other benefit programs in your analysis. Companies that pay heavily in cash are likely to use less stock compensation and vice versa. Thus, you don’t want to set award sizes based on peer data without also knowing how the cash compensation (including salary, commissions, bonuses, and other long-term incentives) paid by your peers compares to your own. Doing so could result in severely over-compensating or under-compensating employees.

The same consideration also should be given to other benefit programs. For example, I recently spoke with a company that was implementing a stock award program to replace the company match in their 401(k) program. Because their stock awards are designed to make up for a lack in their 401(k) benefit, I would expect them to grant larger awards to more employees than a similarly situated company that has a more robust 401(k).

Stock compensation should be a component of your overall compensation package–the goal is to figure out what your overall compensation package should be, including cash, stock, and other benefits, and then figure out how much of that overall package you want to be in stock.

While we, here at the NASPP, are the leading experts on stock compensation, I admit that we don’t know beans about cash-based compensation and other benefit programs. Because we don’t have the expertise to properly evaluate other compensation data, we have decided that it would be inappropriate–perhaps even irresponsible–for us to publish data on grant sizes.

Ultimately, determining guidelines for grant sizes isn’t a do-it-yourself project. It’s not quite as simple as just looking at some survey data. There are numerous questions as to how grants, particularly stock options, should be valued for compensation purposes (we’ll have a great session on this at this year’s NASPP Conference–stay tuned for more information when we announce the program later this month). The number of shares you have available in your plan and how amenable your shareholders will be to additional share allocations (which will in part depend on your shareholder demographics, as well as your overhang and burn rate) are additional factors to consider when deciding on grant sizes. You would not want to set guidelines that cause you to run out of shares before you’ll be able to get your shareholders to approve an additional allocation of shares to the plan. In addition, any survey data lags behind the market, sometimes considerably. This is an inherent part of the survey process; it takes time to collect the results, analyze, and publish them so that by the time the results are published, the market has already changed.

Once awards are granted, mistakes as to size aren’t easy to fix. I encourage companies to work with a compensation consultant who can provide the appropriate benchmarking from peer companies with similar compensation strategies and benefits and can suggest adjustments based on differences in your strategies and other benefits. In addition, a consultant can help you assess the value of your overall compensation package as it compares to your peers, determine the appropriate way to value your own options and awards, and provide input into how the market has shifted since the survey results you are looking at were published. Grant sizes are one of the single most important decisions you are going to make about your stock program; it’s worth the investment.

In last week’s blog entry (“News on the Proxy Advisors“), I got the name of ISS’s parent company wrong.  Four times (at least I was consistent).  It should have been MSCI (not MCSI).  But don’t bother going back to look at it now to find the mistakes–I’ve fixed it.

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 we keep an ongoing “to do” list for you here in our blog. 

– Barbara 

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May 10, 2012

A Survey You Don’t Want to Miss!

Global stock plan administration is more complex than ever. As more companies venture into foreign jurisdictions, more stock plan administrators become tasked with managing this new and ongoing growth relative to the company’s stock incentive programs. The NASPP recognizes the importance of identifying and understanding global stock plan practices and trends; that’s why, in partnership with PwC, we’re conducting the most comprehensive industry survey on this topic: the NASPP-PwC 2012 Global Equity Incentive Survey.

The last global survey was conducted in 2008 (in partnership with Deloitte), and even back then more than 60% of respondents had at least 2,500 employees based outside of the U.S. That’s a good sized population, and I’m betting those numbers have only increased since then, meaning that understanding global practices is even more important than ever. Back in 2008, non-qualified stock options ranked as the most popular form of stock compensation for employees outside of the U.S.; it will be interesting to see how much the use of Restricted Stock Units has risen in usage since that time.

In 2008, about half of responding companies indicated they make adjustments to the size of grants for their non-U.S. employees. 42% of companies had reported having recharge agreements in place with subsidiaries for stock plan arrangements. Have those trends continued to rise since then? This past year, our 2011 Domestic Stock Plan Administration Survey (in partnership with Deloitte), revealed some domestic trends that were somewhat surprising – for example, a dramatic rise in the use of stock ownership guidelines. Certainly we had expected this trend to continue to penetrate organizations, but the percentage of companies in 2011 (73%, vs. 54% from the prior survey in 2007) that had implemented such guidelines surpassed even our own informal projections. A lot can happen in four years, and we’re expecting to see some new trends on the global front, even some that may surprise us. You don’t want to miss out on the opportunity to have the full results available at your fingertips.

