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Monthly Archives: November 2014

November 25, 2014

What’s Your Resolution?

It’s Thanksgiving week and the holiday season is already in full swing (I actually consider the start of the holiday season to be November 1st, the day Starbucks switches over to their festive red holiday cups.) In fact, we’ve been very busy at the NASPP preparing for 2015 and we’ve decided to have some fun in documenting some of our goals for next year (hint: the “fun” will be revealed at a future date). We’re inviting members to join us in doing the same.

Which of our members has a goal to play tennis twice a week in 2015? Which one wants to step up their participation in our Question of the Week contest? Can you guess which member runs a farm when they aren’t contributing to our Global Stock Plans portal? You’ll find out soon enough, we’ve got some of our members on the record (via short audio clips)…sharing what they want most in 2015 — both professionally and personally. The folks I’ve talked to so far have been full of great goals and fun ideas.

It gets better! You can do the same! If you’re interested in recording your 2015 resolutions (or a portion of them) in a one-minute or less clip, send an email to: It takes just 5-10 minutes on the phone to get it done. And, your audio clip and photo will be featured on our web site during the holiday season.

Did you know that an estimated 40% of Americans make New Year’s resolutions? That’s more than watch the Superbowl (that event attracts an audience of about one-third of Americans). There are many estimates out there as to the actual percentage of resolutions that are achieved each year; one reported that only 8% of resolutions are actually achieved. I know we brilliant NASPP members can do better than that – we are a motivated bunch. Just in case you’re a doubter, I’m going to offer some reasons why resolutions aren’t achieved, and how to overcome them.

It’s Too Hard

Does your list for 2015 look something like a long bucket list of many amazing things that you want to accomplish? Perhaps you’ve got too much on the list. Many experts agree that the simpler you keep your resolutions, the more likely you are to achieve them. You don’t have to do everything at once!

It’s Not Defined

Some of the most popular year-to-year resolutions include losing weight, becoming healthier and spending more time with family. Those are all GREAT objectives. But, in their present form they are also vague, which makes it harder to know if you’ve actually succeeded in reaching a goal. When thinking about what you’d like to accomplish, put a measurement factor to it, and think about how you are going to achieve it! Do you want to spend more time with family? Maybe that translates to spending at least 2 hours a week engaged in an outdoor activity. You get the picture.

What Did I Resolve Again?

Many people write down their resolutions and then put them away somewhere, only to be forgotten. If you take a little time to create some reminders – visuals, sticky notes on your computer, or something that will be in front of you daily, you’ll be more likely to stay engaged with your goal. You’re also more likely to follow through on something if you declare it publicly, in front of others (hence the option to put some of your goals out to the NASPP population).

I’m sure this Thanksgiving week we can all find many things to be grateful for in 2014. I’d really love to hear from you about what you’re excited about for 2015. We still have a few spots open for brave members to record their 2015 goals, so if you want to participate please send me a note!

Happy Thanksgiving and wishing everyone a wonderful holiday season.



November 20, 2014

Untimely Tax Deposits (Part 2) – The Misconceptions

Last week I did a pop quiz on some of the nuances of making timely tax deposits to the IRS. I’ll admit, some of the questions were a bit detailed – covering points that may not be well known to a lot of us. More than 250 of you responded! The results of the quiz suggest a bit of room to provide some additional education in this area, so today I’ll tackle some of the explanations behind last week’s questions.

Question 1: The IRS requires accelerated deposit of federal employment taxes when the cumulative liability exceeds $100,000 during what period of time?

79% of poll respondents answered “any single day”, which is a common misconception and incorrect. The correct answer to that question was “during the IRS defined deposit period”, which was chosen by 12% of respondents. The short story on this is that the IRS has two deposit schedules – monthly and semi-weekly. Most NASPP members fall into the semi-weekly category, making twice weekly deposits of federal payroll taxes to the IRS. When the cumulative federal tax withholdings reach or exceed $100,000 during the payroll deposit period, then accelerated deposit is required (within one business day of reaching $100,000 or more).

