The NASPP Blog

Monthly Archives: July 2015

July 29, 2015

NASPP To Do List

Help the NASPP with Our Comment Letter to the FASB!
Complete our quick survey to tell us what you think about the FASB’s proposed amendments to ASC 718.

Just One Week Left to Save on the NASPP Conference
The discounted rate for the 23rd Annual NASPP Conference is only available through next Friday, August 7.  Don’t miss out—register today!

NASPP To Do List
Here’s your NASPP To Do List for the week:


July 28, 2015

Delaware Law Gets an Update

Delaware recently amended its general corporation law to allow boards to delegate authority to approve restricted stock grants to officers (or other people) who aren’t directors.  Just to clarify: it isn’t that the restricted stock is being granted to people who aren’t directors, it’s that non-directors can now approve restricted stock grants.


For well over a decade (ten points if you remember when this law changed), Delaware has permitted boards to delegate authority for approving stock option grants and other rights (generally interpreted to include RSUs) to officers, even if those officers are not board members.  Now the law has been amended to also allow this for restricted stock.

Hold On—Don’t Go Crazy Now

The resolution delegating approval authority must include the following restrictions:

  • The maximum number of shares that can be issued
  • The time period over which the shares can be issued
  • The minimum consideration that must be received for the shares (if the shares are subject to par value, this minimum cannot be less than that amount)

Just as for stock options and other rights, the delegation of authority is solely for determining who receives the awards and the number of shares issued to each person. Vesting requirements and other terms and provisions still must be determined by the board.

Plan Must Allow Delegation

Also, before your board delegates authority to approve restricted stock grants to anyone other than a board member (or committee thereof), the plan must allow this.  Maybe your plan anticipated Delaware eventually changing their laws and already allows this, but there’s probably a pretty good chance it doesn’t.  Luckily, plans can always be amended, oftentimes without shareholder approval.  Amending the plan to allow this delegation of authority should be something that can be accomplished by board action alone.  Thus the board could amend the plan to allow this delegation of authority and then delegate authority under the amended plan at the same meeting; but to safe, make sure they do it in that order.

See the NASPP alert “Delaware Allows Non-Directors to Approve Restricted Stock Grants” for more information.

– Barbara


Tags: , , ,

July 22, 2015

NASPP To Do List

Help the NASPP with Our Comment Letter to the FASB!
Complete our quick survey to tell us what you think about the FASB’s proposed amendments to ASC 718.

Nominate a Keynote Speaker!
Always dreamed of being a keynote speaker? Have a particular speaker you’d like to see be part of a keynote panel? We still have a couple of spots open on our ballot for the keynote at the 23rd Annual NASPP Conference—nominate yourself our someone else. Read more about it and submit your nomination.

Emily Cervino on Building Your Brand
In her most recent Career Corner blog, Andrea Best of SOS interviews Emily Cervino of Fidelity about building your personal brand.

NASPP To Do List
Here’s your NASPP To Do List for the week:


July 21, 2015

Update on the ISS Scorecard

Now that the proxy season is winding down and I’ve had the chance to attend a couple of presentations on the new ISS Equity Plan Scorecard, I thought it would be a good time to provide an update on how the scorecard has worked out so far.

Most Plans Passed

Very few plans failed to obtain a favorable rating under the new EPSC.  But I’m not sure this should come as a surprise.  Of course, most plans passed; that’s why companies pay for the ISS Compass model and hire consultants certified in the use of this model—to ensure that they don’t undertake the expense of submitting a plan to a shareholder vote and not get the votes they need to pass. If a favorable ISS recommendation is key to ensuring the plan is approved, companies are going to do what it takes to get a favorable recommendation.  But, how much did companies have to reduce their share requests (and how many of the scorecard factors did companies have to incorporate into their plans) to get favorable recommendations?

