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Monthly Archives: March 2014

March 27, 2014

Lessons from the CEP Symposium

This week I attended the annual CEP Symposium hosted by the Certified Equity Professional Institute at Santa Clara University. This was no ordinary CEP Symposium – it was the Institute’s 10th annual event, and also celebrated the Institute’s 25th anniversary. With so many great sessions at this event, it was hard to choose some tidbits to share in today’s blog. Finally, I decided to share with you 5 things I learned from Mark Borges, who delivered this year’s keynote address (and, by no coincidence, delivered the keynote at the first CEP Symposium years ago).

1. Performance-based pay is the new “norm.” That’s probably not surprising to many of us who are in the trenches of administering these programs, but the part that caught my attention is that shareholders are also catching on to the mainstream prevalence of these awards. The bottom line: if you are not using performance-based pay (which includes awards), your shareholders are likely to say something – now or in the near term future.

2. The proxy statement has become a “communication” tool, rather than a “compliance” tool. Some of the bigger brands have caught on to this concept and are investing in magazine-like layouts, looks and feels in designing and delivering their proxies. For examples, check out this year’s proxies from General Electric and Coca-Cola.

3. Executive pay litigation isn’t over. We’ve been through a couple phases of litigation initiated by shareholder plaintiff attorneys. The first round mostly focused on failed say-on-pay votes. The second round turns to inadequate proxy disclosures – mostly around stock plan proposals. Where is the litigation moving next? The eye seems to be turning to the technical non-compliance with the qualified performance based exception under Section 162(m).

4. Say-on-pay disclosures may be headed towards inclusion of more supplemental or responsive insights. It’s not far fetched to envision a table in the proxy that reports detailed results of shareholder say-on-pay votes and a matrix to address concerns raised by shareholders.

5. Don’t forget about the impending CEO pay ratio disclosure requirements coming from the SEC.
The Commission is still scheduled to adopt rules this year, with a likely effective date somewhere in 2014 and implementation in 2016. These disclosures are expected to be both informative and inflammatory.

All in all, this year’s Symposium was a great event. I remember the first one – attended by somewhere around 75 people. This year’s attendance appeared to be just over 400. Congratulations to the Santa Clara University and the CEPI on their 25th anniversary in supporting the equity compensation profession, and for another successful event!


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March 26, 2014

NASPP To Do List

Hot or Not?
You have one last chance to play the Hot or Not game.  Don’t miss your chance to rate potential topics for the NASPP Conference.

NASPP To Do List
Here is your NASPP to do list for this week:

– Barbara


March 25, 2014

SEC Comments on Stock Compensation

PricewaterhouseCoopers has published a summary of SEC comments on stock compensation (“2013 SEC Comment Letter Trends: Employee Stock Compensation,” available in the NASPP’s Surveys & Studies Portal).  The comments were made in the course of the SEC’s review of various types of public filings (mostly Forms S-1, but also some Forms 10-K and other filings). I thought it would be interesting to take a look at what PwC found for today’s blog.

Companies Targeted

The majority (79%) of the companies to receive comments were technology, pharmaceutical, and life science companies.  But don’t read anything into this–as noted above, the majority of the SEC’s comments were on S-1 filings, and these industries represented the majority of IPOs last year (particularly IPOs where employees held substantial amounts of stock compensation).

Areas Commented On

81% of the SEC’s comments related to information on stock compensation included in the MD&A.  Of the comments related to the MD&A, 90% related to the discussion of critical accounting policies, et. al., for stock compensation.  Based on the sample comments excerpted by PwC, it seems that many of these comments requested more information on the valuation of the company’s stock on grant dates. 

Types of Comments

PwC found that, overall, 50% of the comments related to disclosure, 41% related to valuation, and 9% related to other accounting issues.  Of the 41% of comments related to valuation, many of these seem to relate to the valuation of the company’s underlying stock on grant dates, rather than the valuation of stock options.  Also, a little over one-third of the comments that PwC classified as disclosure-related were on the disclosures related specifically to valuation. Another 29% were on disclosures related to IPOs; many of these comments focused on valuation of the company’s stock (specifically on the differences between the most recent valuation and the IPO price). 

