Here’s what’s happening at your local NASPP chapter this week:

Austin:  June Anne Burke and Denise Glagau of Baker & McKenzie and I are presenting on today’s hottest topics in stock compensation (Tuesday, May 12, 11:30 AM)

Chicago: Jack McArthur and Derrick Neuhauser of Aon Hewitt present “Equity Awards in M&A: OMG I need the 411!” and a bonus presentation on capped stock awards. (Thursday, May 15, 7:30 AM)

Houston:  A double session!  I present “Ways to Breathe New Life Into Your Stock Compensation Program” and Michael Mauro of EASi presents “Treatment of Equity Awards Upon Termination.”  There will be prizes! (Thursday, May 15, 11:30 AM)

Michigan: Brian Wydajewski and Aimee Soodan of Baker & McKenzie present “Mission Impossible? Navigating Award Acceptance, Post-Grant Changes and Local Recharge Arrangements for International Equity Awards.” (Thursday, May 15, 1:00 PM)

Twin Cities: The chapter hosts “So, What Do You Do? – A Unique Opportunity to Meet other Stock Compensation Professionals.”  This will be a great opportunity to meet your colleagues in the Twin Cities area! (Thursday, May 15, 7:30 AM)

NY/NJ: Kathy Biddle of EASi and Marsha Tepper of CompIntelligence present “Treatment of Equity Awards Upon Termination.” (Friday, May 16, 8:30 AM)

I begin my 2014 Grand Tour of the American Southwest this week (to be concluded next week) and I hope to see you at the Austin and Houston chapter meetings!

– Barbara

The term “mobility” has been part of our stock plan vocabulary for some time now. To me the concept of mobility is like taxes – a constant presence and there are always intricacies to handle or interpret. If I had to come up with a list of top 10 issues that our issuers face right now, mobility (and taxes) would be on it. It’s like a simmering pot – not quite boiling over, but it could at any minute if not monitored.

While the concept of tracking mobile employees has been around for a while now, I feel like there is still a mysterious aspect to handling this element of our employee population. The title of last month’s NASPP webcast summed it up perfectly: “Employee Mobility: We’ve Heard All the Rules, But What Are People Actually Doing?” I gathered quite a few tips from that webcast for keeping track of your mobile population; in today’s blog I’ll share a few of them.

What Are People Doing?

Manual is still “in.” When I say that manual tracking is still in, I don’t necessarily mean it should stay that way. But for now that seems to be a norm in keeping tabs on cross border and state changes. If tracking mobile employees involves manual effort (even a significant amount of it), you are probably on par with many of your peers at other companies. They key is to work effectively within the manual framework. For example, rather than audit address changes one by one to identify transfers, perhaps you can work with your IT group to develop a report that detects changes in address (and other applicable) fields within your HRIS system and deliver those changes to you daily. Now that you have a report, your manual focus can turn to conducting a periodic audit of that data, rather than undergo the cumbersome effort to do frequent manual address audits.

Leverage Your Platform’s User Defined Fields. While manual effort may still represent a part of the process, you do want to find ways to automate as much as you can. One area where you may be able to make some headway is storing information about the employee and their grants/awards in the system that maintains the records of your grants. Many of the systems that track equity awards have some variation of what we call a “user defined or designated” field (“UDF”) – which essentially is a blank field where you can store custom information. Not all systems are structured the same, but there are two places you can start with your inquiries: 1) create a UDF at the “person” level so that you can label a person who has “transferred” jurisdictions; 2) create a UDF at the grant level to keep track of the country of residence when the grant was made. Some systems may already have mobility specific fields that you can use, allowing you to save your UDFs for other purposes. These are just suggestions – all systems are not the same and you’d need to explore the tracking options with your service provider. The bottom line: use whatever the system can offer you to track your cross border activity.

