The NASPP Blog

Yesterday, I attended the Certified Equity Professional Institute’s 7th Annual CEP Symposium in Santa Clara. My only regret is that I could not be in three (or four) places at once to sit in on all of the session! Today, I’d like to share with you which sessions I was able to participate in and give you some take-aways that I benefited from for each.

Speaking of the CEPI–if you are not already a CEP or on your way to becoming a CEP, then I know what your New Year’s resolution should be! What are you waiting for?

“Like”

The opening session was a fantastic message about employee communications. Fidelity and Starbucks offered us all some insight to their communication partnership. The cool tidbit from this session is that really grabbing your employees’ attention is best done by customizing your message for your specific audience. Starbucks made an awesome move to reach out to employees by creating a Facebook page along with targeted ads for anyone listing Starbucks as their employer. When clicked on, these ads bring the Facebook user to a landing page where Starbucks can put some general (and already public) information with links to the Fidelity site. For a young, hip company like Starbucks, this has been a far more successful approach to the old paper communications–not that those are going away, mind you–and a great way to target an employee population that is completely comfortable with the online world, but doesn’t have access to a computer at work.

Example Examples

I presented in the first break-out session on the difference between providing employees with financial and tax information or advice in Walking the Line: Benefits and Risks in Stock Plan Communications. One of my fabulous co-presenters, Bob Callanan from UBS, gave some great examples on how to communicate transaction decisions to employees. One way to avoid providing investment advice to your employees and also ensure that you are creating effective examples for them to consider is to use three outcomes in your scenarios: what happens when the stock price goes up, drops, and remains flat. He reminded us that the “rule of three” applies also to the way in which information is presented. Providing information in all of descriptive, tabular, and graphical interpretation of scenarios ensures that you’ve captured data in a way that each employee can identify with.

Namaste

After a rousing game of Equity Compensation Jeopardy (Congratulations to the winners, Elizabeth Dodge of Stock & Option Solutions and Wendy Jennings of Riverbed Technology), I learned about “Achieving Year-End Nirvana” in the second break-out session. This presentation was a great overview of year-end processes including what goes into 10-K and proxy preparation. One essential reminder from this session is regarding you audit process: audit key data points against independent data. For example, verify your transaction share amounts with your broker and TA, not just reconciling against the stock plan administration database. Each section of this presentation included concrete tips. In the 10-K preparation, the NASPP’s Barbara Baksa provided a list of common EPS calculation errors. My favorite was: not considering all sources of proceeds when determining anti-dilutive stock. In particular, she warned us that unvested underwater (or even barely in-the-money) options may be anti-dilutive once the value unamortized expense is incorporated into the calculation

The Big Stretch

The final session I attended gave a detailed look at financial reporting including modification and M&A accounting, forfeiture rates, and calculating your APIC pool in Oops I Did It Again, Myriad Missteps and Misunderstandings In Financial Reporting. Although it was absolutely hilarious watching Elizabeth Dodge make some pretty big leaps to get Britney Spears lyrics to relate to financial reporting, the real value in this session was the very comprehensive explanations provided by each of the panelists. My tidbit from this presentation is a reminder that forfeiture rates are not a one-time calculation. If you are realizing significant true-ups, it is probably time to take a look at your forfeiture rate. This is particularly important of you are aware of an upcoming lay-off or other change that could temporarily wreak havoc on your company’s typical turn-over.

-Rachel