For today’s “Meet the Speaker” interview, we feature an interview with Megan Jasionis of Bank of America Merrill Lynch, who will lead the session “The Evolution of Equity Plan Design.” Here is what Megan Jasionis had to say:
NASPP: What are a few key areas your panel will address with respect to your topic?
Megan: Our session will review how granting practices have shifted over time from options, to restricted awards, to performance awards. We will focus on how companies can stay current and competive with their plan design. It is critical that education, communication and measurement components evolve along with the changing plan designs. Hear how to make it all work from three great companies!
NASPP: What common mistake do companies make and how can they avoid it?
Megan: When looking to implement a new plan design, it is critical to have all pieces of the puzzle in place. From consulting with the administration team, to communications, grant agreements, financial reporting and compliance–every aspect needs to be represented. Let us show you how to make it all come together!
NASPP: What is the silver lining to your topic?
Megan: With the right planning and the appropriate teams in place and accounted for, evolving your plan design doesn’t have to be painful!
NASPP: What is your favorite NASPP Conference memory?
Megan: Being in New Orleans! It was a great time along with great sessions!!
Former Congressman Mike Oxley to Address NASPP Conference I’m very excited to announce that Former Congressman Mike Oxley will present the opening keynote address at the 21st Annual NASPP Conference. Yep, that right, Oxley of the Sarbanes-Oxley Act, or SOX as we all affectionately refer to it.
Rep. Oxley’s address will be followed by a panel of former Congressional staffers who served on the House Financial Services Committee and the Senate Banking Committee, who will explain how things really get done in DC. The two addresses together should be very enlightening!
Don’t miss out on these great presentations–register for the Conference today! And remember, you heard about it here first, in the NASPP Blog!
NASPP To Do List Here’s your NASPP “to do” list for this week.
Last Friday, the Silicon Valley NASPP chapter held their annual all-day conference. Year after year, this is consistently a great event. For today’s blog entry, I feature a few pictures from this year’s conference.
The day started off with a keynote presented by Mike Albert of Fidelity, Aaron Boyd of Equilar, and Stacey Lombardi of Allergan on “The New Normal? Executive Shareholding Requirements.” You can see that they had a full house.
For the second keynote of the day, Jon Burg of Radford, Donna Hammer of Yelp, and Dan Walter of Performensation presented their answer to MythBusters: “The Truth about ESPPs – 10 Employee Stock Purchase Plan Myths and Facts.” This slide busts the myth that other types of plans (e.g., 409(k), RSUs) can provide the same benefits as ESPPs.
There was lots of traffic through the exhibit hall all day. Here attendees mingle during breakfast.
I presented with Elizabeth Dodge of Stock & Option Solutions and Carrie Kovac of Symantec on “Alphabet Soup: 10-K, 10-Q, S-K, Where Does Your Stock Plan Info Go? And Why Should You Care?” Hopefully our audience had as much fun watching the presentation as we did presenting it.
Stock & Option Solutions gave out these nifty “boogie bots” at their table in the exhibit hall. They are even cooler in action: see the video. And, yes, I am aware that photographing a red robot toy on a red background is not my best moment as a photographer.
Neta Pyasi of Solium, Ken Scully of Facebook, and Sinead Kelly of Baker & McKenzie presented “Out-of-this-world Practical and Technological Tips for Managing Your Mobile Employees.” Here, Ken and Sinead answer questions from the audience afterwards.
A big thank-you to the sponsors for the event.
Kudos to Inta Abele of Schwab, the Silicon Valley chapter president, and the rest of the chapter board for hosting a great event again this year!
Here’s what’s happening at your local NASPP chapter this week:
Connecticut: Deborah Lifshey and Aalap H. Shah of Pearl Meyer & Partners present “Dressing for the Public – Do You Have the Right Accessories?” (Tuesday, June 25, 10:00 AM)
San Diego: Emily Cervino of Fidelity and Jon Burg of Radford present “Performance Awards – Rewarding Results or RSUs in Disguise? Trends, Tips and Traps with Today’s Performance Equity,” (Wednesday, June 26, 11:30 AM).
NASPP: What is the most critical thing NASPP Conference attendees need to know about your topic?
Wendy: Proxy strategy is not one size fits all, and smaller companies–whether small reporting companies, emerging growth companies, or mature small cap companies–may have to work harder, and more creatively, to communicate their compensation message. Smaller companies face very different compensation issues than larger cap companies, including:
Delivering equity compensation value when stock price is less than a few dollars and the stock is thinly traded or volatile,
Creating meaningful cash-based performance incentives when budgets are tight, and
Recruiting in a talent pool that includes both pre-IPO and large cap executives.
