The NASPP Blog

April 15th is looming and many of your employees will be scrambling to get their taxes filed. Since crunch time exaggerates confusion, this last push will really highlight the top issues your employees face when it comes to reporting their equity compensation.

Keep a Tally

It’s a busy time of year. I know you have a lot going on, and fielding tax questions from employees only makes it busier. But, give this a try, anyway. Keep a tally of the types of questions that you get from employees who are trying to file their tax returns. Better yet, see if you can bring your HR teams in on the count (or at least get feedback from them). This is the best feedback on your communications efforts that you can get from your employees. They may love your seminars, you may have high participation rates, you may even have 100% grant acceptance. But, when it comes down to actually getting the right numbers onto the right tax forms, employees absolutely must have absorbed what you’ve been telling them. If you see a particular type of question come up more often than any other, then you know what information to tackle in the coming year. If you get too many questions to even begin to keep track, then tax time is telling you to step up your game and get communicating.

More Choices Mean More Issues

If you have multiple equity compensation vehicles (say, an ESPP, NQ options, and RSUs), employees have a lot to sort through when tackling their tax returns. If they sold shares during the year, they need to understand how to find the cost basis of those shares and whether they are reporting income or capital gains. If you find that a significant number of questions center around employees’ inability to distinguish between their different pieces of equity compensation, then maybe tax time is telling you to reconsider the mix as well as the choices. Even just limiting tax payment methods can reduce the confusion.

Walk the Line

A difficult issue that stock plan management teams deal with is exactly how to help an employee understand their equity compensation well enough to file a correct tax return without actually offering tax advice. I think the best way to avoid the two extremes of either giving out too much information or frustrating employees by just sending them away unassisted is to have standard communications and samples ready. You can get buy-off from your legal department on the communications, desiminate them to HR locations, and make them available on your intranet. This helps to control the message that’s going out to employees and will save you time when you can direct an employee to a resource instead of walk them through the information personally.

If you find that you are getting a significant number of employees begging for tax help beyond what is in your standard communications, tax time may be telling you that employees need tax advice resources. Check with your legal team and your current service providers to see if you can direct employees to a list of financial advisors that understand equity compensation.

NASPP Resources – Be a Part of the Solution!

We now have an Employee Communications portal on the NASPP site. Included in the content are samples of how other companies are helping employees understand their equity compensation. This is a great place to share and learn, so don’t be shy about submitting your own communications. You can submit via the Employee Communications portal, or by contacting me directly. You can find my contact information in the NASPP On-line Member Directory.

Speaking of April 15th…

Don’t forget that the best prices for the 18th Annual NASPP Conference as well as the Practical Guide to Performance-Based Awards pre-Conference course will disappear after April 15th.

And There’s Always Tomorrow!

If you signed up to participate in the 2010 Domestic Stock Plan Design Survey, but haven’t completed it, yet, don’t forget that the deadline for completion is Friday, April 9th! Remember, anyone who completes the survey will get an additional 10% discount on 2010 Conference registration fee.

-Rachel