Accounting Recognition Comments

Not much here. PwC notes that:

“Interestingly, we did not come across many comments related to some of the more complex areas of stock compensation accounting. For example, we saw only one comment on classification of awards as equity verses liability, no comments on expense attribution methodology, one comment on award modifications, and no comments on determination of the grant date.”

Key Takeaways

Overall, it seems that the SEC either (1) focused primarily on stock valuation-related issues in their review of stock compensation info in public filings, or (2) focused on everything but simply didn’t find much to comment on beyond the stock valuation issues. 

If you are a public company, this is probably good news.  Because your stock is publicly traded, so long as your grant dates are accurate, there’s not a lot for the SEC to question with regards to your stock value.  But if you are a private company, you’ll want to make sure your house is in order when it comes to grant date stock valuations. 

– Barbara

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March 24, 2014

NASPP Chapter Meetings

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

Seattle: Geoff Hammel of ISP Advisors and Lisa Leitner of Outerwall present “Share Ownership Guidelines – How to Handle this Governance Golden Child.” (Monday, March 24, 11:30 AM)

Connecticut: Bruce Brumberg of presents a webinar on “Tax Season Communications: Challenges for Employees and Common Questions.” (Tuesday, March 25, 1:00 PM)

Wisconsin: Bryan Ortwein, of Towers Watson presents on the CEO pay ratio disclosure rules. (Wednesday, March 26, 11:45 AM)

Houston: Shane Tucker and Stephen Jacobson of Vinson & Elkins present “Whoops! Avoiding Common Pitfalls in Equity Compensation Plans (Part II).” (Thursday, March 27, 12:00 PM)

Twin Cities: Jim Sillery of Buck Consultants presents “Executive Compensation Practices and Trends in the Middle Market.” (Thursday, March 27, 7:30 AM)

Boston: Rob Melz of State Street Corporation, Christopher Hall of Global Tax Network, and Jewon Wee of Independent Stock Plan Advisors present on logistics and challenges of administering equity plans for a globally mobile population. (Friday, March 28, 8:30 AM)


March 20, 2014


We’re into late March and I’m reminded of the centuries old English proverb: “March comes in like a lion and goes out like a lamb.” Somehow I think it’s the reverse for the stock plan world; as many of us get to this point in the year, we’ve found that we moved on from year-end reporting to a busier proxy season.


Perhaps I speak for many of us when I suggest that the term “say-on-pay” has almost become like white noise in the background. For so long it was talked about everywhere – with so much attention spent on dissecting how companies were implementing say-on-pay driven practices and proxy voting outcomes. Well, say-on-pay is still here, and while many of us are used to it, there are still a fair number of companies that still fail to gain an affirmative say-on-pay vote when proxy season comes. A few days ago, Broc Romanek of blogged that the 2nd say-on-pay failure for this proxy season just happened. This particular company was one that received an affirmative say-on-pay vote the year before. All in all, 74 companies failed the say-on-pay vote last year. Let’s hope those numbers start a downward trend this season. I’m not sure if I’d put my money on a downward spiral just yet, though. According to an informal poll on, 82% of respondents felt that somewhere between 41-90 companies would fail to obtain affirmative say-on-pay votes this season. Yikes!

Keep Your Eyes Wide Open

The message of today’s blog is that while say-on-pay is not so much a “hot topic” in stock compensation at the moment, it is proxy season, and shareholders are still very much engaged in expressing themselves via their say-on-pay votes. Additionally, last year we had much discussion on the wave of litigation aimed at better proxy disclosures. These are the things to keep in mind as you sit at the proxy table this year. While it’s obviously good to care about any proposal in your proxy statement, if you’ve got stock plan related proposals on the table, you’ll want to have your radar up to understand how shareholders (and their lawyers?) are reactive to your proxy statement as a whole. A negative vote against a stock plan matter may simply be a by-product of shareholder unhappiness related to other aspects of the company’s disclosures.

Although we many be feeling complacent with the concept of say-on-pay, now is not the time to relax our efforts to ensure that all disclosures will stand up to the continued scrutiny of shareholders and their advisors.

In separate proxy related news, the Wall Street Journal reports that it looks like proxy advisory firm ISS is set to change hands (for the third time in seven years).


