A few weeks ago, the following headline showed up in one of my Google alerts: “Why Did Google Pay Nearly Twice In Stock-Based Comp than Apple last Quarter?” I like to think of myself as being pretty smart about stock plan accounting, so this seemed like a question I ought to be able to answer. Today, I take it on.
Apple to Google: Stock-Based Compensation As noted in the story, both companies are Silicon Valley high-tech companies, competing for a lot of the same talent pool against a lot of the same companies, so you’d expect them to have similar compensation strategies. Digging a little further into their Forms 10-K, I was able to determine that they both grant a mix of stock options and RSUs. Apple has some RSUs that vest in as few as two years and Google has some RSUs that have some sort of cliff vesting that I couldn’t figure out from their disclosures, but other than those minor differences, their options and awards vest over four years. In addition, both companies recognize expense on a straight-line basis, so monthly versus annual vesting wouldn’t account for a difference in the expense they recognize. (Google has options that vest monthly; Apple’s options vest annually, bi-annually, or quarterly. Google appears to have at least some RSUs that vest annually, I couldn’t figure this out for Apple).
Apple’s stock plan expense for their quarter ending on June 25, 2011 was $284 million. Google’s stock plan expense for essentially the same quarter was $435 million.
Is it Google’s Exchange Program?
At first I thought maybe the difference was due to Google’s option exchange program. In March 2009, Google completed an option exchange program that was notable in that 1) it was a one-for-one exchange, which is virturally unheard of these days and 2) they allowed options that were barely underwater to be included in the exchange, rather than including only those options that had exercise prices in excess of their 52-week high. The incremental expense for a one-for-one exchange that included somewhere around 50% of their outstanding options seemed like a good candidate to explain the difference in expense.
But I don’t think this is it. The exchange resulted in a charge of $360 million, of which $189 million has already been recognized and the rest ($171 million) will be recognized over another three or so years. This could account for some of the difference, but I don’t think it is the whole story.
So What Is the Difference?
I think it just comes down to the fact that Google has been making grants for more value in the past few years than Apple. This is probably in part due to the fact that Apple’s average stock price for the past four years is around $210 per share and Google’s average stock price for this same period is around $510 per share. Where grants are based on a percentage of compensation or some other monetary amount, a higher stock price theoretically means that the company will grant options and awards for fewer shares. But, given differences in compensation philosophies between companies, I’m not sure that this will be true when comparing, say, Apple to Google.
In other words, if Apple’s stock price were to double from one year to the next, I would expect that the number of shares they grant might decrease commensurately. But just because Apple’s stock price is less than half Google’s price doesn’t necessarily mean that they are granting a commensurately greater number of shares than Google. There are just too many other factors at play in compensation decisions.
And, in fact, the total fair value of Google’s grants (both options and RSUs) for their 2010 fiscal year was somewhere around $2.4 billion, whereas the total fair value of Apple’s grants for the same period was somewhere around $1.3 billion. For their 2009 fiscal years, there is a similar discrepancy: $1.6 billion in fair value for Googe’s grants and .9 billion in fair value for Apple’s grants. Interestingly, for 2008, the companies granted about the same amount of fair value. but for the 2007 year, the aggregate fair value of Google’s grants was $1.8 billion to $.6 billion for Apple.
BTW: 1) Note that I am backing into the aggregate fair value per year numbers by multiplying the shares granted by the weighted average fair value for grants during the year. 2) Kudos to Apple for voluntarily including three years in their stock plan activity roll-forward, so that I didn’t have to pull up each 10-K separately to get their grant amounts for all three years.
With vesting schedules–and, consequently, service periods–of four years, both Google and Apple’s current expense includes the fair value of grants made in prior years, going all the way back to 2007. Because Google has historically issued awards with a greater aggregate fair value than Apple, they are now recognizing more expense for those awards (plus they have some additional cost as a result of the option exchange program).