It’s Only Going to Get Harder

One thing that’s been clear from the beginning is that ISS is likely to tweak both the pass threshold and the points allotted to each test in the EPSC from year-to-year (this is how they operate scorecards they have created for other purposes).  Ken Lockett of AST, Laura Wanlass of AON Hewitt, Scott McCloskey of Lincoln Financial, and Melinda Hanzel of D.F. King presented on the EPSC at the Philadephia/DC/VA/MD joint half-day meeting in June.  Given that so few companies failed this year, they noted that they expect the EPSC to be harder to pass next year.

Negative Points Are Possible

Laura noted that on some of the tests, including the SVT, a company can score so poorly that the plan is awarded negative points. The Corporate Executive noted, in its January-February 2015 issue, that with the SVT worth 45% of the score for most companies, it is virtually impossible to achieve a favorable recommendation without earning at least some points for this test. Now it turns out that the plan could score so poorly on the SVT that it is actually impossible to make up enough points the elsewhere in the scorecard to pass.

Vesting Restrictions Unpopular; Post-Vest Holding Valuable

Where companies need to make up points under the scorecard, there are several provisions they can remove from (e.g., liberal share recycling, discretion to accelerate vesting) or add to (e.g., post-vesting holding periods, minimum vesting requirement) their plan to earn additional points.

I’ve heard from several practitioners that post-vest holding periods are worth more than expected under the scorecard. This is a nice break, since post-vest holding requirements aren’t necessarily a takeaway for execs when the company already has stock ownership guidelines in place (and what public company doesn’t have these already). To learn more about post-vesting holding periods, check out our podcast with Terry Adamson or our March webcast.

Peter Kimball of ISS Corporate Services presented on the scorecard at the Phoenix NASPP chapter meeting in May and noted that many companies were reluctant to remove discretion to accelerate vesting or to stipulate a minimum vesting period under the plan. I can understand this—there are perfectly legitimate reasons to accelerate vesting.  And minimum vesting periods are a disaster waiting to happen.  I’ve already encountered one company that had a minimum vesting requirement, and then granted RSUs that vested in under that time frame and did not discover the error until after the RSUs had vested and been paid out. I’m not sure how you fix that mistake; the lawyers I asked about it did not want to touch that question with a ten-foot pole (or without an attorney-client relationship to protect everyone involved).

Learn More at the NASPP Conference

The session “Demystifying the ISS Equity Plan Scorecard” at the 23rd Annual NASPP Conference will provide a full analysis of how companies fared under the scorecard this year and includes a case study from one company that has already navigated it. The Conference will be held in San Diego from October 27 to 30; register by August 7 to save!

– Barbara

Tags: , , , , , , , ,

July 20, 2015

NASPP Chapter Meetings

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

Austin: Emily Cervino of Fidelity Stock Plan Services presents “Data Analytics for Stock Plan Decision Makers.” (Wednesday, July 22, 11:30 AM)

Phoenix and Sacramento: The chapters co-host a webinar on top mid-year administrative items to consider and processes to review now to make your year-end go smoother. (Wednesday, July 22, 11:00 AM)


July 17, 2015

Transforming Your Broker Relationship

If you’re a public company with stock plans, it’s highly likely that you have a relationship with a broker to execute stock plan transactions. It may be a captive relationship (the broker services all of your employees), or perhaps you have relationships with multiple brokers to satisfy the needs of a varied employee population. Whether you have one or several brokers engaged in your stock plans, in today’s blog I offer up some tips on transforming your broker partnership(s) into an “epic” one(s).

The Awesomeness of Epic

Okay, so I borrowed the term “epic” from our recent NASPP webcast, “Making Your Broker Relationship into an Epic Partnership.” You have to admit, though, it sounds pretty cool to use the word “epic.” Coming from an era where “rad” was the go-to phrase, I’m still getting used to epic. Ah, I’ve digressed. Back to the topic at hand. If you’ve been in the stock plan world for a while, chances are you’ve been around many, many broker relationships. I think brokers as a whole do a great job executing stock plan transactions. Most of the brokers who service stock plans that have got the associated transactions down to a science. What I want to focus on today are the other things that can take your relationship with your broker to a whole another level.

