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3 Things to Have on Your Stock Plan Radar

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September 17, 2020 | Jennifer Namazi

3 Things to Have on Your Stock Plan Radar

2020 has been a year of the unprecedented and uncertain. Along those lines, it can be easy to lose tabs on what the priorities should be. While I can’t speak for an individual organization’s unique circumstances, I can offer up some things that should be on the radar.

1. Your Stock Plan Share Reserve

The uncertainties of 2020 caught some companies off guard and scrambling to address volatility in the markets, employee morale, amongst other things.  

Some organizations found themselves contemplating how to handle sudden drop in stock price and the associated impact on their equity awards. Should supplemental awards be issued? Should there be a repricing? Maybe it’s better to just wait and see what happens?

If 2020 has taught us anything, it’s to be prepared for the unexpected. Having a buffer in your plan reserve to address unanticipated needs provides peace-of-mind that the company has available resources to address what may arise if shares are needed.  

Now is the time to evaluate your share plan reserve, do some stress testing, and determine if it can weather another storm (or, if more shares are needed).

Resource Tip: More info on this is covered in the NASPP Virtual Conference Session “Best Practices and Latest Trends in Equity Plans

2. The Payroll Tax Holiday

In August, President Trump issued an executive order that established a payroll tax holiday for the employee portion of Social Security tax. This holiday allows companies to defer collecting Social Security tax from employees between September 1 and December 31, 2020.

Here’s a few key things to know about the payroll tax holiday:
  • It’s not mandatory
  • Qualification for deferral is determined by pay period
  • Income from ESPPs and ISOs don’t count towards the threshold of qualification
  • All deferred amounts must be collected by April 30, 2021
Resource Tip: 2 NASPP blogs cover this extensively:
5 Things to Know About the Payroll Tax Holiday (August 17, 2020)
7 More Things to Know About the Payroll Tax Holiday (Sept 9, 2020)

3. Incorporating ESG Into Incentive Awards

ESG are the environmental, social and governance standards, applied to a company’s practices and operations, that investors use to evaluate an investment.

Use of ESG criteria is rising in popularity as a means for investors to evaluate potential investments.
ESG disclosures have made their way into the proxy statements, and those disclosures continue to expand. The question arises, how does a company integrate ESG into their incentive awards?

An imperative in successful ESG implementation is careful thought into selecting metrics, linking them to shareholder value creation, and defining how they will be measured. Now, the trickiest part of this may be the last one – defining measurement. When it comes to social and environmental factors, not everything can be easily assessed.

Resource Tip: Companies looking at how to incorporate ESG into their equity award practices should review the NASPP Virtual conference session: The ABCs of Getting ESG Into Your Incentive Awards
Sneak Peek: Our next episode of the Equity Expert Podcast will feature additional things to have on your radar. Subscribe to the podcast to be notified when the episode is available!
It’s Not Too Late for #NASPPVirtual!

It’s still #StockPlanSeptember and the answers and strategies related to your stock plan questions and concerns are bound to be addressed in our MANY conference sessions.

If you were unable to attend the live portion of #NASPPVirtual, registration (and access to sessions on-demand for registered attendees) is still available through September 30th. The feedback from our hundreds of attendees has been incredible – don’t miss this opportunity to learn from dozens of experts during #StockPlanSeptember.

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