Money Talks: Cash Awards
The Role of Cash in a Global Equity Award Program

Wednesday, May 17, 2017

Cash and cash-settled equity awards are becoming a popular option, especially in a global equity compensation program. Listen in and learn why companies use cash awards, how the tax and legal issues differ for cash, key accounting considerations, and how your broker or third-party administrator can help manage a cash award program.
Featured panelists:

• Nora McCord, Aon Hewitt
• Denise Glagau, Baker & McKenzie
• Craig Long, Bank of America Merrill Lynch
• Thomas Molloy, Bank of America

 
Index
Introduction and Agenda
General Concepts
The Upside of Cash Awards
Downside of Cash Awards
Implementing / Administering Long-Term Cash Programs
Takeaways
 
 
Kathleen Cleary, Education Director, NASPP: Good afternoon, everyone.  Welcome to “Money Talks: The Role of Cash Awards in a Global Equity Award Program”.  We have a great panel lined up for today to talk to us about the role of cash in a global equity compensation program, so fasten your seatbelts and let's get going. 
First, introductions, my name is Kathleen Cleary and I'm the Education Director for the NASPP.  Today, I'm happy to welcome a very esteemed panel of experts: Craig Long from Bank of America Merrill Lynch; Denise Glagau, from Baker & McKenzie; Thomas Molloy from Bank of America and Nora McCord from Aon Hewitt.
The slide presentation for this webcast is available on the webcast page at Naspp.com and you're welcome to download the slides and print them out.  We are presenting this webcast using GoToWebinar, so you should be seeing the presentation slides as we move through the webcast.  Right now, you should be seeing the title slide.  You will also have an opportunity to ask questions throughout the webcast by typing them into the question section of your GoToWebinar panel.
All right, let's dive into the webcast.  I'll start by giving the panel an opportunity to tell you a little bit more about themselves, other than their names and emails, shown on slide 2.  Nora, I'll pass it over to you.
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Introduction and Agenda

 
Nora McCord, Associate Partner, Aon Hewitt:  Thank you so much.  My name is Nora McCord and I work for Radford, which is a division of Aon Hewitt.  We are an executive compensation consulting firm, specializing in technology and life sciences.  My day job is working in the boardroom and helping folks understand whether or not they want to go down a particular route and if so, what the pros and cons are. 
Denise Glagau, Partner, Baker McKenzie:  I'm Denise Glagau and I'm a partner in the San Francisco office of Baker & McKenzie.  I'm part of the firm's employment and compensation group.  My practice focuses on helping companies with offering their employee equity plans globally. Certainly, a question that we hear a lot is “How can we avoid some of these filings outside the U.S. with equity awards?”  That has led me to have a good deal of experience talking with companies about offering cash awards.
Craig Long, Head of Institutional Equity Client Relationships, Bank of America Merrill Lynch:  My name is Craig Long.  I head up the equity relationship team at Bank of America Merrill Lynch.  I’ve been with the firm for 23 years, all in equity, and I'll be approaching this conversation from the vendor perspective.
Thomas Molloy, Equity Compensation Manager, Bank of America:  I'm Tom Molloy, with Bank of America.  I’ve been working with cash and equity plans for about 18 years, and I’m mostly responsible for governance functions related to the executive compensation programs including our annual proxy tables, 10K disclosures and new award design and administration. 
Glagau:  Great.  This slide gives us an outline of what we are going to discuss today.  Tom is going to give us some background on Bank of America and he'll be addressing these programs from the issuer’s perspective.  We'll walk through some general concepts of cash awards and then really get into the pros and cons of these awards.
Finally, we’ll wrap up with next steps if you and your company were to proceed with offering cash awards at some level, how you would go about implementing and administering these programs and then hopefully at the end, you’ll have some good takeaways.
We wanted to kick it off with a polling question for you, to ask: If you personally are receiving an award and you had a choice between a cash award and a stock award, what you would prefer to receive?
Cleary:  For those listening, I'm launching the poll now.  You should see it on your screen and you can go ahead and enter your selection.  Then we'll go show you the results.
I should mention that no one sees your name, so you can feel comfortable that you’re answering anonymously.
Long:  It'll be interesting to compare today’s results to what we saw at the Annual Conference, because there it was really swayed in one direction.
Cleary:  The polls at the Conference actually show the results as people vote, so it’s fun to watch the bar chart moving with each vote.  We don't quite have that element of excitement here, we can just show the results once our attendees have had a chance to enter their selection.  OK, it looks like almost everybody has voted, so I'm going to go ahead and close the poll and share the results with you.
Craig, how do these results compare with the Conference results?
Long: Interesting, because when we were at the Annual Conference, the majority wanted cash.  It's almost 180 degrees.
Glagau:  Interesting. 
Cleary:  All right.  I'm going to close the poll results.  Are we ready to move on?
Glagau:  Yes, we are.  We just wanted to get a little perspective on where you're coming from personally, but of course for the companies we’re working with, we’re discussing what they are doing and thinking about in this respect. With that, I want to turn it over to Tom to tell us a little bit about Bank of America and their employee equity and cash programs.
Molloy:  Thank you, Denise.  Bank of America is one of the world's leading financial institutions, serving clients in over 35 countries.  Our clients include individual consumers, small and middle market businesses, as well as large corporations.  Our products include banking, investing, asset management, among a variety of other financial products and services.   The key divisions of the bank include consumer banking, advisory which is our fleet of financial advisors.  We also have global banking and then our staff support, which is all of our CFO, HR, all the teams that support the various functions that we have.  We provide long-term awards to approximately 22,000 employees across these divisions in over 35 countries throughout the world, both RSU and cash-based programs.
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General Concepts

 
Long:  Let’s get to the general concepts and go to the next slide, Kathleen.  Just to give the basics—and we all live and breathe these equity awards day in and day out—so there's nothing shocking here, just to give a baseline.
Cash awards work very similarly to equity based awards, primarily driven by internal performance metrics.  It could also be driven by stock price and then have the option of having the cash distributed in a lump sum payment.
Molloy:  At Bank of America, we pretty much operate two primary cash programs, the first is referred to as long-term cash.  This is a fixed dollar amount that may include interest in most cases.  It's used primarily as our vehicle for new hire buyouts.  And by providing long-term cash, it takes pressure off the share pool that we primarily use for our annual awards.  The fixed nature of the award reduces uncertainty for new employees.