Smaller companies must then craft an individual approach to communicating their decisions in the proxy, given the scaled down reporting rules applicable to SRCs and EGCs, the different shareholder base who will be reading the proxy, and the tests designed by proxy advisory services that don’t account for the special circumstances of small cap companies. This panel has first hand experience helping smaller public companies make the hard decisions on compensation design, understand the reporting optics of these decisions, and then effectively communicate these decisions in the proxy and in pre-meeting shareholder outreach campaigns.
NASPP: What common mistake do companies make and how can they avoid it?
Wendy: Smaller public companies often feel compelled to use buzz words like “performance” or follow the compensation decisions or disclosure practices of other companies who are current or perhaps aspirational peers. In doing so, smaller companies lose the real message of their program and sometimes come across as talking the talk but not walking the walk. To have a meaningful proxy disclosure, the compensation team must be willing to have open, frank, fully informed discussions with management and the board, providing information beyond benchmark numbers and statistics on the frequency of a given policy or disclosure. At the time compensation decisions are made, smaller companies must consider how their decisions will be viewed not only one or two years from now but as part of a longer term trend of the direction of their executive compensation program.
NASPP: What is the silver lining to your topic?
Wendy: Compensation strategy is like a giant ocean liner. Rarely is it too late to avoid the iceberg ahead–but it does take time, good tools, and lots of preparation to steer the ship onto a different course.
NASPP: Tell us three things people don’t know about you.
Wendy:
After law school, I drove in an 18-wheeler cab–without a trailer attached–from Seattle to Banff, and the Canadian border patrol didn’t know what to make of it.
I learned freestyle wrestling in college from US Olympic team members as a club sport and I can still perform a headlock-hiptoss (although I risk throwing out my back at this point).
I still remember, from my 9th grade final exam, and can sing a glowing rendition of “La Marseillaise” in French. But I can’t remember how to order dinner or have even a basic conversation.
On April 30, the FASB’s Small Business Advisory Committee (SBAC) met to discuss whether the Private Company Council (PCC) should add the topic of stock plan accounting to their agenda. I listened to the whole discussion–even the parts that were hard to hear–so I figure I’m due a blog entry out of it.
Background
Some of you may recall that, back in February of last year, I blogged about the FASB forming a special group to review whether exceptions or modifications for private companies should be made to GAAP (“A Different Standard for Private Companies,” February 7, 2012). At the time, the name of the group was the Private Company Standards Improvement Council. It’s not quite clear how we got from there to here (maybe FASB didn’t like the fact that everyone would probably pronounce the acronym “pic-sic”), but the PCC seems to be the current iteration of that group.
The SBAC provides a forum for the small business community to share ideas, experiences, etc. with the FASB. The PCC is considering taking up the topic of stock plan accounting–specifically, should the requirements of ASC 718 be modified for private companies or should private companies be exempt from some of the requirements–and asked the SBAC to discuss whether this is a big enough issue for small companies that they (the PCC) should add it to their agenda.
The SBAC Discussion
The FASB, in preparation for the meeting, and the committee did identify a number of concerns for private companies, including:
Valuation of underlying stock and valuation of options can both be difficult and costly.
The required disclosures may be onerous for private companies.
It can be difficult for private companies to interpret and apply the relevant accounting principles without help from paid advisors and there are probably lots of tedious rules that private companies aren’t aware of.
It can be difficult for private companies to determine whether awards are subject to equity or liability treatment due to various redemption provisions that are often utilized by them (e.g., rights of first refusal, repurchase rights, etc.).
The accounting implications of awards issued by private companies don’t really become relevant until a CIC and equity awards could be viewed as a cost to the ultimate buyer, rather than a cost to the issuing company.
Despite these concerns, I was surprised to note that the SBAC wasn’t terribly sympathetic to the idea of carving out some exceptions for private companies. The committee seemed skeptical of how widespread usage of stock compensation is among private companies. Some committee members supported the idea of further research into the level of usage; other members simply didn’t believe that enough private companies offered stock compensation to make the topic worthy of the PCC’s time. Also, some committee members felt that because offering stock compensation is optional, those private companies that offer it should be prepared to devote the resources necessary to account for it correctly.
