Most recordkeeping systems have multiple opportunities to code various forms of data. This can include user defined codes, but also code fields already built in for specific tracking purposes. Surprisingly, not all companies take full advantage of the tracking codes offered within their system.
Action item: Invest time into understanding the codes within your recordkeeping system and leverage them to filter and track global filtering and reporting needs.
There are many decisions to be made in administering a stock plan. There are plan level interpretation decisions – like how fair market value is defined (if not specifically stated in the plan). There are processes or procedures to support the plan – such as a determination to suspend vesting during a leave of absence, or implementation of a post-vest holding period. Finally, there are choices to be made about how to comply with local requirements in jurisdictions where non-US plan participants work and/or reside.
When non-US participants are involved, the number of decisions can grow exponentially. Each country has requirements (or, in come cases, a lack of requirements) that dictate a compliance framework for awards and grants made under stock plans.
In China, for example, there are strict exchange control requirements that affect the offering of foreign equity to employees in China. A company with employees in China might also have employees in France, which has a completely different set of regulatory considerations. For both countries, the company would need to make specific decisions about how they will structure their awards in a manner that complies with the local regulations.
Multiply varied decision points by several locations, and the number made in a stock plan context can be overwhelming. The solution? Develop a log to track decisions in a single source. This log can be organized in way that makes sense to the users – by country, by plan, by award type, or whatever makes the most sense for the organization.
Action item: Create a log to track stock plan related decisions. This can be as simple as a spreadsheet or as elaborate as a library tool or software (if there are A LOT of decisions to catalog).
Stock Plan Administrators wear many hats. It is often said in this industry that “There’s a lot to know about a lot of stuff.” With that in mind, it can be easy to hedge our range of knowledge with internal business partners by using the “I’m not an expert in that” caveat. However, when it comes to global stock plans, the stock plan administrator must become the in-house expert.
What does it mean to become an expert? In this case, it is not about knowing each nuance of the laws for 50 countries. It does mean being the go-to centralized source for administration, monitoring, and compliance associated with the company’s stock plans. It is about understanding the landscape of administering stock plans, furthered by ongoing learning and asserting plan ownership. Becoming an expert is equivalent to becoming the resource.
When a company has offices outside the US with stock plan participants, a natural assumption may be that the local office has expertise in the compliance and administration lay-of-the-land for stock plans. Drawing such a conclusion can provide a false sense of security – thinking that any potential concerns pitfalls, changes in compliance requirements will be raised by the local office. This is most often not the case.
For one thing, even if a local office has employees who are savvy about how stock plans operate within their country, they may not have experience in understanding the rules that apply when the stock plan is run by a foreign-based parent entity.
Within a company, chances are there is nobody outside of the stock administration function that is calling themselves a stock plan expert. A best practice course of action is to embrace the role of being the in-house resource for global stock plans, and partner with local internal business partners and outside advisors as needed to build solid compliance strategies and processes.
Action Items: Establish yourself as the in-house expert for global stock plans. Ensure partners at local entities know that all things stock plans should flow through the centralized stock plan function.
A successful strategy for global stock plan management includes an ongoing quest to find and implement best practices. Learning from our peers is one of the most productive pathways to uncovering the game-changers that will fuel compliance, ease administration, and avoid pitfalls. A big thanks to the issuers whose insights inspired this blog.
These best practices will be explored at the upcoming Virtual NASPP Conference (#NASPPVirtual) in the session “Going Global: Best Practices and Lessons Learned.”
The discussion will be moderated by Tommy Swindle of UBS Financial Services, with insights and case studies shared by the issuers who provided the basis for this blog: Dan Ferretti of Campbell Soup Company, Keri Gill of Applied Materials Inc, and Rachel Smith from TE Connectivity. To attend this session and more, visit our conference page.
With 60+ sessions across stock plan domains, exciting keynotes, and plenty of interactive opportunities, NASPP Virtual is the must-attend equity event of the year. No need for FOMO (fear of missing out) over a session - a huge perk this year is that all sessions will be available on-demand through the end of September. You can attend the entire conference or pick and choose what works best for you! I can’t wait to see you (online) there!
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Global Grab Bag
As part of an ongoing effort to keep tabs on interesting developments or resources in the area of administering global stock plans, I round up a few of them in today's blog.