Question 2: Which types of taxes count towards calculating cumulative withholdings for purposes of determining if accelerated (next day) deposit is necessary?

This question seemed to raise confusion – the responses were all across the 4 possible choices. Only 11% of respondents chose the correct answer, which is *all* federal taxes, which are: federal, and both employee and employer portions of Medicare and social security taxes. Essentially, anything owed to the IRS for tax deposits (including employer portion) counts towards determining if the company has accumulated $100,000 or more in taxes due to the IRS.

Question 3: Accelerated deposits are due to the IRS by the next business day. What happens when the “next business day” falls on a day when the IRS is closed (e.g. legal holiday recognized by IRS but not your company)?

The majority of respondents (70%) came up with the correct answer, which is “The deposit needs to be made by the next business day that the IRS is open – so that would be the next business day after the holiday.” However, 24% of respondents thought that they still may need to make the deposit to the IRS if their company wasn’t closed on the holiday, answering “The IRS expects the deposit anyway, and the IRS systems will accept the payment even if the agency is closed.” To clarify – the IRS defines business day as a day that is not a Saturday, Sunday or legal holiday. If the IRS is closed, then payroll deposits can be made timely the next business day that the IRS is open.

Question 4: How does the IRS define a “legal holiday” for purposes determining whether it is considered a business day or not?

Many respondents seemed stumped by this question, because the answers were all over the place. 40% felt that if it were a legal holiday somewhere, then it was a legal holiday for IRS tax deposits. 35% of participants felt that a “legal holiday” was any holiday observed by the banking industry. Both of these answers (representing 75% of responses) are incorrect. The right answer is that a “legal holiday” is any legal holiday observed in the District of Columbia, where the IRS resides (26% came up with this answer). The District of Columbia does have at least one “legal” holiday not observed in other jurisdictions – Emancipation Day in April. It’s wise to check the IRS’s annual calendar of legal holidays each year and share those with the payroll department.

While stock plan administrators may not be the primary person responsible for making tax deposits to the IRS, we are in a unique position in that we may often know of situations where the $100,000 threshold will be reached in a deposit period, triggering the accelerated tax deposit deadline. However, there are also situations where the stock plan administrator may not know with certainty that the cumulative amount has been reached, since it is indeed cumulative – covering all of the organization’s federal taxes on hand. With the IRS recently expressing more interest in monitoring late tax deposits, stock plan administrators should work closely with their Payroll departments to ensure all the nuances of accelerated and timely tax deposits are understood and covered.


November 19, 2014

NASPP To Do List

Transforming Difficult Relationships
Read Andrea Best’s most recent blog, “Transforming Difficult Relationships on the Job,” in the NASPP’s Career Center.

Light Reading
Here are a few new articles posted to the NASPP website:

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

Next week is a holiday week, which means we’ll only have one blog entry and Jenn Namazi is planning to post it, making this the last time you’ll hear from me until after Thanksgiving.  There are many things I’m thankful for, just three of which are several weeks’ worth of ideas for blog entries, looking forward to a simpler future under ASC 718, and pecan pie (maybe with vanilla ice cream)! I hope you have a Happy Thanksgiving!

– Barbara


November 18, 2014

Five Pay-Ratio Take-Aways

I’ve been listening to the recordings of the sessions at the 22nd Annual NASPP Conference.  And frankly, I’ve been surprised—pleasantly surprised by how much I’ve learned.  All of the sessions I’ve listened to have been very enlightening, even the ones where I thought I already knew everything on the topic.

Take the session on pay-ratio disclosure. I wasn’t really sure how interesting this session would be, since the rules haven’t been finalized yet. I mean, really, how much could there possibly be to talk about?  But it turns out that the panel had a lot to say and all of it was very interesting.  So for today’s blog entry, I feature five things I learned from listening to the panel, “Pay Ratio (& Other Issues): Pointers from In-House.”

