The NASPP Blog

For today’s blog, I have another exciting smorgasbord of random stock plan related tidbits.

IRS Issues GLAM on Stock Compensation Deductions and CICs
In January, the IRS issued general legal advice memorandum AM2012-010 clarifying that when NQSOs and SARs are cashed out due to a change in control, the tax deduction is attributable to the acquired company. This is because the obligation to make the payments became fixed and determinable at the closing and the payments were for services performed prior to the acquistion. 

Two things to note here:

• This is unfortunate because chances are the target company isn’t all that profitable, making the deduction less than useful. 
• The acronym for this type of IRS pronouncement is GLAM.  That makes the whole thing sound way cooler than it actually is. 

For more information see the WSGR alert we posted on this development. 

ISS Theme Song: Coming Around Again?
I’m sure you’ve heard about this by now, but just in case, ISS has announced that it will replace the GRId analysis system with a new system called “QuickScore,” which does have the advantage of sounding niftier and friendlier.  If you are thinking “what the heck, didn’t they just switch to the GRId system,” time must be flying by for you just as fast as it does for me.  ISS switched to GRId back in 2010 (I blogged about it, see “Will ISS Red Light Your Stock Compensation?” March 23, 2010).  Still, it does feel like ISS is changing systems almost as often as they change their name.   

Under QuickScore, companies will receive a relative ranking from 1 to 10 (1 is good, 10 is bad) by region and industry, instead of the color coded (red, yellow, green) score companies received under GRId.  Which is similar to ISS’s Corporate Governance Quotient system that was replaced by GRId. Sort like how ISS changed to RiskMetrics and then changed back to ISS. 

Towers Watson provides a quick summary of QuickScore in their blog.  See also the ISS announcement.

Backdating Bad for Your Career
A recent academic study found that CFOs that lost their job as a result of option backdating have had a tough time re-entering the workforce. Only 18.7% found a comparable position (compared to 35.1% of CFOs that had lost their job for other reasons) and only 48.4% found any full-time corporate position (compared to 83.8% of other CFOs). 

Which was a little surprising to me because how would a potential employer even know that’s how you lost your job?  You wouldn’t exactly put “falsifying corporate records to reduce expense” under the skills listed on your resume and, in my experience, companies don’t give out that kind of information about former employees. But I guess a quick Google search these days can be very revealing about job candidates. 

– Barbara