This past summer, the NASPP and Solium co-sponsored a quick survey on global stock plan administration. We asked companies about the technological challenges they experience when it comes to administering global stock plans, focusing on 12 primary challenges related to tax compliance, financial reporting, and other administrative matters. Close to 70% of respondents indicated that they struggle with four or more of the challenges identified and several noted that they struggle with nine or more of the challenges.
For today's blog entry, I highlight five things I learned from the survey:
1. There are still a lot of manual processes out there.
Two-thirds of respondents say they spend too much time on manual processes. This is a high-risk proposition: it is difficult to implement adequate controls over processes and calculations performed in a spreadsheet. This seems especially concerning given that the SEC is in the process of adopting rules requiring recovery of compensation for all material misstatements, even if due to inadvertent error (see "SEC Proposes Clawback Rules," July 7, 2015). One incorrect calculation discovered too late could result in recoupment of bonuses and other incentive compensation paid to executive officers.
2. Tax compliance is a top concern for companies.
This really isn't a surprise—let's face it, tax laws outside the United States are a hot mess. Every country does something different. Some countries change their laws every few years (I'm looking at you, Australia and France) and grandfather in old awards. Some countries have different rules for social insurance taxes vs. income taxes. Add in mobile employees and, well, you have a lot of work for tax lawyers.
3. Regulatory compliance is also a challenge.
56% of respondents cite keeping up with regulatory changes as a top challenge and 45% cite regulatory requirements in other countries. Regulatory compliance goes beyond tax laws to include things like securities laws, data privacy (a hot topic these days, see "Data Privacy Upheaval," December 3, 2015), labor laws, currency restrictions and a host of other issues. It's hard to stay on top of it all.
4. It's the participants that suffer.
Ultimately, in the struggle to administer a global stock plan, something has to give and that something is usually the participant. Only 50% of respondents offer a qualified plan in countries where they could; the hurdle of regulatory compliance gets in the way. And 75% of respondents said that they would focus more on employee education if they could just spend less time on basic administration.
5. Expectations are low.
When we asked companies what is on their wish list for their administrative system, I was surprised at how low some items ranked (it was a "check all that apply" question, I thought everyone would want just about everything). For example, despite the fact that 71% of respondents reported tax-compliance for mobile employees as a top challenge, only 64% wanted a system that could calculate tax liabilities for mobile participants. It left us wondering if companies need to dream bigger for their administrative platforms.
Check out the White Paper and Survey
If you haven't had a chance to read it yet, check out the white paper on the survey results and download the full results from the Solium website.
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.
Top Trends in Global Stock Plans
We recently posted the executive summary to the NASPP and PwC 2015 Global Equity Incentives Survey and, late...Read More
Key International Updates
We are excited to bring our popular “Meet the Speaker” series back to the NASPP Blog, featuring interviews with speakers at the 22...Read More
Trends in Global Stock Plans
Buck Consultants' 2013 Global Long-Term Incentives...Read More
Global Year-End Reporting
Many companies are in the throes of year-end related activities. If your fiscal year ended on December 31, then you have the double duty of year-end financial reporting tasks combined with U.S. ...Read More