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Protect Your Stock Plan From a Recession

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June 12, 2019 | Barbara Baksa

Protect Your Stock Plan From a Recession

It seems like all I hear about in the news these days is the inverted yield curve and how this is an indicator that a recession may be on the horizon. An inverted yield curve occurs when short-term interest rates are higher than long-term interest rates. This has preceded recessions in the past (e.g., see the article “The Bond Market Is Trying to Tell Us Something (Worry)” in the NY Times).

Recession-Proofing Your Stock Plan

All of this talk about recessions has reminded me that recession-proofing equity awards was a topic in our January webcast “Hot Topics in Stock Compensation.” Takis Makridis of Equity Methods suggested five questions to ask about your equity program:

  1. Will turnover increase or decrease in a down-market?
  2. How will our compensation committee feel about value restoration in a secular downturn?
  3. Do we have cash and equity available to play offense in a downturn, or do we need to guard against poaching?
  4. To what extent are our awards insulated from secular downturns?
  5. Do we have regular investor outreach so that we can take a novel downturn strategy to our key investors?

Takis discussed specific strategies to mitigate the impact of volatility in the marketplace, including using relative awards, longer or shorter performance horizons, dollar cost averaging, and cash awards.  The webcast recording and transcript is available on the NASPP website if you want to learn more.

The panel “Hot Topics in Stock Compensation” will be updated and offered again at the 27th Annual NASPP Conference in New Orleans in September. Unless the yield curve straightens out in short order, I’m sure this topic will be discussed during the panel.

Financial Planning for Public Company Executives and Directors

myStockOptions.com is offering their one-day course, Financial Planning for Public Company Executives and Directors, on June 18 in San Francisco. I will be giving a short presentation on trends in equity awards.

This course will help financial advisors and stock plan professionals understand current trends in equity compensation and will feature a faculty of industry experts who will discuss the following topics:

  • Trends of importance to advisors
  • Tax, estate, and SEC-related planning challenges
  • Methods for attracting and advising high-net-worth clients
  • Case studies and examples of successful financial-planning strategies
  • Special sessions on financial planning for clients at pre-IPO companies

This is a great course for stock plan professionals who want to better understand and incorporate financial planning concepts into their stock plan education program or who need to understand the strategies executives use to manage their equity awards. Enter the coupon code THREE when you register to receive $300 off the registration fee.

- Barbara

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