Tune in Next Week
This perhaps explains the difference in the current period expense, but it doesn’t explain why Google is granting awards for significantly more fair value than Apple, especially given that as of their most recent Forms 10-K, Google has only 24,400 employee compared to Apple’s 46,600 employees. Tune in next week when I discuss this question.
NASPP “To Do” List We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.
Did It Pass? Understanding Shareholder Voting Issues By Keith Bishop of Allen Matkins
Because we live in a democracy, we are likely to feel that we have a good understanding of voting. The basic principle is that whoever or whatever gets the most votes wins. Voting, however, is a far more complicated subject than many governance professionals may realize.
When determining whether a proposal has passed, the first step is to determine the applicable voting rule. This will be a function of state corporate law and the corporation’s charter documents. For Delaware corporations, Section 216 provides a general (there are some exceptions) default rule for matters other than the election of directors – the affirmative vote of the majority of the shares present and entitled to vote present in person or by proxy at the meeting. However, this default rule is not immutable. It can be changed by the certificate of incorporation or the bylaws. Some Delaware corporations, for example, have adopted a majority of the votes cast rule for shareholder action. Thus, it is important to review a company’s charter documents when determining whether a matter has been approved.
What’s the difference between these two rules? Under Delaware’s default rule, broker non-votes are not counted as votes against because they are not considered present and entitled to vote. Under a “votes cast” standard, abstentions and broker non-votes aren’t counted as votes against because neither is a vote against.
But wait, there’s more. In determining whether a proposal has passed, it is critical that companies ask the question “why are we seeking shareholder approval?” If shareholder approval is being sought to meet listing, tax or other requirements, additional, and even conflicting, voting requirements may come in to play.
For example, the New York Stock Exchange (Rule 303A.08) generally requires listed companies to obtain shareholder approval of equity compensation plans. The requisite standard for approval appears to be similar to a majority of the votes cast standard – “the minimum vote which will constitute shareholder approval for listing purposes is defined as approval by a majority of votes cast on a proposal in a proxy bearing on the particular matter, provided that the total vote cast on the proposal represents over 50% in interest of all securities entitled to vote on the proposal.” Rule 312.07. However, the NYSE treats abstentions as votes cast regardless of their treatment under state law. Consequently, a measure may pass as a matter of state law and yet fail to meet the NYSE’s requirement.
Determination of whether a proposal has passed is not as easy as it may seem. It requires an understanding of applicable state law as well as other applicable listing and legal requirements.
Don’t Miss the 19th Annual NASPP Conference The 19th Annual NASPP Conference will be held from November 1-4 in San Francisco. With Dodd-Frank and Say-on-Pay dramatically impacting pay practices, you cannot afford to fall behind in this rapidly changing environment; it is critical that you–and your staff–have the best possible guidance. The NASPP Conference brings together top industry luminaries to provide the latest essential–and practical–implementation guidance that you need. This is the one Conference you can’t afford to miss. Don’t wait–the hotel is filling up fast; register today to make sure you’ll be able to attend.
If you’ve been thinking about beginning the Certified Equity Professional (CEP) program or pursuing the next level, this year’s NASPP Conference is a great time to do it. Because the NASPP Conference is in November, for this year only, you have a unique opportunity to attend the Conference and take the CEP exam at the same time. To make it even more convenient, the CEP is hosting an exam site at the Conference hotel in San Francisco!
Take the CEP Exam, Attend the NASPP Conference, and Save! The Certified Equity Professional (CEP) Institute will host an exam site at the 19th Annual NASPP Conference in San Francisco. The exam will be held on Saturday, November 5, following the conclusion of the NASPP Conference (which will be held from November 1-4). Catch up on the latest industry developments–including Dodd-Frank and Say-on-Pay–with the NASPP Conference and then reinforce your core knowledge with the CEP exam.
Why Take the Exam at the NASPP Conference?