Remember the Importance of a One-on-One Interaction

In the recent webcast, the panel shared UBS participant survey results that pointed to a higher level of participant satisfaction with the education provided by their company when that education included one-on-one conversations. That concept, while not new, really struck me. I think it’s because we live in a world dominated by so many forms of electronic communication options – mobile, video, email, text, and so on. It can be easy to forget the value of a one-on-one conversation with someone. As a stock plan administrator, it would be a huge challenge to find time to have these types of conversations with all stock plan participants. This is where the broker relationship can take center stage. Most, if not all, of the brokers in this industry are skilled in participant education and communication. Knowing that participants value conversation, elevate your plan to the next level by leveraging your broker to help with those educational moments.

Other Areas to Consider

Busy stock plan administrators need all the help they can get. There are several areas where brokers are typically willing and able to help their issuer clients, some of them not as well known. These areas include taking some of the responsibility for communicating with the transfer agent, analyzing the impact (or potential impact) of the company’s stock plan on the market, and completing 144 paperwork. The list goes on.

A good manager has learned the art of leverage – tapping into other resources beyond themselves in order to do the best job possible. The broker relationship is the ultimate example of a leveraged one – the stock plan administrator leans on the broker to do what they do best – execute stock plan transactions and help educate employees. Isn’t it great to learn there are even more ways to leverage the broker partnership? Why not sit down with your broker today to learn more about how they can further help you elevate your plan? By the way, “elevate” is a catch word I got from the webcast and it’s stuck with me. It’s time to take things to the next level.

Other Resources

I’ve already mentioned the NASPP webcast on this topic, available to all NASPP members. If you’re not an NASPP member or are a time challenged member, you can check out the shorter podcast episode on the same topic “Creating an Epic Broker Partnership with Brian Burke (TD Ameritrade).”





July 15, 2015

NASPP To Do List

Nominate a Keynote Speaker!
Always dreamed of being a keynote speaker?  Have a particular speaker you’d like to see be part of a keynote panel? Nominate yourself our someone else to participate in our keynote panel at the 23rd NASPP Annual Conference.  Read more about it and submit your nomination.

NASPP To Do List
Here’s your NASPP To Do List for the week:


July 14, 2015

Do-It-Yourself Keynote

The “Top Compensation Consultants: Survivor Edition” keynote at last year’s NASPP Conference was so successful that we have decided to continue to infotainment theme for this year’s keynote with “Family Feud: NASPP Style.”

Just like the real Family Feud, we’ll be conducting polls in advance (but on hot issues in stock and executive compensation, not on what you have in your refrigerator).  Our “families” will consist of industry luminaries who will try to guess the poll results and will offer their commentary on the topics du jour.  I think it will be a lot of fun, but will also be an interesting juxtaposition of popular vs. expert opinions on some of today’s most controversial topics.

Nominate a Speaker!
We have identified most of our family members, but we still have two open slots.  For those slots, we have decided to give our community a chance to participate.  You can nominate yourself or someone else to be one of the “family” members.

Here’s how it will work:

  1. Enter your nomination.  You can nominate yourself or someone else that you think would be a good fit for the game.
  2. The first ten nominees will be put on a ballot; I’ll announce the ballot in the NASPP Blog and our members will have two weeks to vote for their favorite nominee.
  3. The top two vote-getters will be placed on the “families.”

(Note:  To keep things interesting and diverse, each of the ten nominees on the ballot must be from different companies. If we receive nominations for multiple people from the same company, the first person nominated will be selected to be on the ballot. Also NASPP employees are ineligible to participate; we’ll already know the answers so it wouldn’t be fair to everyone else.)

Let the nominations begin!