Interestingly, the committee seemed most concerned about the disclosures. This was a surprise to me because I didn’t think private companies even bothered with the disclosures, given that their financial statements aren’t filed with the SEC. The committee spent so much time talking about the disclosures that I started to think maybe it was a separate agenda item (it wasn’t–I checked). They suggested that for both small public companies and private companies it would be helpful if FASB provided more assistance related to the disclosures, including possibly providing a checklist of annual vs. quarterly and public vs. private disclosures. Coincidentally, in preparing for my session, “Alphabet Soup: 10-K, 10-Q, S-K, Where Does Your Stock Plan Info Go? And Why Should You Care?,” Carrie, Elizabeth, and I had just been discussing the confusion over what information companies are supposed to include in their quarterly disclosures.
The recording of the SBAC meeting is no longer available, but you can access the meeting handouts, which include some of the feedback from SBAC members.
Here’s what’s happening at your local NASPP chapter this week:
Philadelphia: The chapter hosts a presentation on “What to Expect When You’re Expecting… a Corporate Action.” (Monday, June 17, 11:30 AM)
Kansas/Missouri: Andrew Katsoudas of Ernst & Young presents “Hot Topics in Global Equity/Best Practices for Managing Your Global Plans.” (Tuesday, June 18, 11:30 AM)
Chicago: Bill Gerek and Tim Bartlett of Hay Group present findings from the Wall Street Journal/Hay Group 2012 CEO Pay Study. (Wednesday, June 19, 7:30 AM)
San Fernando Valley: The chapter hosts a presentation on “A Real-Time Update on Proxy Season Trends & Takeaways.” (Wednesday, June 19, 11:30 AM)
DC/VA/MD: Terry Adamson of Aon Hewitt and Don Gillotti of EASi present “Accounting for Performance Based Restricted Stock Awards.” (Friday, June 21, 8:30 AM)
Silicon Valley: The chapter’s annual all-day conference featuring keynote presentations on “The New Normal? Executive Shareholding Requirements” and “The Truth about ESPPs – 10 Employee Stock Purchase Plan Myths and Facts,” among many other presentations!
I will be presenting at the Silicon Valley chapter all-day with Elizabeth Dodge of Stock & Option Solutions and Carrie Kovac of Symantec on “Alphabet Soup: 10-K, 10-Q, S-K, Where Does Your Stock Plan Info Go? And Why Should You Care?” I hope to see you there! This is a great event–check out the photos of last year’s all-day.
New this year, we are featuring “Meet the Speaker” interviews with panelists for the upcoming 21st Annual NASPP Conference. This is a great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.
NASPP: What are a few key areas your panel will address with respect to your topic?
Berni: Stock plan professionals are being asked to do more with less. And, at the same time, are expected to enhance collaboration and ensure equity plan are compliant worldwide. The only way to be successful is to centralize and organize source content and business knowledge. Our panel of experts will share how they use technology to do just that.
NASPP: What is the biggest challenge companies face with respect to this issue?
Berni: Document and version control is one of the biggest challenges. Let’s use a stock plan for an example. In the past, when I joined a new company or when I consulted, one of the first things I would do is read through all the active stock plans. I would try to find the document(s) on my own… after an hour of searching through shared folders I might have found multiple copies of the plan. To ensure I was working off the most recent version, I would have to ask someone. Turns out the most recent version was on the person’s laptop. And when there’s a remote workforce, sharing documents and knowledge is even more of a challenge.
NASPP: What are some horror stories you can tell about your topic?
Berni: Some horror stories include missed deadlines, working off the wrong set of information, or not knowing what has been done in the past. Each of these resulted in companies needing to pay large fines or legal fees. In one case, a company paid for a private letter ruling twice, because no one on the team knew the history and there wasn’t a record of the original filing to be found. Our panel will share remedies for managing key processes.
NASPP:Tell us three things people don’t know about you.
Berni: Wow…how do I answer this question?
I’m older than I look, thanks to my hair stylist.
I direct a dance company. Yes, when I’m not a stock plan professional, I’m a dancer/choreographer.
My favorite color is red, but people think it’s teal, since I tend to wear teal a lot!
NASPP Connecticut Chapter Joins Forces with WorldatWork
The Connecticut NASPP chapter recently hosted a joint meeting with Colonial Total Rewards Association, which is the local WorldatWork chapter. We love to see NASPP chapters collaborating with other local organizations.
Edi Abbott of ECA Consulting and Program Director for the Connecticut NASPP Chapter with Dan Purushotham of the Colonial Total Rewards Association. Edi and Dan helped organize the meeting. Congratulations to the Edi and the rest of the Connecticut chapter board for hosting a great meeting.
See more pictures of the meeting on the NASPP’s Facebook page.
NASPP To Do List Here’s your NASPP “to do” list for this week.