I know you are thinking that you should spend the week before the CEP exam holed up in a conference room somewhere, all by yourself, meticulously reading the exam materials to the exclusion of everything else in your life and that the NASPP Conference is the last place you would want to prepare for the exam. But I think that’s the wrong strategy; here’s why you should consider taking the exam at the Conference:
You’ll be surrounded by industry leaders, including many of the authors of the CEP exam texts. I’ll be there, as well as Takis Makridis, Mark Borges, Bill Dunn, Joshua McGinn, Christine Zwerling, Blair Jones, Scott Rodrick, and Dan Walter–to name just a few of the authors. These are the folks that, literally, wrote the books you are being tested on. The Conference is a great opportunity to meet them and clarify any points you are having trouble with in their texts.
The CEP Institute staff will be on hand, as well as probably the largest population of CEPs to congregate in one place all year. If you stay home to prepare for the exam, it’s just you alone in that room and, frankly, if you had all the answers, you wouldn’t have had to sequester yourself like that. If you have questions as you prepare for the exam, the folks that can help you are going to be in San Francisco–don’t you want to be there with them?
Let’s be honest, the “you in a room by yourself” scenario isn’t really going to happen. That conference room you’ve reserved is going to sit empty while you spend your week running reports for finance, putting out the fire caused by your CEO’s problematic stock trade, arguing with your spouse about who is going to pick the kids up from school and cook dinner, and helping your kids with their math homework. Wouldn’t it be better to just leave all that behind for someone else to deal with and spend the week before the exam really focusing on stock compensation to the exclusion of everything else?
Special Offer
Candidates that take the CEP exam at the San Francisco site can receive 10% off NASPP Conference registration and can receive 50% off NASPP membership for 2012. As an added bonus, candidates that take advantage of the membership offer will receive membership in the NASPP for the rest of 2011 for free, qualifying them for the member rate on the Conference. And, if that’s not enough of a deal, NASPP members that are issuers can receive $200 off the CEP exam.*
To receive the discount on NASPP membership and registration, first register for the CEP exam by calling the CEP Institute at 408-554-2187. Mention this offer to receive the $200 discount on the exam. Once you have registered for the exam, contact the NASPP at 925-685-9271 or naspp@naspp.com to register for the NASPP Conference and mention this offer to receive the discount on the Conference and, if you aren’t already an NASPP member, NASPP membership.
What is the CEP?
The CEPI’s self-study curriculum serves as the industry’s educational standard, focusing on the core disciplines of equity compensation: accounting; equity plan design, analysis and administration; corporate and securities law; and taxation. The CEP designation is granted to individuals who have passed the three program exams (Level 1, basic, through Level 3, advanced). Candidates can select to complete one, two or all three levels of the program.
I completed the program when I first began working in stock compensation and the knowledge I developed has been key to my success in this industry. I highly recommend the CEP program for anyone involved in any aspect of stock compensation.
*The Fine Print
The discount on NASPP Conference registration is available for new registrations only and the discount on NASPP membership is available to new members only. I’m sorry, but I can’t offer the discounts on a retroactive basis, for membership renewals for 2011 or 2012, or for additions to existing corporate memberships.
The CEP exam discount is available for new registrations for issuing companies only. Individuals already registered for the exam are not eligible for a retroactive discount. For full eligibility details contact the CEPI at cepi@scu.edu.
NASPP “To Do” List We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.
Don’t miss your local NASPP chapter meetings in Chicago and Sacramento. The Sacramento chapter meeting features a “Beat the Heat” theme: Wear your favorite summertime or Hawaiian shirt or outfit and win a prize (please be professional–no thongs or Speedos)!
Not-So-Stupid Equity Plan Questions: What Your Employees Are REALLY Asking By Pam Ellis of Solium Capital
Ever get those head-scratching questions from employees where you just don’t have a clue what they’re thinking, let alone asking? Let’s face it, this happens all the time, and often way more often than we’d like. But rather than throwing the question immediately in your circular file, you can turn this into a valuable lesson to understand the employee’s perspective better and learn what you can do to enhance your communication techniques.