The second program we offer is designed for financial advisors.  This is our “Wealth Choice” program which initially sets a flat dollar amount, but then the financial advisor has the opportunity to invest that against a series, a basket of mutual funds.  It's a benchmark type program.  It does provide an investment flexibility for the FA and at the same time, has the ability to align the interest of the FA with their clients.  Payments on these types of awards typically occur anywhere from a five to eight-year period, so that the FA really has some time to get some value out of the investment.
Long:  Then when you look at the equity awards that are settled in cash, the different types of cash-settled awards really manifest in different ways.  And if you think back to the original cash type award, it was a stock appreciation right.
But then you've seen different flavors as the equity industry has evolved to RSUs that are settling in cash and driven off the stock price.  We've even seen—as many of you have seen—performance awards or performance share units that are driven via cash off the stock price and even some variances where they change what the per unit price is, maybe based on something other than the stock price.
It can go even change a little bit from there.  You get restricted cash units, but the two main ones we've seen are either through stock appreciation rights, restricted stock units, performance units or like Tom was saying, between the different account types that we have here at the bank.
Molloy:  In terms of the cash awards we have at the bank, we've always used some form of cash-settled award in countries where share settlement was a challenge, specifically countries like Brazil, where there are regulatory concerns in trying to establish stock-settled type awards.  When we're talking about China, they have various SAFE requirements that are associated with stock-based awards.  In Canada, there are tax deductibility challenges that you come across using stock-settled awards that you don't face with cash-settled awards.  We've always had something out there to ensure that we could still provide a stock-based vehicle to employees. 
Our response to the financial crisis in 2010 really led to the broader use of cash-settled awards.  The financial crisis resulted in the introduction of clawbacks and such.  Those clawbacks really created some challenges and continue to affect accounting for our awards.  At the same time, trying to provide share-settled awards when your stock price is gone from some place in the mid '40s and suddenly drops to under 10, you’re suddenly going through your share pool significantly faster than you expected to.  It definitely takes a significant amount of pressure off the share pool by providing cash-settled awards instead.
The other thing we saw is that because we had the variable accounting, it also led to the introduction of some complex cash flow hedges we were able to use to offset those variable accounting challenges.
In 2015, we went back to shareholders and did receive an increase in the share pool, so with that increase in shares, beginning in February 2016, we were able to reintroduce share-settled awards back to our employees.
Long: When we look at this slide, if you're contemplating issuing cash-settled awards, you really want to try to sync up your goals with how you want to pay out the awards.  When you speak to your leadership or you speak to your plan design teams, what are the ultimate goals when you're looking to deliver this?  Every organization would be different.
Is it really designed to provide ease of access for individuals to cash?  Maybe it makes more sense to have these types of awards paid out through payroll.  That's where they get their paycheck.  That's where they would get the cash, similar types of currency.  That means they can get from the same area, a little easier for them to comprehend.
If you're looking to tie it to equity compensation as a whole, if your cash awards are just one component of your overall group of awards you're sending out, maybe it makes sense to deliver it through the vendor system.  Whether it's into a brokerage account or one of the vehicles that they have, that way all the equity is tied together.  Maybe you're trying to drive more of a financial wellness campaign on how people can build wealth and that would make a certain decision on how you'd want to distribute the cash coming out of these awards as well.
Lastly, I think we all have to listen—which should actually be at the top of the list—to what your leadership wants.  Maybe they have a firm direction.  Maybe you have to make a decision on what the CEO wants and how to apply it to drive the behavior you’re looking for.
But you definitely want to think about—when you're going to design the plan and how you're eventually going to administer it—do the goals sync up and how do you want to approach them?
Molloy:  Craig, in terms of what you're discussing, as far as these concepts and how they apply to the bank, we're definitely taking a look at the different goals we have for each of our lines of business.
And for those lines of business, what the total incentive is that we're providing to an employee, as well as how senior that person is in the company and the decision-making authority, that really drives how much we want to provide in terms of short-term cash versus something in the long-term award.
Long: Now Kathleen will bring up another polling question for our listeners to answer.  What we want to find out from the group is: does your company grant cash awards as part of its long-term incentive plan?
Again, we have some good comparisons from our last session.  We'll see if it stays true, because at least from our standpoint as administering these programs, we have seen an increase, especially in certain locations where it’s easier for these types of cash awards.
Cleary:  And the great thing about this poll is that it's just yes or no.  There is no right or wrong.  Not that anyone sees your name anyway.  All right, I'm going to close this out and show the results and then we'll see how it compares to the conference.  It looks like not a lot of people listening have long-term incentive cash awards.
Long: Yes.  When we did this the last time, it was 67 percent yes and 40 percent no.
Cleary:  Well, I guess that's really pretty close, 60-40.
Long: They're different groups.  Yes.
Cleary:  All right.  I will go ahead and close the poll.  Thank you all for responding.  It gives you something else to do besides listen to all of us.  And we'll move on, the upside of cash awards.
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The Upside of Cash Awards

 
McCord:  Now that we’ve talked a little bit about how it’s played out in certain instances, I think it's important to look at why companies use cash awards.  We have three reasons here, but in my view, they're really three variations on the same theme.
It's time to use cash awards in instances when you're running out of shares or have a problem with ISS—we'll talk a little bit more about that later—or if you have some sort of special program and you're looking to provide a sort of “capstone” to that program.
It does that very nicely because all of a sudden, you're able to deliver an extra award to an individual without using any of your valuable share pool. 
Glagau:  Moving on to another reason and another advantage that companies use cash for—simplicity.  This covers a multitude of things.  I would say what I see in my practice is companies using cash awards or cash-settled awards to avoid certain regulatory filings, primarily outside the U.S.  But even within the U.S., you don't have the same securities registration requirements, at least at the federal level, for cash-settled award if someone can only get cash and there's no possibility of getting shares.  Then you wouldn't have to register your shares with SEC, et cetera.  One thing to watch in the U.S. is if you are a private company, relying on blue sky laws, in some states a cash-settled award tracking to the stock price—even if you only deliver cash—would still be considered an offer of securities and you would need to register or rely on an exemption.
But more so outside the U.S., we see companies looking at cash as an alternative to needing to do a significant regulatory filing required for an equity award, but not for cash.
Tom mentioned a couple of those issues. China is the big one that we've seen over the last probably eight years or so with the introduction of the exchange control registration there.  I think there are quite a few companies that have eventually registered their plans with the exchange control authorities there.       But for companies with only a small population there or who have some other reason why they cannot or don't want to register their plan with the SAFE authorities in China, then cash is an alternative.  One thing about China is that you need to be able to fund and pay that cash locally. 
