The NASPP Blog

Is your calendar full for January yet? As we head into the new year, now is a good time to touch base with other departments that you work with throughout the year to review procedures and plan for the coming year. In today’s blog, I discuss a few of the groups you might want to meet with. Looks like it’s going to be a busy month…

Payroll

Schedule a meeting with payroll to kick off the start of the year. A few items for the meeting agenda include reviewing W-2 reporting procedures for various stock plan transactions (see our “Form W-2 Reporting Checklist” and “W-2 and 1099 Reporting for Equity Compensation – FAQs“); reviewing tax rate and limit changes for the upcoming year; and reviewing current procedures–what’s working and what isn’t working.

Accounts Payable

Forms 1099-MISC are typically prepared by accounts payable. If you grant equity to outside directors and other non-employees, it’s a good idea to meet with this group to ensure that any of their taxable stock plan transactions for the year will be reported appropriately. Ditto for any taxable transactions that occurred after the death of an employee or subsequent to the transfer of options/awards pursuant to divorce.

Accounting/Finance

For calendar year-end companies that haven’t done so since last year, now is a good time to review your valuation assumptions (volatility, dividend yield, interest rates, and expected life) for stock option grants. It’s also a good time to revisit the expected forfeiture rate applied to options and awards. Set up a meeting with accounting/finance to have a conversation about this. If you’ve had unusual transactions that occurred during the year (acceleration of vesting, changes in employee status, option exchange programs, other option/award modifications), it’s a good idea to review how these transactions are accounted for as well. You don’t want any surprises when your auditors review your financial reports.

Legal/Finance

You’ve probably already done this if your company has a calendar year-end, but if you haven’t, you’ll want to schedule a meeting with the folks responsible for preparing your company’s Form 10-K and proxy solicitation statements to ascertain what your contributions will need to be. Reviewing last year’s statements to remind yourself of the information included relating to stock compensation can be a good preparatory step for this meeting. It’s also a good idea to review the number of shares available in your stock plans, expected share usage for the next two years, and plan expiration dates, so you’ll know if a shareholder proposal relating to your stock plans is necessary.

HR

Review your current grant guidelines with HR to determine if any tweaking is necessary and to find out if HR has planned any changes to your equity programs for the next year.

Brokers

With cost-basis reporting going into effect for the first time with 2011 Forms 1099-B, you’ll want to meet with your brokers to find out what will be reported as the cost basis for stock issued under your stock plans and what information they will be providing your employees about the new reporting procedures.  See my November 30, 2010 bog, “Four Questions to Ask Your Brokers.”

Section 6039 Service

If you plan to use an outside provider to prepare and/or file Section 6039 returns with the IRS and provide statements to employees, don’t wait any longer to get the conversations with your provider started. The deadline for employee statements is January 31!

International Advisors

If you offer stock compensation to non-US employees, it’s a good time to check in with your external advisors for international compliance to find out if any local requirements have changed and if there are any year-end reporting requirements you need to comply with outside of the United States.   Where US employees have relocated to other countries, or foreign nationals have moved into the United States, also review the US tax reporting requirements with respect to these folks (even for foreign nationals that moved back out of the US by the end of the year).

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. 

– Barbara