At this year’s conference, I am leading a panel presentation that goes through this very analysis. Entitled “Not-So-Stupid Equity Plan Questions: What Your Employees Are REALLY Asking,” the panel consists of several service providers and an issuer who will review a list of common questions they have received and dig deeper to see what each one can teach us. Panelists include Bank of America Merrill Lynch, Prometheus Laboratories, Solium Capital, and UBS. The speakers from the various service providers are either involved in or have direct oversight of their stock plan call centers, so they hear firsthand the range and multitude of questions that come in across their broad base of clients.
Once the group started looking at common questions across the spectrum, they realized this was employee-relations gold and set out to illustrate how a company could use these questions to their advantage. The session focuses on 10 of the panelists’ favorite questions, analyzes the hidden message in each one, and provides recommendations on what the company can do to alleviate or eliminate these concerns altogether.
A great example is the confusion employees have over year-end tax forms; like many people who think taxes are a waste of time and an unnecessary evil, they don’t bother to understand them or make sure the numbers are right. They don’t know what information to provide to a tax advisor, what forms they need to complete on their return, or even what income has to be reported. Tailoring education materials to include visual flowcharts and checklists can go a long way in making the employee feel more comfortable about the tax reporting process – and therefore more positive about their equity awards in general. Other concepts such as exercising underwater options and differences between equity awards and 401ks can create further headaches and incite plenty of brow-furrowing inquiries.
With a little bit of humor and audience participation, the panelists expect to demonstrate how there really are no stupid questions.
Don’t Miss the 19th Annual NASPP Conference The 19th Annual NASPP Conference will be held from November 1-4 in San Francisco. With Dodd-Frank and Say-on-Pay dramatically impacting pay practices, you cannot afford to fall behind in this rapidly changing environment; it is critical that you–and your staff–have the best possible guidance. The NASPP Conference brings together top industry luminaries to provide the latest essential–and practical–implementation guidance that you need. This is the one Conference you can’t afford to miss. Don’t wait–the hotel is filling up fast; register today to make sure you’ll be able to attend.
Last Wednesday, was a beautiful day in Livermore, CA. I know because I was there to attend the San Francisco NASPP Chapter All-Day Conference at Wente Winery. For today’s blog entry, I feature highlights of the day. (Click the images below to see the full-size pictures.)
The All-Day Conference is held at the lovely Wente Winery.
Wente Winery is nestled in the hills in Livermore, making this a very special event.
This is the only conference I have ever attended that features an open-air exhibit hall.
Inta Abele of Schwab, Michael Kahn of PG&E, and Suzie Bentley of Nvidia presented the morning general session on educating employees on stock compensation.
Paz Dizon of Tesla Motors listens intently to Takis Makridis of Equity Methods.
Sinead Kelly and Barbara Klementz of Baker & McKenzie presented on “Global ESPP and Its Dirty Little Secrets,” along with Wendy Jennings of Riverbed (who quite possibly administers the world’s most compliant ESPP).
Lunch for the event was out on the lawn, under cloudless blue skies.
Stephen Buckhout of Synopsys talks with Don Drybough of Solium at the Solium booth (that’s Mark Shimomura and Pam Ellis of Solium in the background).
Zachary Crumption of E*TRADE and Valerie Diamond of Baker & McKenzie presented the closing general session on “Top 20 Ways Global Equity Awards are Quirkier Than You Thought.”
Karen Hertz and Joe Fiorita are ready to answer your questions at the Morgan Stanley Smith Barney booth.
As the grand prize raffle winner, Louise Carbone of Cadence Design Systems went home with a brand new iPad–that’s worth the price of registration!
The day concluded with a private wine tasting in the winery’s caves.
