The NASPP Blog

Have you heard the latest news generating a buzz in the industry? We recently rolled out our newest educational offering, Tackling Equity Compensation Issues Related to Mergers & Acquisitions. I thought I’d use my blog today to highlight one of the topics I will be covering during the administrative part of this offering to give you a hint of what you can expect from this part of the program.

Communicating with Employees About How the Deal Impacts Stock Compensation

Communication is a topic that is important to me in every area of this job, and business combinations are no exception! In times of change, internal communications are paramount; clearly this is no time to neglect your employee communications. There are many topics related to the company’s equity programs that will need to be contemplated in your communications during a business combination. One topic, however, that is typically imminent and generates a lot of interest (because it involves the use of income earned by employees) is the employee stock purchase plan (ESPP). Employees of the target company participating in the ESPP will be very anxious to learn what will happen to the company’s existing ESPP and their current offering. These employees will be equally interested to know about the ESPP of the new parent company (we hope there is one!).

Key Details to Address

Some of the more common topics you’ll want to cover in your communications to address these ESPP concerns include:

• Details about the final purchase under the plan: Will the purchase take place on a date different than the pre-arranged purchase dates under the plan, what payroll periods will be covered under this final purchase, and where will the shares purchased be deposited under this final purchase (if shares are being issued). 
• 6039 reporting: What party will be responsible for delivering year-end tax reporting obligations and who should employees contact regarding subsequent sales of target company ESPP shares (if shares are being assumed/converted). 
• Action Items: Specifics of any action items employees need to follow to continue their participation in the existing offering or become enrolled in the acquiring company’s ESPP, i.e., enrollment deadlines or opening accounts at the acquiring company’s designated broker. 
• Information about the new parent company’s ESPP: Highlight what’s the same and what’s different under the target and acquiring companies’ ESPPs, describe where shares purchased under the acquiring company’s plan will be deposited, how soon the shares purchased under the plan will be available for sale following the purchase date and what type of brokerage fees employees can expect to pay for sales of their ESPP stock.

Stay Tuned

Now that I’ve covered the topics you want to address in your internal communications, tune in next week when I discuss strategies for effectively delivering this information to employees.

There is the strong possibility that mergers and acquisitions will increase later in the year; it is a mistake to assume you are immune to this trend. You don’t want to wait until you are in the middle of a deal before finding out how your stock plans are impacted. Your participation in our program, Tacklling Equity Compensation Issues Related to Mergers & Acquisitions, will ensure you are poised to address the issues that come up when this time arrives. Early bird registration for this program ends tomorrow; register now and save $100.

Survey on Stock Compensation Practices

Stock & Options Solutions is conducting market research on stock compensation practices. Take a moment to complete their survey today; it should only take five or ten minutes and all respondents will receive a copy of the results.

– Robyn