In other countries—and I will use the Philippines as an example—there's a securities registration requirement basically for any kind of award.  Whether it's an RSU, an option, an employee stock purchase plan, you have to do a registration or exemption filing.  But if you deliver cash—and it doesn't really matter how you deliver the cash to the employees—whether you pay it through payroll, put it into a U.S. brokerage account, if the parent company funds it, if the local entity funds it—any of those variations, you get out of the securities filing there.  
We do see that in some other countries, cash just eases the regulatory or tax issues.  Tom also mentioned the tax deductibility issue—in some countries (and Canada is a very good example)—for a share-settled award, your local entity cannot get a tax deduction for that, even if they pay the parent company for the award.  But if you deliver cash and the local entity funds it, then they can get a tax deduction at the local level, so that's something we see sometimes in Canada.
The other thing that we sometimes see on the tax front is, for example in India, to correctly do your tax withholding and reporting for a stock-settled award, you need to have your shares valued by an Indian merchant banker.  Here again, we see companies looking to avoid that, so if you've got only a small number of employees in India, you may not want to go to the expense of having your shares valued by a local merchant banker, you might decide to deliver cash instead. And there, whatever the background of the cash is, whether it's a cash-settled award where it tracks your stock price or cash tied to something else, the employees are just going to be taxed on the actual amount of cash that they receive, so you have the simplicity of not needing to get that valuation by the merchant banker.
There are quite a number of examples as you go around the globe of countries where the cash helps solve the regulatory issue.  One thing I want to note is that sometimes it depends on the background of the cash.  What I'll refer to as a “pure cash” award is where the cash amount is set at the time of grant and it's just being paid out over a period of time, a deferred cash award, you could call it.  Then there is a cash award that depends on the stock price.  Some countries have a securities filing requirement for one of these kinds of awards, and maybe a cash-settled award would actually still be subject to the requirement.
I'll use South Africa as an example.  There is a securities requirement there that if you grant a cash-settled award, it doesn't actually get you out of the requirement to find an exemption from their prospectus requirement, whereas if you use a deferred cash award or something that's not tracking your stock price, you do get out of the filing.
I would say this one is a mixed bag.  In a lot of countries, cash does indeed alleviate the regulatory or tax issues.  But you do need to be careful because in some countries, if that cash payment is tied to stock price, you're actually not escaping whatever the filing requirement is.
Then the other part of the simplicity of cash is that it’s just easier to understand.  Depending on who the population is that you're delivering these awards to, maybe they understand share awards perfectly and they just need to figure out the best time to sell, et cetera.
But sometimes if you're delivering awards to more rank and file individuals, there may be concern about whether they are really going to understand how the award works and treat it accordingly, knowing that they could actually take a loss on it.  They might get the shares, pay tax on them and then lose value.  Then they would experience a capital loss, and have some potentially negative tax impact.  Then there is cash—you give them cash, very straightforward.  Most people understand what that means and how that's valued.  It is easier to understand than trying to explain how a restricted stock unit works.  But again, that's largely dependent on your population.
The last part of the simplicity point is that cash can be easier to administer.  You don't have to worry about reserving shares and having people set up their accounts with the broker.  Of course, if you're going to pay the cash into a U.S. or international brokerage account, you have that issue.  But if you're planning to deliver the cash through payroll, then that's very simple.  You don't need to do any sort of campaigns to make sure people open up their brokerage account.
There are probably some other things to consider, but that gives you a good idea as to some of the reasons why companies turn to cash, because there are many ways in which it is a lot simpler than stock awards.
McCord:  Another upside of cash awards is that it can permit you to do some fairly sophisticated cost planning and potentially minimize the expense of your incentive program.  For example, we have a client that wanted to do a relative TSR plan, but they were also concerned about the accounting cost associated with that plan.
And many of our clients are concerned about accounting cost.  They're looking for ways to mitigate accounting expense, and this client decided to bring down the cost for the Monte Carlo simulation that was being used and put an upside cap on the award.
They actually capped the payout at 3x the original grant and said that if the performance exceeded that amount, they would pay any excess in cash.  There were no accounting costs at all because the likelihood of hitting the maximum and exceeding it was deemed very unlikely.
And so, it provided some cost savings from an accounting perspective, but from a messaging perspective to employees and a way to incentivize some sort of outsized growth, it was tremendously powerful for them.
And one of the great things that they were able to do is they've had that plan in place for a couple of years, it's paid out once, just a little bit.  But what that did was, of course, it allows them to convince executives that it could work theoretically. It was a really powerful motivator in focusing people on growth and delivering that growth, so really allowed them to cap the expense.
Molloy:  Just a few different things where the upside comes into play at the bank. I already mentioned the share pool pressure when you have a stock price decline, and you really start increasing how quickly you're going through that pool.  Something like a long-term award or a cash RSU can really take the burden off.
When you're talking about a new hire who doesn't have any true experience with your company and setting some expectations, providing a fixed award of long-term cash can really mitigate the risk of that person then coming out of the company or at least from the buyout perspective, what they're leaving behind.
They've got a set value they're going to get first, for that period of time.  So it really opens up a good set of expectations when starting that initial relationship.  When we're talking about hedging considerations, if you’ve got RSUs that are subject to variable accounting, you can end up getting into some type of cash flow hedge, which definitely does add some significant complexity to how your awards are administered, not to mention the additional cost just trying to administer that hedge, making sure that it's in at the right place and subject to all the significant regulatory scrutiny when you're trying to hedge against your stock expense.
McCord:  We wanted to tee up another polling question to ask everybody on the line “If your company does grant cash awards as part of a long-term incentive program, what is the primary reason?  Is it the dilution issue, a regulatory or tax issue, or some other undisclosed or disclosed reason?”
Cleary:  All right, I'm going to go ahead and launch the poll so you should all be seeing it on your screen.  Go ahead and make your selections.  I just want to remind you all that you are also welcome to submit questions for the panel to answer.  And, again, if for any reason we don't get to the questions or possibly a question is outside the scope of this webcast, we can always take it up with you later.
Long: And I can tell you the leading answer last time was not "Other." 
Cleary:  None of the above.  Ok, only about 50 percent of our listeners have voted, so please enter your selection now if you haven’t already.  Or maybe if you're brand new to equity compensation at your company, you don't know and that's OK.  We should have put an "I don't know" selection.  OK, I'm going to go ahead and close out the poll and let's take a look at the results.
Long:  The last time we got together, it was 46 percent for B and 33 percent for A, relatively close. 
Cleary:  OK.  Let's close out the poll and move on to talk about the downside of cash awards.