The San Francisco chapter board: Donna Spinola, vice president; Wendy Jennings, director, Paz Dizon, program committee; Ingrid Freire, program committee; Joe Thatcher, president; Barbara Klementz, secretary; Jeff Graham, director; and Christine Zwerling, treasurer. Not pictured: Lauren Downes and Sara Spengler, both on the program committee.
NASPP “To Do” List We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.
Mastering ESPP and RSU Withholding Outside the United States By Jennifer Kirk and Narendra Acharya of Baker & McKenzie
In today’s world, your company cannot afford to be noncompliant with its global stock plan withholding and reporting obligations. On a daily basis, we hear about the fiscal challenges affecting governments around the world. In addition to the cutbacks of programs and increased taxes and fees, governments remain focused on greater enforcement of existing tax obligations. In a number of countries, revenue collected from employer tax withholding (including employer and employee contributions to social taxes) is often the largest source of tax revenue–but still not sufficient. Whether through increased frequency of payroll audits, hiring more specialized teams of auditors, and/or more robust or extra reporting requirements, it is reasonable to expect that stock plan withholding practices will be facing increased scrutiny on a global basis.
As a general example, in December 2010, the UK tax authorities (HMRC) published a discussion document aptly titled “Improving the Operation of PAYE – Collecting Real-Time Information.” Not content to rely on payroll filings, which may only be made annually, and the periodic audit, HMRC in the discussion document envisions a process where it is electronically notified whenever payment is made to an employee and would confirm that the appropriate income tax and social taxes (National Insurance Contributions) have been deducted. The latest version of the discussion document no longer contains the more controversial proposal of having the compensation funds flow from the employer to HMRC (as a “central calculator” and disbursement agent) and then to the employee. Regardless of the outcome of the proposals, they are a great example of government’s focus on getting the money sooner and greater review of payroll calculations.
While a “central calculator” may not be imminent in the UK, even the current employer withholding and reporting requirements in the UK, as an example, can be challenging. First, there are additional reporting requirements beyond traditional payroll reporting that apply to equity compensation plans. This includes the annual share schemes return (Form 42) where the details of equity grants need to be specifically reported. The HMRC is then better able to cross-check the annual payroll reporting done by the UK employer to confirm that the taxable amount of equity compensation is indeed reported (and withheld upon) correctly. Second, there are timing requirements such that if the appropriate UK tax is not collected within 90 days, the employee is deemed to receive an additional benefit from the employer equal to the tax that should have been withheld, but on a grossed up basis. In short, noncompliance in the UK can be quite expensive.
During the 19th Annual NASPP Conference, the session “Mastering ESPP and RSU Withholding Outside the United States” will answer the key questions: the who, what, where, why and how of withholding for global stock plans. Don’t allow your company to be an easy target for foreign governments seeking tax revenue, as the penalties (and unwelcome scrutiny from foreign tax agencies) will be a much greater burden than ensuring that it gets done correctly in the first place.
Earlier this summer, Senator Carl Levin (D-MI), introduced another bill that would limit corporate tax deductions for stock options to the expense recognized for them, the “Ending Excessive Corporate Deductions for Stock Options Act.” His cohort on this year’s bill is Senator Sherrod Brown (D-Ohio) (Senator Claire McCaskill, D-OH, has also signed on since the bill was introduced).
A Bi-Annual Event I say “this year’s bill” because this is becoming a bi-annual event. Levin has been introducing bills like this for at least the past 20 years. He didn’t even bother to change the name of the bill this year. In fact, just for kicks, I did a redline comparison of this bill to his 2009 bill; the two bills are almost exactly the same. His co-sponsors have varied over the years but often include Senator John McCain (R-AZ).
The bill would limit the tax deduction corporations could take for stock options to the amount of expense recognized for them (i.e., the grant date fair value). According to Levin’s press release, this would raise $24.6 billion in tax revenue over the next ten years (assuming, apparently, that the market doesn’t have too many more days like yesterday). The press release states that Levin has released IRS data showing that, from 2005 to 2009, corporations took tax deductions that were “billions of dollars” greater than the expenses shown on their financial statements.