1.  Run a Test Calculation.

If you haven’t already, you really should perform a test of how you will calculate your CEO pay ratio.  It might prove to be harder than you expect.  Patty Hoffman-Friedes of Seagate Technology noted that they actually didn’t get very far in their test, but they are now much more prepared for the final calculation.  Things you haven’t thought about come to light. Patty noted that Seagate provides shoes to employees in China and they had to think about whether those should be included in compensation.

2.  How Will the Ratio Be Used?

The panel spent some time discussing how the ratio will be used by ISS and investors.  Although it isn’t clear how ISS will use the disclosure, everyone felt that they will eventually use it.  But, as Patty noted, perhaps the bigger question is how the NY Times will use the disclosure.

Stacey Geer of Primerica brought up a concern that hadn’t occurred to me: how employees will react when they realize they are below the median.  Valerie Ho from ICF explained that she is planning to educate her HR business partners on the ratio, so that they can be prepared to address employee inquiries.  She will also be looking to them for feedback on what employees are saying about the ratio.

3.  Your Peers Are the Wildcard.

As moderator Barry Sullivan of Semler Brossy noted, the first year the rules are in effect will be a little bit like the Wild West. Everyone will have to decide on an approach and draft their disclosure without really knowing what their peers will be doing and how their ratio will compare to that of their peers.

Panelists recommend using your outside advisors—attorneys and compensation consultants—for a sanity check, since they will at least have some insight into trends and practices among their clients.  Ask for feedback on your methodology and help with drafting the disclosure.

4.  Year-Over-Year Comparisons Are Likely to be a Challenge.

Several panelists noted concerns about how much variation will exist in the results from one year to the next. If the median employee shifts from the United States to another country, if the company acquires another company, if there is a significant reduction in force, if a new CEO steps in—all of these events, and lots more, could cause significant year-to-year variability in the ratio, which could be confusing for investors and the media.  Before you decide on a methodology, make sure you run comparisons of the results for the past several years, so you can get a feel for how much the number changes from one year to the next.  And keep this potential for variability in mind when drafting the disclosure.

5.  Thorough, Accurate, Ease of Calculation, Reliable, and Reproducible (and Defensible)

The panel touched on the various approaches companies can take to find the median employee.  Primerica has 1800 employees located in the US and Canada; Stacy Geer can download W-2 income to a spreadsheet and calculate the median in about ten minutes. But fellow panelist Charles Grace of EMC—with 60,000 employees in 75 countries and upwards of 30 payroll systems—has a much more involved decision-making process.  Include all employees in the calculation or use statistical sampling? What compensation to include?  Patty Hoffman-Friedes noted that the range of approaches Seagate is considering could involve using salary, using actual wages earned, including benefits, or including all elements of compensation (even shoes for those employees in China).

Patty explained that Seagate has five touchstones that they are using to evaluate the methodologies: thoroughness, accuracy, ease of calculation, reliability, and reproducibility.  Barry Sullivan noted that a sixth is defensibility.  I think these are great touchstones for any company to consider as it decides on a methodology.

– Barbara

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November 17, 2014

NASPP Chapter Meetings

A few last NASPP chapter meetings before the holiday week:

Connecticut: Nathan O’Connor & Raenelle James of Equity Methods present “Ten Things You Want Your Comp Committee to Know BEFORE Performance Grants are Issued.” (Wednesday, November 19, 9:00 AM)

San Francisco Two totally timely topics:  Robert Slaughter of Equity Methods presents “Proposed Changes to ASC 718: How They May Affect You” and Gary Hamilton of My Equity Comp presents “6039 Compliance, Tips, and Tricks: Filing Your 3921 and 3922 Forms the Right Way.” (Wednesday, November 19, 11:00 AM)

Denver: The chapter hosts its annual Winter Members’ Luncheon and Roundtable Discussion.  Over lunch, the chapter will discuss planning and ideas, solicit member feedback, and get input to inform the executive board’s 2015 chapter meeting’s agendas. Everyone is welcome to contribute. (Thursday, November 20, Noon)

I’ll be at the San Francisco chapter meeting; I hope to see you there!