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Downside of Cash Awards

 
Long: It's hard to believe that there are actually downsides to cash awards, considering we talked about ease of administration and ease to understand.  If you can go to the next slide, Kathleen, when we look at one of the major downsides, it is just aligning the interests of both the employees and shareholders.
We talked a little bit about aligning goals, but from the interest standpoint, we've listed a few points here.  Looking at your organization and the analytics or history of how your employees or participants in the plan handle stock, it would be good to share that with your plan design team.  Maybe participants really do want the cash and if you're issuing stock, they're selling it right away.  Considering that will give you a better idea of how cash or shares would be received.  It may not be in the best interest of shareholders that employees are selling their stock right away, so it is definitely one of the downsides.
The other aspect is if you're thinking of your leadership team and where they have share ownership guidelines, you're taking a useful tool out of their toolbox for them to achieve these desired results.  The only option they would have is to take that cash from the award and utilize it to purchase shares to get them up to their guidelines.  You would have to do a balance between the cost administration thinking of some of the countries we threw out there, such as China, versus buying shares and where they hold them. 
Then you also need to look at the population, what's your company philosophy, what's your stock price.  If there's a strong price and you're on an upward trajectory, if you have a strong industry or if you have a population that's bullish on your company, they may have some concern that they're getting cash where they can't benefit from the stock price once the shares are vested.  And in the previous case, if the shares are vested and held in a brokerage account, they benefit from that stock price increase.  If they get cash, they only benefit from it during the vesting period, so you may have some concerns there. 
On the flipside, again, knowing your population, if there's a downturn in the market, you're going to have a lot of happy individuals who would benefit from having the cash because it would be a stronger position for them in that type of a market.
We're going to be bringing up another question here and Kathleen will have it up in a minute.  In thinking of the first point, it's always interesting to find out when you look at your participant population, how long they actually hold their stock.  When you go through the reports you receive and think about your annual vestings, how many of your participants are selling the stock right away or do they actually hold on to it?  Our polling question is, “How long do employees at your company voluntarily hold on to the stock?”  A. Not at all, sold it right away; B. 1 to 5 months; C. 6 to 12 months and, D. they hold it more than a year.  The poll is up now, thank you, Kathleen.
Cleary:  You're welcome.  And while our listeners are entering their selection here, we have someone who was just asking for a clarification as to how a long-term cash plan affects the company share pool.  Craig, I believe you addressed that, but if anyone on the panel wants to comment on whether or not there is an impact to the company’s share pool for awards paid in cash?
Long: I believe Tom spoke to the slide on the share pool aspect?
Molloy:  Right.  From a share pool perspective, any award that's paid in cash does not hit the share pool at all.  If you have a pool of 10 shares and all of your RSUs settled in cash, you still have 10 shares in that pool.
Cleary:  Great.  I think that's what this person was looking for, just a clarification.  OK, it looks like we've got a pretty good response on our poll, so I'm going to close it and share the results with you.  And we'll see how it compares to this presentation when it was done at the conference.
Long: B was the first-choice last time, but with 39 percent of the attendees.  So, a little bit more here today and that's very much what we see.  We do get a big bump right after the vesting when there are a number of people selling, but for the vast majority of the employees, they look at it as a long-term hold on those shares.
Cleary:  All right.  Let's go ahead and close the poll.  You should be back to the slide presentation on your screen, for more downside.
Long:  Right.  We talked a little about it on the previous slide, which comes from the share ownership requirements.  It is increasingly difficult for individuals to maintain or manage up to the ever-increasing share hold limits or requirements that organizations place on the leadership.
Like I mentioned before, executives do utilize equity awards as one of the primary vehicles to get to their share ownership point.  A lot of organizations look at that and how much they're granting and where they're trying to set their executives.
If you're removing shares from the mix, the only opportunity for individuals to meet their ownership requirements on their own is to take the award cash or other cash to buy shares.  I know a lot of organizations give executives time to get up to their ownership level, which could coincide with vesting events.  But based on why you're issuing the awards, it comes back to what we've said throughout this session, what are the goals, what are the interests, where does the organization want to drive it depending on how you want to issue these awards and when you want to issue them.
Glagau:  Yes.  Craig, I just wanted to pop in with a comment for participants outside the U.S.  I think the general comment you're making here also applies to them, but then it puts a little bit more burden on these individuals who have share ownership requirements if they have to then turn around and separately acquire shares.
There's an even more difficult aspect for employees in some countries outside the U.S., because it may be much more prohibitive or problematic for them to acquire shares, because if there are exchange controls or other reasons why it's difficult to purchase foreign securities, then you really put a big roadblock in the way for them, whereas if you had just delivered shares through your employee share program, then they may have fallen under an exemption or something like that.
If you do have a share ownership program requirement that applies to people outside the U.S., you really need to think about this aspect, because it's not easy in a lot of countries for individuals to just turn around and buy shares, even if you give them the cash from their cash award or cash-settled award.  They may not be able to just turn around and buy shares on their own, so just something to think about there.
Long:  That's a good point because a number of organizations we work with say they would rather issue cash, but they do have executives in those organizations that have to go to the stock-settled the awards.  And then they take an approach that maybe they just issue stock for those who are subject to the ownership guidelines, so there's an evaluation that's done.  Very good point.
Cleary:  Let me just pop in here with a point that one of our listeners made.  He's saying when we were talking about whether or not cash depletes the share pool, this company evidently has a plan that states if the cash award is based on a stock price, then it does count against their share pool.  So just a caution, obviously be aware of what's in your plan document.  That's the first place you should turn.  And thank you for that comment. 
Long: It's a great clarification, Kathleen.  Thank you.
McCord:  Another downside of cash awards has to do with the accounting treatment.  For most of us who are familiar with what happens when we have a stock-based award, you set the value at the date of grant and unless the award is modified, what you see is what you get there.  It's sort of a set it and forget it approach.  Now, if that's the good news, the bad news, of course, is that you do not always get what you pay for.  If you set the value of the award on the date of grant, but then you have a relative TSR program and it pays out at zero, for example, you’re still carrying that expense as you had it on the date of grant. 
There’s a difference with accounting for the cash-based award.  If you're basing those awards on stock price, they're counted as liability awards.  What that means is you have a mark-to-market obligation, and you have injected into your income statement a tremendous amount of volatility around the value of those awards, because on a quarterly basis you're marking to the market value of the award.  We had this conversation earlier today and, from our experience, CFOs either love it or hate it was the initial comment, and I have yet to meet a CFO who loves variable accounting.  The thing to remember is that you do get a tremendous amount of relief if you miss the target for the award.  If you don't hit the target, and the award doesn’t pay out for whatever reason, then you can back out the expense.  You really do get exactly what you pay for.  The other good news on this front is that if your upside is capped, you only have an accounting expense as great as the cash you're laying out.  So what you see is really what you get.