This is surprising to me because I’m not sure how the IRS would even have this data. The tax deductions companies took in those years would relate to options that were granted in prior years–many may have been granted before FAS 123(R) (now ASC 718) even went into effect. Comparing the tax deduction the company claimed to the option expense for that year is not a valid comparison.
You can usually get an idea of whether a company’s tax deductions for stock compensation exceed the expense recorded for it from their financial statements, but most of the financial statements I’ve seen only provide this information in aggregate for all types of arrangements the company offers–stock options, restricted stock, RSUs, performance awards, ESPP, etc. Levin’s bill only applies to stock options.
Section 162(m)–No More Free Pass
The bill would also make stock options subject to the limitation on corporate tax deductions under Section 162(m). Currently, stock options are exempt from the limit by virtue of being considered inherently performance-based (because the stock price must appreciate for the option to deliver a benefit). This clearly would raise revenue–maybe that’s where a good chunk of the $25 billion comes from. What was the tax deduction your company claimed for the options exercised by your NEOs last year?
Given that, after twenty years, Levin still hasn’t had any success with this agenda, I think chances are nothing will happen with this bill either, so I don’t expect it to be a hot topic at this year’s NASPP Conference. But you can catch up on all hottest tax topics–straight from the IRS–with the session “The IRS Speaks” at the 19th Annual NASPP Conference.
It’s Not Too Late to Enroll in the NASPP’s Financial Reporting Course The NASPP’s newest online program, “Financial Reporting for Equity Compensation” started on Thursday, July 14, but it’s not too late to get into the course. All webcasts have been archived for you to listen to at your convenience.
Designed for non-accounting professionals, this course will help you become literate in all aspects of stock plan accounting, from expense measurement and recognition, to EPS and tax accounting. Register today so you don’t miss any more webcasts.
NASPP “To Do” List We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.
Don’t miss your local NASPP chapter meetings in Denver, Houston, and San Francisco. I’ll be at the San Francisco chapter annual all-day event at the lovely Wente Vineyard in Livermore, CA, on Wednesday–I hope to see you there!
A Sensible Approach to Stock Ownership Guidelines By Doreen Lilienfeld of Shearman and Sterling
In recent years, there has been significant discussion concerning the terms of stock ownership guidelines and stock retention requirements for directors and executive officers. Shareholders want to know that directors and executive officers adhere to a philosophy of investing in the company for the long-term.
With the passage of mandatory say-on-pay, companies have become even more attuned to the views of shareholder activists on these issues. ISS considers three categories relating to stock options guidelines and stock retention requirements in its Governance Risk Indicators (“GRId”) score. Up to three points can be added and five points can be subtracted from a company’s GRId score in each category. These points can make the difference between a positive or negative vote on say-on-pay, director elections and other proposals.
There is standard approach to ownership and retention guidelines. For boards that are designing or revising director and executive stock ownership programs, the myriad of possible design structures can be daunting. It is not always clear what is the most effective means to ensure that the company’s decision makers build and retain a substantial stake in the company at a level sufficient to properly align their interests with those shareholders.
With preparations for the 2012 proxy season underway at many companies, now is the time to begin thinking about your guidelines and retention requirements. In our panel, we will walk you through the decision process analyzing the important design features and let you know what other companies are doing now. Drilling down, we will explore the questions:
Should you adopt ownership guidelines, retention requirements or both? How will they interact with each other?
How deep in the ranks should these programs go?
What will be the consequences for noncompliance?
For Ownership Guidelines
What are the ownership requirements? A percentage of base salary/annual retainer? A fixed dollar amount? A fixed number of shares?
How high should you set the ownership requirements? Do they differ by position?
How much time should directors and executives be given to reach the guidelines?