– Barbara


November 13, 2014

Untimely Tax Deposits

Every once in a while we visit the topic of timely tax deposits in this blog. It’s been a while, and judging by recent comments made by the IRS’s Stephen Tackney (in the session The IRS and Treasury Speak at the recent 22nd Annual NASPP Conference), there are a significant number of companies still not in compliance with the IRS’s requirements for tax deposits, the most egregious likely being those companies who should be making accelerated tax deposits but aren’t doing so. This time instead of the standard recap on the tax deposit rules (see NASPP Blog from May 26, 2011 for that detail), I’m going to challenge our readers to a quiz! How knowledgeable are you about the IRS deposit requirements?



The answers are below, but all fun aside – this is an area where companies should pay attention. It’s clear that late deposits may be subject to penalties and interest. Given the public opinion shared by at least one IRS staffer regarding the agency’s awareness that many companies are not making timely deposits, companies should be concerned that this may become an area of focus or even audit for the IRS.

Most of us are aware that common triggers for accelerated deposits that come from the equity plan side are restricted stock/unit vesting events (performance and time based) and large volume or sized stock option exercises. We are probably well attuned to the fact that the $100,000 or more figure is cumulative – not just reflective of equity transactions, but rather all federal employment tax withholding/liability for an entity. However, without careful coordination between payroll and stock administration, it’s hard to know when this amount is exceeded. For example, a stock option exercise with taxes at the $50,000 mark may seem well below the $100,000 threshold to the stock administration group – until the company payroll department realizes that bonuses were taxed on the same day (or even two days ago, yesterday or tomorrow or the next day if those days fall within the same deposit period). Additionally, some personnel may incorrectly assume that the period of time over which the $100,000 or more in cumulative tax withholding figure is measured is the payroll cycle. That is actually not the case. The calculation is based on the company’s deposit schedule with the IRS (there are two types of deposits – either monthly or semi-weekly – most NASPP members fall into the semi-weekly category).

The cumulative calculation resets each deposit period. For example, if the company is on a semi-weekly deposit plan (making two deposits to the IRS each week), and the end of one deposit period was Tuesday, then taxes withheld on Wednesday would not be combined with Tuesday’s since Wednesday is in a different deposit period.

IRS’s Tackney suggested that many companies are ignoring the next day deposit requirements when their cumulative tax withholding in the deposit period meets or exceeds $100,000, choosing instead to deposit the taxes as part of their normal schedule of deposits. For companies still taking that approach and hoping that they don’t get caught, be aware that the IRS is aware this practice.

For additional details, see:

IRS Publication 15

IRS’s Notice 931 (rev October 2014),

NASPP’s Tax Withholding and Reporting Portal

NASPP blog entry (May 26, 2011)



Answers: C, C, C, B

November 12, 2014

NASPP To Do List

Time to Renew Your Membership
It’s that time again: renew your NASPP membership for 2015; we have some great programs planned for next year and you don’t want to miss them! (if you aren’t an NASPP member, now is a great time to join; you’ll get membership for 2015 plus the rest of 2014 for free!)

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

– Barbara


November 11, 2014

Pics from the Roadshow

I recently completed a little roadshow of the Twin Cities, Wisconsin and Chicago chapters. Here are pics from the road:

???????????????????????????????All of the meetings included an audience-driven presentation in the form of a game, challenge questions, and prizes.  I brought some of my homemade jam to give out a prizes; a lot of jam (30 jars between the three meetings) was given away! At the Wisconsin meeting, someone also won the grand prize of a men’s Harley-Davidson jacket.  The meetings were all well attended and a lot of fun!