Don’t Miss the 23rd Annual NASPP Conference
This year’s NASPP Conference will be held in San Diego from October 27-30.  In addition to a super fun and informative keynote, we have close to 100 sessions on today’s hottest topics in executive and stock compensation. Check out the full program today—don’t wait; the early bird discount is only available until August 7.

– Barbara


July 13, 2015

NASPP Chapter Meetings

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

Denver: Nathan O’Connor and  Daniel Hunninghake of Equity Methods present “What’s New in Stock Compensation in 2015.” (Wednesday, July 15, 12:00 PM)

Boston & Connecticut: The chapters host the Co-Host the 7th Annual New England NASPP Regional Conference.  This one-day event includes presentations on financial reconciliation, the new ISS Equity Plan Scorecard, state-to state mobility, ESPPs, international updates, and other exciting topics.  (Thursday, July 16, 8:00 AM)

Twin Cities: Brian Blackwood and Scott Hippen from Towers Watson present “The Latest Trends and Developments in Executive Compensation.” (Thursday, July 16)


July 10, 2015

The Impact of Marriage Equality on Stock Plans

On June 26, 2015, the Supreme Court ruled in Obergefell v. Hodges that all states must permit marriage between same sex couples and all states must recognize marriages performed in other states, including those of same sex couples. In essence, marriage is now simply marriage for all. What impact does this ruling have on your stock plans? I’ll cover that in today’s NASPP Blog.

Back in Time

While the Obergefell decision has been described a landmark one, the real mechanical impact to stock plans arrived two years earlier – in June 2013. In deciding the case of U.S. v. Windsor,  the Supreme Court ruled that Section 3 of the Defense of Marriage Act was unconstitutional. The result of that decision was that same-sex couples recognized as married under the laws were they live were considered married for federal purposes. See the NASPP Blog “The Supreme Court and Stock Compensation” (July 18, 2013) for more information on that case.

The Obergefell decision has resulted in marriage equality in all states. However, the Windsor decision in 2013 sparked several changes to employee benefits in states where same sex marriages were recognized. According to a FAQ on the topic, “While the Obergefell decision was a more significant societal landmark, the Windsor decision had a bigger impact on stock plans. It led companies to look through benefit plans and policies, as well administrative procedures, for situations where marital status matters. As a result, companies had already made many changes even before the Obergefell ruling in June 2015. Among more than 1,000 federal laws and regulations touched by the rulings are those which affect the design and administration of employee benefit plans. In short, spousal provisions in employee benefit plans should treat same-sex spouses and opposite-sex spouses in the same way. While stock plans are not affected by federal laws in the same way as qualified retirement plans (e.g. a 401(k) plan) or health and welfare plans, the changes that will be required in these other benefit plans will probably lead to similar modifications in stock plan documents.”

What Now?

While much of the groundwork was already laid in the Windsor decision, there are still several things companies need to consider in ensuring their benefits and stock plans are consistent in application to an employee’s spouse:

  • Ensure benefit and stock plans are consistent in their definition of “spouse” and any other related terms.
  • The above is true for any practices, policies and procedures in place that refer to a spouse. Examples may include policies on divorce, policies on transferability of stock options, and beneficiary designations.
  • Companies may take the existence of “domestic partner or same sex partner” benefits under review since same sex couples are now permitted to marry in all states.

In addition, the SEC and IRS have already clarified that same sex couples who are legally married are considered to be a spouse, husband or wife regardless of where they live. That guidance stands after the Obergefell decision.

While there are some housekeeping items to be done to ensure companies are not consistent in their application the definition of “spouse”, “husband” and “wife”, I don’t expect it to be a significant time commitment or development in terms of far reaching implications to stock plans.

Additional Resources FAQ: Are Stock Options Affected by the Supreme Court’s Decisions on Marriage Equality?

SEC Guidance on “Spouse” and “Marriage”

IRS Revenue Ruling 2013-17

IRS Notice 2014-19