Which holdings should count towards satisfying the guidelines–vested vs. unvested awards, stock options, 401(k) and deferred compensation holdings?
What happens if there is a change in the stock price leading to falling out of compliance with the guidelines?
For Retention Requirements
How many shares should be retained–50% or more of “net shares”, all equity awards?
How long should they last? Until ownership guidelines are satisfied? A specified number of years following vesting or exercise? Until retirement? Following retirement?
For answers to these questions and more, please Doreen Lilienfeld, John Cannon, and Kenneth Laverriere of Shearman & Sterling for their session, “A Sensible Approach to Stock Ownership Guidelines,” at the 19th Annual NASPP Conference.
They grow up so fast! July 21 was the one-year anniversary of the Dodd-Frank Act (in case you are wondering, it’s been nine years since SOX was passed–time sure flies when you’re having fun). Today I take a look at Say-on-Pay results and highlight a recent announcement from the SEC about the timeline of further Dodd-Frank rulemaking projects.
To reminisce more on Dodd-Frank developments over the past year, check out the memo “Dodd-Frank One Year Later” by David Lynn of Morrison & Foerster (and editor of TheCorporateCounsel.net).
Say on Pay: The Results So Far
With proxy season winding down, here are the latest Say-on-Pay results (courtesy of Mark Borges, who has been providing weekly Say-on-Pay updates in his excellent blog on CompensationStandards.com):
2,596 companies have reported votes. Of those, only 37 reported failed votes, but there are three additional companies (Cooper Industries, Hemispherix Biopharma, and isoRay) where whether the Say-on-Pay vote passed depends on how you count. Of course, if your Say-on-Pay vote is that close, it probably doesn’t matter whether you count it as a pass or fail; either way, you are likely to be making some changes to your executive pay.
At least three companies (Lockheed Martin, General Motors, and Umpqua Holdings) modified prior grants to be subject to performance vesting in response to shareholder comments in connection with their Say-on-Pay votes.
At a majority (about 76%) of the companies reporting votes, shareholders expressed a preference for annual Say-on-Pay votes.
SEC Delays Further Rulemaking
In his also excellent blog on CompensationStandards.com, Mike Melbinger reported yesterday that the SEC has modified its schedule for adopting rules relating to the Dodd-Frank Act, including the key provisions applicable to executive compensation. Here is the new schedule:
August – December 2011
§951: Adopt rules regarding disclosure by institutional investment managers of votes on executive compensation
§§953 and 955: Adopt rules regarding disclosure of pay-for-performance, CEO to median employee pay ratio, and hedging policies
§954: Adopt rules regarding recovery of executive compensation (i.e., clawbacks)
§956: Adopt rules (jointly with others) regarding executive compensation at covered financial institutions
July – December 2012
§952: Report to Congress on study and review of the use of compensation consultants and the effects of such use
Given the new schedule, Mike thinks it unlikely that most of these rules will be effective for next year’s proxy season, but there is a chance that one or two provisions will be effective for proxies filed after January (as with the Say-on-Pay rules, published in January 2011). Mike notes that the SEC will propose rules first (and already has for a couple of the provisions), so we should know well in advance which provisions will be final for the 2012 proxy season.
It’s Not Too Late to Enroll in the NASPP’s Financial Reporting Course The NASPP’s newest online program, “Financial Reporting for Equity Compensation” started on Thursday, July 14, but it’s not too late to get into the course. All webcasts have been archived for you to listen to at your convenience.
Designed for non-accounting professionals, this course will help you become literate in all aspects of stock plan accounting, from expense measurement and recognition, to EPS and tax accounting. Register today so you don’t miss any more webcasts.
NASPP “To Do” List We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.
Don’t miss your local NASPP chapter meetings in Kansas/Missouri, Philadelphia, and Phoenix. And, next week, on August 10, the San Francisco chapter will host their annual all-day event at Wente Vineyard in Livermore, CA. You really should come out for this exceptional event.