Cleary:  OK.  Further downside of cash awards.  Denise, is that for you? 
Glagau:  Yes, another downside is that in some countries around the world there are tax-favored programs for share-settled awards and we've listed some here.
I would say the two most common programs that we see companies offering in this regard are in France and Israel, where if both options and RSUs are share-settled awards, they can benefit from these qualified programs.  Tax is deferred until the shares are sold, employees may get better income tax treatment.  The employee and employer typically don't have to pay as much in social charges either.
Then you have a similar program for options in the U.K.  Even here in the U.S. we have a potential tax-favored program with individuals being able to make an 83(b) election on restricted stock awards and then, of course, option programs like incentive stock options. 
There are all of these more formal qualified programs where one of the basic requirements is for you to deliver shares.  If you're delivering cash, you're out of those regimes completely, so you may have opted for this for simplicity purposes or some of these other benefits of the cash, but then you've given up the tax-favored treatment in some of these countries. 
At the bottom, I mention a couple of other countries where there are less formal programs, but the employees can still get some favorable treatment.  And for the exemptions in Italy and Spain, the requirement is that you get shares and hold on to them for a certain period of time.  So if you're delivering cash, then you're automatically out of those regimes. 
Whether or not this is, in your company's view, a downside will depend on your philosophy about this kind of program, because there are some companies who don't offer these programs at all, and so there is not a difference between cash and stock-settled awards.  If you are a company that has looked into offering tax-favored awards in any regime, you're definitely going to have a downside if you go to cash awards.
Moving to the next slide, some other downsides, and I'm going to jump to the last point on this slide.  Besides the fact that you may not benefit from a tax-favored regime, the other thing we see outside the U.S. with cash versus stock is that there can be a difference in the tax withholding, reporting and social insurance contribution requirements. 
I would say many countries outside the U.S. have a similar approach to what we have in the U.S. where if you get shares, that's a taxable benefit, withholding, reporting applies, social insurance applies, same as cash.
But there are still a number of countries outside the U.S. where that's not the case, where if you deliver shares into a U.S. brokerage account, they may not impose a withholding requirement on the employer.  In some countries, you may not even have to do any reporting for tax purposes in that country.
From the company's perspective in some countries, if shares are delivered, you might not even have an employer social charge on that benefit.  If you shift over to cash, in many countries you then will shift over to the regimes where you do have to withhold, report and pay social insurance contributions.
I think this is a point that's been changing over the years, because more and more countries around the world are viewing stock-settled awards as a benefit just like cash, just like salary.  The number of countries in this category is shrinking, but I think it's still a point worth considering, that you will have a different set of requirements you need to look at if you're delivering cash awards versus stock awards as part of your long-term program.
Just an example, I'll mention in Ireland, on a stock-settled award no matter what it is, options, ESPP, restricted stock units, the employer does not have a social insurance contribution requirement.  But if you deliver cash or a cash-settled award, the employer will also have a social insurance contribution requirement.
And just popping back up the list here: increased labor law risks outside the U.S.  If you've heard myself or any of my colleagues here at Baker, or some of the other global equity advisors, one thing we always recommend for a parent company offering any kind of equity award in another country, is that you keep it separate from the local employment benefits, because most countries around the world have much more favorable employment laws than we have here.
And very easily, a benefit that's provided to employees can become either an acquired right where once you give it to someone a few times, it's very difficult to take it away.  And if you give someone a benefit and then they're terminated, you may have to take into consideration the value of that benefit when paying them out some sort of termination indemnity.  We always suggest that you keep your equity/long-term incentive programs offered by the parent company separate.
With the stock-settled award or a share award, that's easier to do than cash because shares automatically look different than cash and there's a very clear distinction.  Once you start delivering cash as part of this incentive program offered by the parent company, it looks and feels very much like the rest of their employment benefits.  It's easier for those to get melded together, and depending on a number of factors, it may be easier for employees to argue that it's part of their local employment benefits and subject to things like acquired rights, termination indemnities, et cetera.
One big thing there is that it depends a lot on how you pay it.  If you pay it into a U.S. brokerage account, it's still going to look and feel different from their regular salary and other benefits being provided locally.  If you pay it through payroll, it's going to look and feel like salary and therefore in the employee's mind, it looks more like an employee benefit from the local employer.
We're going to talk in a couple of slides about—if you do implement cash programs—some of the things you can do to still try to have cash awards separate from local employment benefits.  But I think no matter what you do and how good of a distinction you try to maintain between your local employment benefit and the cash award offered by the parent company or part of that parent company incentive programs, cash is always going to have increased risks in this area.  I think that’s just something you're going to have accept if you go down the road of cash awards.
Craig, I think you were going to talk a little bit about the first point on this slide?
Long: Absolutely.  And thinking back to earlier in the presentation on your goals and where you're going to ultimately pay out the cash, whether through payroll or a brokerage, if you do decide for the latter and you deposit the cash into the brokerage account, we are subject to U.S. legislation.  Then we have to make sure that we comply with the Dodd-Frank rules which, when it comes to cash and the person does connect with the broker, we would have to quote the exchange rate that the person is going to get if they're looking to convert to a foreign currency. 
Those individuals have a period of time to decide, and maybe they didn't like the rate, to cancel the exchange.  Now, this only applies if it's cash going into the account.  It doesn't apply, there is an exemption built into the Dodd-Frank legislation where if it's a stock option exercise or a long stock sale, it doesn't exempt those particular provisions.  It only really applies if it's cash in the account and then there are some additional oversights in the monitors that we have to put in place.
Cleary:  Before we move on, I do have a comment one of our listeners submitted that's kind of interesting.  This listener says that their company grants cash awards that don't track against the stock price and it works very well for their company and a couple of different countries, Brazil, Indonesia and UAE, and they don't grant equity in those countries.  Thank you for that comment, and for our other listeners, that's what's working for one of our participants today. 
So let's talk about implementing and administering long-term cash programs.
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Implementing / Administering Long-Term Cash Programs

 
McCord:  Sure.  Let's say that we have convinced you the benefits would outweigh the downside of the cash program and you're thinking about doing it for your own company.  What are the questions that you should be asking?  Of course, what you're ultimately driving towards is a program tailored to your specific thoughts and circumstances and it really helps you to drive your long-term objective.
