The NASPP Blog

When I worked on the issuer side of stock compensation, I often wondered how other companies were handling the situations I encountered through the course of my day. Did I have the best processes in place? Did my practices mirror industry standards? I wished I had had a way to easily validate my thinking on these topics. Fortunately, you do have a means to measure your level of compliance when it comes to various industry practices: the NASPP Compliance-O-Meter.

The Compliance-O-Meter helps you evaluate your compliance procedures and compare them with other companies’ procedures. You answer four or five short questions about your compliance procedures, receive a score, and then view how other companies have responded to the questions. We also provide a short explanation of the control procedure and how it can help ensure the integrity of your stock compensation program.

I share a few interesting results from our most recent Compliance-O-Meter quizzes:

Domestic Tax Withholding: 42% of companies reported following the cited best practice when it comes to state-to-state mobility tracking, which is to “update their address, note them as a domestic mobile employee, and work with my tax resources to determine the appropriate tax withholding for future transactions.” However, another 47% of quiz participants reported that they automatically withhold based on the employee’s new location, without considering the prior state of residence. Best practice suggests the former jurisdiction should at least be considered in the withholding analysis, so the fact that about half of companies aren’t doing that seems to indicate that a large percentage of organizations still have work to do in this area.

Global Tax Withholding: We asked similar questions in separate Compliance-O-Meter quizzes about domestic and global tax withholding. Interestingly, in answer to the same question I highlighted for domestic tax reporting, nearly 70% of companies do extensive analysis, including involving external advisers, when it comes to country-to-country mobility before assigning a withholding rate.

Insider Trading Policy: We asked companies whether they require those who are subject to their insider trading policy to agree to comply with the policy, in addition to simply acknowledging they have read and understood the policy. Approximately 76% of respondents indicated that they do require the individuals to agree to comply with the policy. However, the remaining 24% of companies said that they do not require agreement to comply. If your company falls into this minority, you may want to discuss with counsel whether an update to the policy may better align your company’s practices with the masses.

From A to Z, or Something Like That…

There are several compliance topics in our quiz archive, ranging from Section 6039 to ESPP design to transfer agents and much more. In addition, we post new topics periodically throughout the year, so be sure to watch our NASPP home page for updates. This week we’ve posted a new Compliance-O-Meter on Life Events: Death and Disability. If you’re not taking advantage of this opportunity to compare your practices to the industry, now would be a great time to start.

-Jennifer