???????????????????????????????Twin Cities chapter president Donna Bailey Morgan Stanley with Brian Boyd of E*TRADE and Sam Zopfi of Morgan Stanley. Kudos to Donna and the rest of the chapter board for planning a fantastic meeting. There were lots of attendees, including a lot of new faces!

???????????????????????????????Charlene Lake of Harley-Davidson and Will Thoms of UBS.  Will is the Wisconsin chapter president and Charlene is a chapter officer. Kudos to Will and the chapter board for planning a great meeting.  The meeting was held at the Harley-Davidson Museum and set a record for the most number of attendees EVER for the chapter.  I’d like to think I was the draw, but I suspect it was the museum.  A big thank-you to Charlene for arranging for the meeting and the tour of the museum for the chapter board.

???????????????????????????????After the meeting, chapter board members got a private tour of the museum, led by Billie Davidson, great grandson of Harley-Davidson co-founder William Davidson. And during the tour, Billie’s father, Willie Davidson just happened to walk by. This is just one example of the sort of benefits you can enjoy by getting involved with your local chapter–consider volunteering today!

Here the board members and I have a little fun.

DSC00892The last stop on the roadshow was Chicago.  You can see we had a great turnout; the most I’ve ever seen at a Chicago chapter meeting!

???????????????????????????????Susan Daley of Perkins Coie and president of the Chicago chapter.  Thanks to Susan for accommodating my schedule and for having the idea to make the meeting a double-presentation with lunch, so that we’d have a great turnout even on a Monday!

See mores pics of the Twin Cities, Wisconsin, and Chicago chapter meetings on the NASPP’s Facebook page.

– Barbara


November 10, 2014

NASPP Chapter Meetings

There is lots going on at your local NASPP chapter this week:

Chicago: For the conclusion of my Midwestern roadshow, I present “Ways to Breathe New Life Into Your Stock Plan Education Program” and “22nd Annual NASPP Conference: Cliff Notes Edition” in a special, double-session lunch meeting.  There will be challenge questions, prizes, and a cat video–don’t miss it! (Monday, November 10, 12:00 PM)

San Diego:  Kathleen Cleary and I begin our southern California roadshow with a stop in San Diego, where we will present  “22nd Annual NASPP Conference: Cliff Notes Edition.”  More challenge questions, prices, and the cat video! (Wednesday, November 12, 11:30 AM)

Austin:  Mike Prewitt and Sandy Shurin of Deloitte Tax present “It’s Back! Time to Gobble Up the Results from the Deloitte 2014 Global Share Plan Survey.” (Thursday, November 13, 5:00 PM)

Los Angeles/San Fernando Valley:  Kathleen Cleary and I continue our roadshow at a joint meeting of the Los Angeles and San Fernando Valley Chapters, where we will present “22nd Annual NASPP Conference: Cliff Notes Edition.” (Thursday, November 13, 8:00 AM)

Orange County:  And it’s on to the Orange County chapter for Kathleen and I, where we will again present “22nd Annual NASPP Conference: Cliff Notes Edition.” (Thursday, November 13, 12:00 PM)

Phoenix:  The Phoenix chapter hosts their annual holiday reception.  Test your skills (or luck) at Financial Reporting Bingo-Jeopardy. There will be prizes, great food and drink, and lots of fun! (Thursday, November 13, 4:00 PM)

NY/NJ: Kelly Malafis and Melissa Burek of Compensation Advisory Partners present “Long-Term Incentive Plan Design—Trends, Challenges, Opportunities.” (Friday, November 14, 8:00 AM)

– Barbara


November 6, 2014

Section 16 Reporting: Low Hanging Fruit for SEC

In late September, the SEC announced enforcement actions against dozens of companies and their insiders for failures and violations of Section 16 and Item 405 of Regulation S-K (see the blog entry: SEC Enforcement Actions for Section 16 Reporting Violations). At that time, I recapped “what” had happened, but didn’t have all the details about the “why” (what triggered the SEC actions). Now, as more is known about the practices that brought the scrutiny, it’s time to look at processes in this area to minimize your company’s risk. Alan Dye and Peter Romeo addressed this topic in their session “Section 16 & Insider Considerations in Today’s Market” at this year’s NASPP Annual Conference (definitely worth a listen to the audio if you want to hear more of their opinions and insights). In today’s blog I’ll catch you up on some of the key things to know about the SEC’s renewed interest in these disclosures.