Time is running out to complete the survey (you must complete it by May 25th,) and, if you are an issuer, you must finish the entire survey to obtain the full results. To help you get started, I reiterate some tips to help submit your survey:

1. Don’t wait until the last minute. This is the industry’s most comprehensive survey; it includes loads of valuable information but it takes a while to complete. Start now, so you have plenty of time.

2. Don’t try to complete the whole survey in one sitting. The survey is divided into seven sections so that you can complete it in several sittings. If you complete just one section at a time, you’ll be done before you know it.

3. Get some help. Ask others at your company to complete the sections related to their responsibilities–everyone at your company will benefit from this data; there’s no reason for you to do all the work.


There are benefits to completing the survey. First, as mentioned, you’ll have access to the full results (non-issuers who are NASPP members will also have access since they can’t complete the survey.) Second, you’ll receive a 10% discount on your registration to the 20th Annual NASPP Conference*, to be held this year from October 8-11 in New Orleans. This is a great opportunity (and added incentive) to attend the industry’s premier conference!

I hope I’ve given you enough reasons to click on over to the survey and start it today. I know I personally can’t wait to see the results.


**The 10% discount applies to the rate in effect at the time you have both completed the survey and registered for the Conference.

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May 8, 2012

News on the Proxy Advisors

For today’s blog, I have a couple of updates related to Glass Lewis and ISS.

Through a Glass (Lewis) Darkly
While ISS has been somewhat forthright about its voting policies, the methodologies employed by Glass Lewis to evaluate management proposals have always been a black box. Recently, however, Glass Lewis launched a new “Issuer Engagement Portal” to provide insight into their decision-making process when making vote recommendations on proxy ballots.

The portal includes both “US Abridged Guidelines” and “Continental Europe Abridged Guidelines.” A few highlights from the US Abridged Guidelines relating to stock options:

  • Companies should seek additional shares only when needed and the number of shares requested should be small enough that the company will need an additional allocation of shares within three to four years (or less).
  • The annual cost of the plan should be reasonable as a percentage of financial results and the overall value of the company and in comparison to peers. Plans that are relatively expensive and that provide grants solely to senior executives and board members are a particular concern.
  • The intrinsic value received by option grantees in the past should be reasonable compared with the financial results of the business.

The portal also includes Issuer FAQs and a short summary of Glass Lewis’ Equity-Based Compensation Analysis, which discusses their analysis relating to program size, cost, and features.

While this is no where near the level of transparency provided by ISS and still leaves many questions unanswered, it is at least a step in the right direction.

ISS: Do as We Say, Not as We Do
The disadvantage about disclosing your voting polices is that others can then apply them to you–or, in this case, to ISS’s parent company, MSCI. Exequity has prepared an in-depth analysis of how MSCI’s executive compensation programs would fare under ISS’s policies (ISS does not issue a report on MSCI due to the inherent conflict of interest in reporting on their own parent). Exequity found a number of areas where MSCI engages in practices that ISS criticizes:

  • Not splitting the CEO and Chairman of the Board roles;
  • Not having stock holding requirements, stock ownership guidelines, or a clawback policy;
  • Not using preset performance goals for the annual bonus plan (the plan is discretionary);
  • Not providing the specific performance goals for the performance-based equity awards until after the two-year performance period ends;
  • Aiming to compensate named executive officers at the “higher end of market practice”; and
  • Granting equity awards with single-trigger change-in-control provisions.

More at the NASPP Conference
This year’s NASPP Conference will feature a session that will sort out fact from fiction on the proxy advisor policies and help you evaluate how critical it is for your company to comply with ISS and Glass Lewis policies.  Look for more information when we announce the full program in a few weeks.  The 20th Annual NASPP Conference will be held in New Orleans from Oct 8-11–register by May 31 for the early-bird rate. 

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 we keep an ongoing “to do” list for you here in our blog. 

– Barbara  

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May 3, 2012

How Does Your Compliance Rate?

When I worked on the issuer side of stock compensation, I often wondered how other companies were handling the situations I encountered through the course of my day. Did I have the best processes in place? Did my practices mirror industry standards? I wished I had had a way to easily validate my thinking on these topics. Fortunately, you do have a means to measure your level of compliance when it comes to various industry practices: the NASPP Compliance-O-Meter.

The Compliance-O-Meter helps you evaluate your compliance procedures and compare them with other companies’ procedures. You answer four or five short questions about your compliance procedures, receive a score, and then view how other companies have responded to the questions. We also provide a short explanation of the control procedure and how it can help ensure the integrity of your stock compensation program.