The first question I think most companies are faced with when they start to head down this path is whether or not you want a cash award tied to some sort of a performance metric, for example, an ROIC or some other metric, either financial, non-financial, or strategic.  Or are you really using a cash vehicle to try to mirror a stock award where for whatever reason you're not going to actually use stock.  It's seems like a very simple question, but actually the answer to that can really drive some of your subsequent decision-making.
In concert with that, you really need to think about what the vesting conditions are that you're looking for.  We have a number of clients who, for example, use a long-term—and by long-term what we mean is three years in the U.S.—path to tie to certain financial objectives.  It fits side by side with their stock, stock option and restricted stock program that's based on return on invested capital tied to their long-term strategic plan.
You can think about something like that.  We've had some clients who have used it to sort of mimic a stock award and some clients who have used it as we discussed earlier as a way to provide a cash kicker on top of an equity award and help to minimize the accounting expense.  Any of those things can play into what your vesting conditions might be. 
Once you've determined the metric—in some sense that is the easy question—the other thing you need to think through is what the target is going to be and how are you going to set that target.  I think that the short and easy answer is, of course, that it's aligned with your long-term plan.  Do you trust your long-term plan or do you have the ability given where you are in the company’s lifecycle or phase of development, to rely on that long-term plan in a way that's responsible and it gives your employee something other than a lottery ticket?
We do have a note here whether or not to include personal performance.  I have never seen this work effectively in a long-term plan so I'm not sure if anybody else on the panel has seen that done.  I think it is extraordinarily difficult to focus people on long-term plans for their own personal performance.  I have seen it come into play occasionally for the CEO, but I don't see it generally as a longer-term objective for individual performers or contributors. 
The other thing to think about is what sort of vesting you want.  In general, when we talk about long-term, we're typically talking about a three to five-year vesting period in my experience.  But there are some instances where it may make sense to shorten that.  You might be in a turnaround situation and you're looking to drive a really impactful change in a relatively short period of time.  You might have a short-term retention risk that you're trying to address and you're using the cash base program to do that.  You may have a situation where you're really in the final stages of a push towards a particular goal and you just want to maintain focus and sort of add a little extra.  Those are all considerations that would go into whether or not you have a long or a short performance cycle.
The one thing I'd add there is the longer the performance cycle or vesting period is, the less tangible it feels for employees.  There's sort of a psychological tradeoff that's worth thinking through and this will be a specific cultural distinction in a lot of organizations about whether or not your employees have a generally short-term or long-term mindset.  And what's short-term in your industry or your company and what's long-term?
We've had instances where we have a longer vesting period because it's truly aligned with the long-term performance as a company.  So what it means is that it's still far out for employees.  They don't really assign any values to it and you're not getting very much bang for your buck there.
I think the other considerations are whether or not you want to provide a deferral election which can be beneficial for individuals from a tax spending perspective and also whether or not you want to include a clawback provision.  Certainly, those of us who have been tasked with grappling with the implications of a possible Dodd-Frank compliant clawback provision know that this can be a very thorny question, and has a lot of complications attached to it.  But understanding whether or not you want to attach that provision and how it might work upfront is something that you're going to want to spend some time thinking about.  I think in most instances that I've been involved in, the individuals rely on their company’s broad clawback policy which often, right now, includes a tremendous amount of board discretion.  I think that's where most of our clients are most comfortable.  Certainly, if we end up with a Dodd-Frank clawback provision, that level of discretion is likely to go away.
Then the final point—and I don’t think this is unique to long-term cash plans—is weighing the complexity of the design with the ease of understanding and administration.  I think in a number of instances, we've had clients over-engineer programs and they've put in every bell and whistle known to mankind.  And that's great on paper, but when you sit down with the recipients of the award, some of them really struggle to understand what it is they have.  That means, of course, far more importantly, that they don’t really understand what we're trying to drive by granting the award in the first place.
So as you start to bolt on additional performance criteria, additional vesting criteria, anything like that, I think it's worth taking a step back to see what you are really trying to drive and whether or not our recipients are going to understand.  You need to consider the clarity of the message and the impact of the award.
Glagau:  Moving to next slide, one other thing that I had alluded to earlier, is that if you've made the decision to grant cash awards, you still want to take some steps to let people know what they're getting and document the grants.  Nora talked about designing the plan, you still want to have a framework for the awards and you still should communicate those awards to the employees to have them actively accept or accept by way of negative or deemed acceptance.  Have them accept the terms of the awards because there are so many things, particularly outside the U.S., but also in the U.S., that you want to have in there to protect the company and make sure that the employee and the company are on the same page about how the award works and how they would lose the award if they terminated.
You still want to take the same approach.  We talked about cash awards being simpler but I should say: Don’t throw everything out and say, "Okay, I'm just going to give away some cash and that's going to be much simpler.  I don’t even need an award agreement."  I would say you should still have an award agreement that has these terms and conditions.  Then outside the U.S., you still want to have protective language.  Some of the things I talked about earlier should be included to observe this separation of the parent company award versus local employment award.
I think Tom is going to talk a little bit more about the bank's approach, but just I'll add one more comment before turning it over to him, and that is mentioned on the next slide.  There are still some country-specific considerations that you may want to include in a country-specific appendix to your awards.  Just to make sure you observe that same separation, including not to mention these awards in employment offer letters or employment contracts if you're trying to have them be truly a separate award that does not get caught up in local employment laws which will end up costing your company a lot of money.  Tom, do you want to talk about the bank’s approach on award documentation for cash awards?
Molloy:  Our approach for the cash awards is that we try to keep the award agreements as generic as we can to limit how much administration we have to implement.  We'll have a base RSU agreement that lays out a lot of the covenants Denise talked about.  For our country-specific challenges, we rely heavily on what we refer to as Exhibit B, that really preempts the language [of the base agreement] and is the primary exhibit to enforce.  For example, it sets out provisions such as: If you're outside one of these countries, you're getting stock.  Or if you're in this country, you're going to get cash.  Or because you're in this country, we're going to have a different retirement provision. 
We even have provisions in there [about what happens] if you're granted an award while working in China versus outside of China and what that means, to ensure that we're complying with the SAFE regulations and not running into trouble.  Our friend, Denise, makes sure that we've got all the documentation lined up and that we're communicating effectively.