Low Hanging Fruit

Prior to the recent actions, the SEC was basically dormant for the past 12 years in pursuing stand alone enforcement actions for Section 16(a) and Item 405 violations. We can speculate as to why scrutiny in this area was in hibernation for so long, but at the end of the day it doesn’t really matter. What matters is that technology has advanced – a lot – in recent years. Tracking trading activity, comparing multiple types of data from different sources, and overall monitoring has become more sophisticated and easier for the SEC. With these advancements, it’s become simple to track Section 16(a) filings and analyze that data. So if you’ve been thinking that the enforcement actions in this area may have been a one shot deal, think again. Untimely or missing filings are now easily exposed, and have become low hanging fruit for the SEC. The message: take compliance seriously.

No Excuses!

Many of us come from a practical mindset. That mindset may have us thinking that sometimes oversights occur, and there was no mal intent involved. After all, we are human, and humans aren’t perfect. Makes sense, right? It does make sense, but don’t count on that thought process buying freedom from SEC penalties. One insider subject to the recent actions was never notified by his company that he was subject to Section 16 reporting (case of Alan Schnaid, corporate controller for Starwood Hotels), and filings were not made on his behalf for several years. The company and the insider both were in agreement on the facts pertaining to this oversight. One may think that the SEC may have forgiven the insider for not filing Section 16 Forms, since he was not informed. They did not. He was personally fined $25,000 for failing to file timely Forms 3 and 4 and also was subject to a cease and desist order.

If you have occasional Section 16 reporting violations, you are not alone. It’s said that approximately 48% of Russell 3000 companies have had at least one late filing each year. Clearly oversights happen. However, the SEC reiterated that “the failure to timely file a required report, even if inadvertent, constitutes a violation.” The message here is to drop the complacency and step up compliance practices. If your insiders have occasional or repeated violations, review the processes involved and make changes. Even an inadvertent or occasional violation can bring SEC sanctions.

Gray Area

There is at least one gray area when it comes to Item 405 disclosures. Alan Dye and Peter Romeo suggested that this is an area where practice and advice differ more than any other area of Section 16, and more guidance from the SEC is needed. People often ask things like whether a correction to a previously timely filed Form 4 needs to be disclosed under Item 405.  There is no uniform answer to that question. Some counsel may guide companies to disclose the corrected Form 4 as late, since the initial filing did not have the complete picture. Others may arrive at the conclusion that disclosure is not required, since the original Form 4 was filed timely. When in doubt, talk to your counsel. Whatever practice is adopted, you’ll want to be consistent.

Think Outside the Box

Often late filings can be triggered by out of the box scenarios. Some of them include situations where the Section 16 reporting insider’s beneficial ownership changes. For example, the insider marries an employee (and now the new spouses’ company stock holdings are also counted as part of the insider’s beneficial ownership). Or, the insider was trustee of the family trust, but is no longer the trustee (thus the beneficial ownership in the trust may no longer be associated to the insider). There are many scenarios where simple life changes can trigger reportable Section 16 transactions. It would be best to brainstorm some of these possibilities internally and with counsel to determine proactive monitoring processes for these situations in order to avoid late or missed Section 16 filings.

I’d love to hope that we’ve seen the last of enforcement actions in this area, but it’s more likely that’s not the case. It’s time to take a look at Section 16 reporting practices to ensure the maximum effort is expended to avoid incorrect or late filings.