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March 19, 2014

NASPP To Do List

Hot or Not?
The Hot or Not game lets you rate potential topics for the NASPP Conference but it’s only available for a short time.  Don’t miss your chance to play.

ESPP Essentials
The NASPP’s newest online program, Employee Stock Purchase Plan Essentials, covers the regulatory framework and day-to-day administration necessary to oversee Section 423 ESPPs.  This two-webcast program is a great crash course in everything you need to know about ESPPs.  Register today–the early-bird rate expires on April 18.

NASPP To Do List
Here is your NASPP to do list for this week:

– Barbara


March 18, 2014

Hot or Not!

It’s once again time to play the Hot or Not game. I have a list of possible topics for the 22nd Annual NASPP Conference; your job is to tell me whether each topic is “hot” (or not). Some quick guidelines:

  • Sizzling hot means you’d definitely want to attend a session the topic
  • Lukewarm means you might be interested in this topic
  • Ice cold means that you have no interest in this topic
  • No opinion means you don’t really know what the topic is or otherwise don’t have an opinion on it

Survey Results
Too late! You missed your chance to vote, but you can review the results below.  Click on the thumbnails to see the full-sized charts.

Accounting & Tax Topics

Accounting & Tax Topics

CIC Related Topics

CIC Topics

Global Topics

Global Topics

Other Topics

Other Topics

Thanks for participating! The 22nd Annual NASPP Conference will be held in Las Vegas from September 29 to October 2. Based on the speaking proposals we received, we will have a phenomenal program this year–our best ever! Don’t pay more than you have to to attend; register by May 9, before the price goes up!

– Barbara


March 17, 2014

NASPP Chapter Meetings

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

DC/VA/MD: Sinead Kelly and Alison Wright of Baker McKenzie and Greg Kopp of Hay Group present “Mastering Performance Awards.” (Thursday, March 20, 11:30 AM)

San Fernando Valley: Jennifer George and Brue Shin of PwC present on recent trends and new developments for global employee stock plans. (Thursday, March 20, 11:30 AM)

Happy St. Patrick’s Day!


March 13, 2014

Breaking News

Earlier this week, Barb Baksa blogged about some proposed large scale tax reforms. Yes, a key word is “proposed” – nothing is imminent or certain just yet. However, these proposed changes are far reaching and there are several potential implications to stock compensation. I’m not going to summarize all of the items on the table – Barb already did that. I am, however, going to show you where to find answers to some of your questions on the topic. I’m not going to stop there, though. I’m going to show you how to get commentary on other breaking industry news as well.

Breaking News

I’ve mentioned it briefly in the past, but I’ll go into more detail now. The NASPP’s new podcast series, Equity Expert, is where you can expect to find a wealth of information on a variety of equity compensation topics. I’ve gently nudged people to subscribe in the past, but I want you to know that when we have something pressing to talk about, our podcast, web site, blog, and social media sites are where you’ll hear about it first.

Today we posted a great Q&A podcast interview with Bill Dunn of PwC on the proposed tax changes (Episode 5). He answers many of the top questions we’re hearing on this topic. I urge you to go check it out (it’s only 20 minutes long).

Our podcast series covers a wide scope of landscape in this industry, including:

  • Tips on how to carve your niche in this industry from seasoned plan managers and other experts
  • Commentary and Q&As on breaking news by subject matter experts
  • Deep dives into tricky, technical, or other types of micro equity compensation topics
  • Career advice and resources

Reasons You Should Subscribe Now

  • It’s free on both our web site and on iTunes (launch iTunes, go to store, click “podcasts”, and search for “Equity Expert”).
  • It’s portable. Driving in the car or headed to the gym? Download the podcast to your tablet or smartphone and take it with you on the go. With each episode typically between 15-30 minutes in length, you’ll pass the time and learn something in the process.
  • A subscription means you’ll automatically be notified of new episodes. Subscribing on our web site will ensure you get an email notification. Subscribing on iTunes means new episodes will automatically show up on your device.

I hope I’ve convinced you. We’ve got 5 episodes up so far (featuring John Hammond, Marlene Zobayan, Bill Dunn and our own Barb Baksa), and many more in the works. You’ve got plenty of content available for that next trip to the gym, commute to work, or companionship in the office.


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