Glagau:  One other thing - just to make a comment about the award documentation - one question we get asked a lot is, "For granting a cash award where we're not going to have the alternative of settling in shares, do we need to grant it under our stock plan?"  There are stock plans and I think one of the listeners mentioned how their cash awards work under their stock plans.  I would say most typical equity incentive plans include the ability to grant an award that's settled in cash or shares, whether a combination or purely cash.  One of the advantages of granting the award under your omnibus plan is that you've got structure and defined terms, for example, what's going to happen in a change of control.
This assumes that you're trying with your cash program to have the same framework that you have for your stock programs.  You've got this great framework and probably a lot of work went into drafting the plan document.  You can benefit from it by granting the awards under the plan, although as one listener pointed out, if you're granting under the plan and it says, for a cash-settled award, it counts against your share pool, then that is a consideration.
If you're granting cash and there is no ability to settle in shares, you don’t have to necessarily grant under your plan—you can do something outside your plan.  There are sometimes reasons to do that and then maybe it's a little bit of effort to draft the award agreement because you don’t have a ready set of defined terms.  But that's a consideration in implementing cash awards, are we going to do it under the plan or outside of the plan?  What definitions will we use if it's outside of the plan?
Molloy:  And just building on that a little bit, Denise.  In terms of providing stock awards, there's a very strict governance process associated with providing those awards.  You have to have shareholder approval in order to have a plan and to set aside the shares.  That's not necessarily true when it comes to cash-settled awards.  Although a plan may spell out a certain number of units that may be granted under the plan regardless if it's stock or cash, if it is a cash-settled plan, there are a lot less administrative hurdles that you need to go through in order to provide cash-settled awards to participants versus the stock-settled awards.
Glagau:  Yes, great point. 
Long: Excellent.  If we can go one more slide, probably one of the least thought of points is communication.   When the teams are putting plan designs together, they're not really thinking about what it would take from a communication standpoint.  But in my opinion, that’s probably one of the more important pieces because these plans are very expensive.  You want to ensure your participants are understanding the value that's being delivered in these programs, so they can understand the value that they have within the organization, based on what they're doing.
Cash awards, in and of themselves, are very easy to understand, like we've talked about.  If it's just a very basic award, maybe you don’t need to put a lot of focus there.  But you can see through the course of our conversation here how these awards can become a little more complex.  When we look at it from the Bank of America standpoint, added to the complexities that we had a marriage between some awards that were being issued and paid in cash and some awards that are being issued and paid in stock, being able to communicate to awardees on what’s being paid which way was very important to us.  We put a lot of effort and time into ensuring that we understood what medium we should use to communicate to these individuals, what was the best way to get the message across, because we wanted to ensure that it was very impactful.
From a broker perspective, it was very helpful to reduce calls coming into the phone center, and very important that the participants understood so there was no confusion when it came to receiving the awards.  Less questions, less confusion made for a better participant experience.  Tom, I’ll hand it over to you to discuss the communication.
Molloy:  So we're communicating to over 20,000 people when we're making this type of change and we generally don’t have a ton of their attention.  Our primary vehicle to communicate what the award provisions are going to be is to provide an annual fact sheet that highlights what the provisions are.  The fact sheet itself is still three or four pages, but we think it’s the most critical information everyone needs to know about their awards until they get their award agreement.  At the same time, we take everything that's changing and what we consider to be the most important information, and stick it right at the very front of the fact sheet to highlight what's changing.
We try to get as much traction on what’s going to be coming and what awardees want to pay attention to.  When we're communicating the awards, we also try to put a box in there: “This is what changed from last year” just to try to get that differentiation.  This is one of the more important communications our population will actually pay attention to because they're excited about getting the awards.  So we’re trying to make sure that they fully comprehend what is happening with their awards and at the same time, we're also teeing up supplemental materials that we give to our HR and comp partners.
They are just as critical as the communications to partners and our HR and comp teams, since they're the first line of defense when somebody has a question.  If they're not calling the phone center, they're calling the company saying, "I don’t understand, can you explain this to me?"  So, we’re trying to make sure that they've got everything they need to know about the awards in advance.  And then finally, we've got our favorite tool, which is the RSU learning center.  If you go to the next slide, this was just recently re-launched in January and this is the website all of our participants have access to.
Each of the circles represents a different video.  We're trying to put the videos in the order of what the lifecycle would be for someone who has never had an award.  We've got all these videos in blue which we feel are the most important.  If you have to watch a video, these are the ones that we would recommend.  It takes the person—who doesn’t know what an RSU is—through an explanation of what it is.  And they're relatively short, one to two-minute videos with a little bit of animation that just quickly covers some of the key concepts. 
At same time, over on the right side, we've got some hard copy materials that we provide to work through how to do some of the key navigation and get you started on benefits online, getting to see your awards and some of the key functionality.  For example, how do you go about accepting your award?  How do you open your brokerage accounts?  And most importantly, how do I get my money from here out of my award into the account when I actually want to use it?  Then down at the bottom, we just have some other summary information if you want an overview of how RSUs work, what the typical lifecycle is, and then, again, most importantly, how these payments work.
Long:  And what's great about it, to Tom's point, they are very short videos.  We found a lot of uptick in people utilizing it.  Not that we all don’t appreciate some of these computer-based training modules which take 10, 15, 20 minutes, but people start kind of falling off. Even thinking of our webinars, we went from 215 down to 180 here because, as it gets longer, people start pulling away.  We wanted short, little vignettes that they can hop in and listen to it over a short period of time and it's been very successful.
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Takeaways

 
Long:  With the takeaways, I'm going to the next page.  What I would add here is from my perspective, it is important that as you work with your design teams, you really understand what the company philosophy is in issuing these awards, what are you looking to accomplish and what the current situation is.  If you have participants who are really bullish on the organization, there may be some negativity if you’re issuing cash awards.  I know that Denise will get into some of the other aspects, but from a company standpoint and partnering with your design team, you really want to share what you see with the data you’re getting out of your plan.  How many people are holding on to awards [shares] at the time of vesting versus selling right away.  And then getting a better understanding of your participant base and what would be appropriate from their perspective.
Glagau:   Yes.  I think my biggest point that I hope people will take away from this webcast is although cash can be very helpful, in particular outside the U.S., in dealing with some of the regulatory and tax issues, you really need to conduct your due diligence.  Sometimes it can actually be negative.  I didn’t delve too much into that, but there are a couple of countries where actually using cash gets you into a worse situation.  You want to make sure that you haven't traded in one set of problems for another set of problems and that you've done your due diligence.