I share a few interesting results from our most recent Compliance-O-Meter quizzes:

Domestic Tax Withholding: 42% of companies reported following the cited best practice when it comes to state-to-state mobility tracking, which is to “update their address, note them as a domestic mobile employee, and work with my tax resources to determine the appropriate tax withholding for future transactions.” However, another 47% of quiz participants reported that they automatically withhold based on the employee’s new location, without considering the prior state of residence. Best practice suggests the former jurisdiction should at least be considered in the withholding analysis, so the fact that about half of companies aren’t doing that seems to indicate that a large percentage of organizations still have work to do in this area.

Global Tax Withholding: We asked similar questions in separate Compliance-O-Meter quizzes about domestic and global tax withholding. Interestingly, in answer to the same question I highlighted for domestic tax reporting, nearly 70% of companies do extensive analysis, including involving external advisers, when it comes to country-to-country mobility before assigning a withholding rate.

Insider Trading Policy: We asked companies whether they require those who are subject to their insider trading policy to agree to comply with the policy, in addition to simply acknowledging they have read and understood the policy. Approximately 76% of respondents indicated that they do require the individuals to agree to comply with the policy. However, the remaining 24% of companies said that they do not require agreement to comply. If your company falls into this minority, you may want to discuss with counsel whether an update to the policy may better align your company’s practices with the masses.

From A to Z, or Something Like That…

There are several compliance topics in our quiz archive, ranging from Section 6039 to ESPP design to transfer agents and much more. In addition, we post new topics periodically throughout the year, so be sure to watch our NASPP home page for updates. This week we’ve posted a new Compliance-O-Meter on Life Events: Death and Disability. If you’re not taking advantage of this opportunity to compare your practices to the industry, now would be a great time to start.


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May 1, 2012

Say-on-Pay: The Sequel

We are now well into the second season of Say-on-Pay voting. In today’s blog, I provide an update of the voting thus far.

Turn-Around of the Year?

It’s probably a little too early in the season to award the title for “Turn-Around of the Year,” but Umpqua Holdings looks like a strong contender. Last year, their Say-on-Pay vote received only 35% support–an emphatic message of disapprobation from their shareholders. Their vote this year was of interest to me because they were one of the companies that modified options and awards granted to their officers to be subject to performance conditions (see my April 2, 2011 blog, “Happy Birthday, Dodd-Frank“). The modification was in response to last year’s Say-on-Pay vote, so I was curious to see if this year’s vote went any better. It did–this year’s vote received 95% support.

The turnaround was not entirely attributable to the grant modifications; Umpqua also did a significant amount of outreach to its shareholders and implemented some other programs (including a policy that at least 50% of all equity awards to executive officers must be performance based), but the modifications surely were a factor. In their discussion of their response to last year’s vote, the grant modifications are the second item that Umpqua mentions.


The most notable failure so far has been Citigroup. The vote has caused such a splash that I feel obliged to mention it, but to be honest, I got nothin’ on it. As far as I can tell, the failure didn’t have anything to do with Citigroup’s stock compensation program, putting it squarely in the category of “things I don’t really care about.” I’ve read speculation that the failure had more to do with dissatisfaction with the banking industry than with Citigroup’s executive compensation programs.

Funny Numbers

This year’s Say-on-Pay vote for Cooper Industries may prove that it doesn’t pay to get cute with your Say-on-Pay vote. Last year, Cooper Industries reported that their Say-on-Pay vote passed with 50.4% support. But, to achieve this, Cooper chose not to count abstentions as “against” votes. This is legally permissible and handy for Cooper because if the abstentions had been counted as “against” votes, their Say-on-Pay proposal would have failed last year.

But, in the end, their decision about how to count abstentions earned them only a short reprieve–this year’s Say-on-Pay vote failed with 70.6% of the votes cast against the proposal.

The Round-Up

According to Mark Borges’ Proxy Disclosure Blog on (my #1 source for the most recent Say-on-Pay vote tabulations), there have been seven Say-on-Pay failures in the 2012 proxy season as of yesterday. As of May 2, 2011, there had been eleven failed Say-on-Pay votes, so companies this year seem to be faring slightly better (unless there are four more failures by tomorrow). Of the seven failures this season, only one failed last year (I believe Mark is counting Cooper Industries as a failure in 2011, despite how they counted their own vote). Three of the failures (Citigroup, FirstMerit, and International Games) had received strong support (over 80%) for their Say-on-Pay votes in 2011.

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 we keep an ongoing “to do” list for you here in our blog. 

– Barbara  

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