Generally, you will come up with a shorter list of compliance items if you're dealing with cash, but you still do need to do that due diligence.  One other bonus comment I'll make here is what we've seen a lot in the last few years is in the context of transactions.  A straight cash-settled award or a deferred cash award replacing equity awards in the transaction context is being used a lot.  For the same reasons we're talking about today, you will still want to have some due diligence done to make sure you haven't signed up for a bad tax problem with cash replacement awards, in the transactional context.  I guess my big takeaway is just that it is simpler but you still have to do your due diligence with cash and cash settled awards.
Molloy:  And my final takeaway is, cash is one of the tools from the toolbox and it can be a really good tool.  But like with any job, it's really a matter of making sure that the tool you're using is the right tool and it is serving the right purpose for what you plan to do and meeting the goals of that objective.
Cleary:  All right.  That sounds great.  I do have a couple of questions that have accumulated, if the panel wouldn’t mind?  We have a participant in the audience who's interested in knowing how companies are administering these long-term cash awards.  Tom, maybe you can comment or Nora, from your consulting experience?  Or anyone on the panel.  Are companies administering these plans separate from their equity awards?  Do they have one plan, maybe an omnibus plan that allows cash and equity?  Then the second part of that question is how the cash is vesting?  Do they have an account, like maybe an equity account where they see vesting dates and cash amounts?  Anybody want to comment on that?
Molloy:  I can at least handle the bank’s perspective.  And it really depends on the award program that we're using.  Our primary stock plan that we have right now, the Key Employee Equity Plan, does provide both cash-settled and stock-settled awards.  Both programs are administered on Benefits Online.  The only distinction that a participant would see is that on Benefits Online, one award would be reflected as being in cash and the other in stock.  But all of the administrative aspects really look the same.  Long-term cash is also administered on Benefits Online.  There's a separate section for those awards, so it does differentiate from this is fixed cash versus RSUs that will fluctuate with the market value.
Then our Wealth Choice program is probably a little bit different because it's got that investment opportunity benchmark in the mutual funds.  The participant experience almost looks a little bit like the 401K balance—they can see what the total balance is and then how they've allocated across their different accounts.  Each program is administered a little bit differently, but it's still very convenient to the participants.
Cleary:  Thank you.  And I would just suggest to this listener, a great place to get comments on this type of a question would be the NASPP's Q&A forum on our website.  You can post the question out there and get responses from a lot of your peers who will chime in and let you know what’s working for them.  So that's a good place to seek some additional information.
I also have a question from someone who's asking about the prevalence of these programs.  Are you seeing them become more broad-based or are they more of a target-based approach?  One of the reasons we're doing this webcast and that it was also presented at the conference last year, is because more and more organizations are looking into these cash awards.  I mentioned the Q&A forum, we're getting a lot of questions there about cash awards, so we thought it was a great time to put up a webcast on this topic.  Any of the panelists have any comments on the prevalence of these awards?
Long:  What I would add in is that we're seeing a lot of it.  And as Tom mentioned, this is a tool in your toolbox.  I think we had a polling question which came up and hit on why you are issuing cash awards but it's really specific on certain locations where cash is easier.  Not to say that there are certain organizations out there that don’t issue cash broadly, but we see that as well.  If we had to think of the majority of where we see it being done it's mostly to solve for specific locales and make it easier on the administration.  Sometimes that also equates the costs.  Any of the other panelists have thoughts here?
Glagau:  Yes, I’ll kind of echo what Craig said, we've seen it in our practice here that cash is looked at, and I think there continue to be countries where stock is just too challenging.  Sometimes those issues get resolved, the laws in the country change but then there'll be another country where companies tend to be going and that country has some issues.  I think we've always seen it but there does seem to have been a little bit of an uptick, I would say in the last couple of years, outside the U.S.   But also the pressure on the share pool, because it's increasingly difficult for companies to get the number of shares they want for their normal share program.  I think that's definitely been a driver in the last few years.
Cleary:  Denise, do any particular countries come to your mind where it would not be advantageous to give a cash award instead of stock?
Glagau:  Yes, there are two that jump to mind. 
Denmark—there are some companies who just avoid Denmark as a matter of course for stock-settled awards, because there is something called the Danish Stock Option Act, which despite its name, applies to options, restricted stock units, employee stock purchase plans.  The act basically makes it nearly impossible for an employee to forfeit their award upon an involuntary termination.  They would have to do something pretty horrific that qualifies as misconduct under Danish law to forfeit the award.  It doesn’t matter what your plan says.  You give them an award, they probably will remain entitled to it.  That's with stock.  Companies will sometimes say, "Well, why don’t I use cash in Denmark?"  But a similar law applies for cash, and it applies for voluntary and involuntary terminations.  So cash is really worse than shares in Denmark for the labor law aspect of it. 
And then the other that pops to mind when we talk about cash actually being negative is in Canada.  There are some advantages to using cash in Canada, but if you have a cash award that has a vesting period of longer than three years, you actually get into their deferred comp rules, which make 409A look almost friendly and nice.  Things can be structured in a certain way, but you have to watch out, you don’t want to have a vesting period longer than three years in Canada with a cash award.  So those are the two that come to mind.  There are some other countries I would say with probably lesser considerations, but those are the two big ones. 
Molloy:  And, Denise, I'm just going to throw out Italy really quick, which at least a couple years ago, the employee tax withholding rate for cash awards was 10 percent higher than those for stock-settled awards.
Glagau:  Yes, that's a good point.  There are those countries with tax-favored programs or where social insurance contributions might not be due on stock awards, but they're due on cash.  There are actually quite a few countries where the cost to the employer can increase with cash because of that.  So, yes, good point, Tom.
Cleary:  And let me just mention, if you are looking for global information, the NASPP's Global Portal has a ton of information that's organized by country.  So, if you're looking to grant cash or equity in a particular country, that's a good place to start.  Of course, nothing takes the place of your company’s advisors, but the portal can give you a good place to get started.  Also, we did a webcast in March of this year, “Around the World in 90 Minutes,” which included a lot of country specific information.
If there are no further questions, let me just say thank you.  I certainly learned a lot about cash-settled awards today.  We will be posting an audio/video archive in the next day or two, and you're welcome to listen to any part or all of the webcast again, as many times as you wish.  We'll also post a transcript in the next few weeks.  A huge thank you to our expert panelists for a great session today, Craig Long, Denise Glagau, Nora McCord, and Thomas Molloy.  Thank you for all your time preparing for and presenting the webcast today.  I really do appreciate it.  Thanks to our audience for joining us today and I hope that you will all listen in on June 13th for “The Trump Administration and Compensation: How the New Administration Seeks to Change the Rules.”  Thank you, everyone.  That concludes our webcast for today.
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