Implement Safety Nets Where You Can. Because of the complexity involved in keeping track of people who are moving around, you want to consider having multiple means to monitor this activity. Don’t just rely on a single report feed. Don’t just rely on a process in which HR manually informs you of the changes. None of these are “wrong,” but there can be gaps. For example, if HR needs to fill out a form each time someone transfers and they forget to pass it on, you can still catch the action if you have a daily “feed” of HRIS address changes. But if you rely on the form alone, you may find that things get missed. No approach is fool proof or perfect, especially when things go global or involve multiple locations. Audits are great ways to identify missing data, but you don’t want to be doing an audit every day or every week. Also, the more time that passes, the harder it is to “unwind” activity or make corrections. So think about how you are tracking your mobile employees and try to come up with at least one safety net to catch the activity in case the first method fails. Reserve the audits to be done on a periodic basis.

Form a Mobility Department. Mobility affects more than just the stock administration department. There are other departments that are equally vested in understanding who is moving where – like Payroll and Human Resources (among others). If you have a significant mobile population, or the number of transfers is frequent, you may want to consider forming some type of mobility task force or department to serve as command for monitoring cross border activity. That sounds fabulous if resources are available for that scenario. In fact, it seems several companies are already on that path: in the NASPP/Deloitte 2012 Global Equity Incentive Survey, 34% of respondents said they had a mobile department to track the movements of expats and cross border employees. If your mobile population is on the smaller side, it may not make sense to have an entire department dedicated to this purpose. In that case a task force comprised of key inter-departmental players and external advisers may suffice in helping to streamline the process.

Many of the tips or inspiration for tips in today’s blog came from the fabulous panelists who shared them on last month’s mobility themed webcast. If you missed it, it’s definitely worth listening to the replay.

As I wrote this blog, I realized that there are so many areas of mobility to cover. In next week’s blog I will do a “Part II”, so stay tuned for more on this topic.

-Jennifer

I was intrigued a couple of weeks ago by an article about workers in India that were threatening to go on strike. One of the demands in order to avoid the strike? Stock options. I think part of my captivation came from my own point of reference – stock options are on the decline here in the U.S., so I’m surprised to see people actually striking for them. As it turns out, stock options are still quite popular in India. Tsk tsk to me for not being more “global” in my analysis of the perceived value of stock options. My new found intrigue with India was backed up by a study conducted by Ernst & Young, which I’ll explore in more detail in today’s blog.

We Want Stock Options!

According to an article on the Financial Express, union representatives for a group of auto workers “asked that all workers of Bajaj Auto should be given the option to subscribe to equity shares at a discounted rate of R10 per share, and that each workman be allowed to purchase 500 shares.” A similar demand was made in last year during a period in which workers were on strike for 50 days. I’d say these workers are passionate about their desire for an equity stake in the company. I wondered, though, why they didn’t ask for restricted stock units. I think I got my answer when I came across the study by Ernst & Young (which is also mentioned in the latest edition of the NASPP Advisor newsletter, due out next week).

It’s All in the Perceived Value…

We’ve long observed the downward trend in stock option issuances here in the United States. While that pattern continues, a study by Ernst & Young shows that stock options (referred to as ESOPs) remain popular in India, as reported in an article at the Indian business website LiveMint.com (“Evaluating Stock Options” by P.R. Sanjai and Aveek Datta, Mar. 25). The E&Y study reports that a whopping 88% of Indian companies still prefer stock option plans (compared to only 49% of multinational corporations). There are a few reasons why the immense popularity of stock options in India – one may be found in the perceived value that these equity types carry in the technology sector. When stock options were more popular, technology companies were heavy users, and in some cases a lot of wealth was created – even in the lower ranks of organizations. With India having a strong technology sector of its own, it may be that the perception of stock options took hold back in the boom times, and hasn’t really dissipated or refocused on other equity types. Though in checking around, it seems RSUs are also gaining in popularity amongst employees in India as well, but still trail stock options (at least from a perceived value perspective).

It May Not Be One Size Fits All

We often talk about how multinational companies need to consider the factors of the locales in which they do business. Things like culture, economics, business and regulatory climate all impact a company’s compensation approach in a jurisdiction. I would add to that analysis and perceived value beliefs about equity held by the local population. While a preferred form of compensation may not be feasible in certain jurisdictions, it may be wise for us to explore the perceptions of our employees abroad in order to better understand how equity compensation affects them. Do they place more “value” on one type of equity versus another? Although India is just one country, and stock options just one form of equity, it’s clear that the dynamics behind “why” a certain type of equity compensation may be preferred in a locale can be multi-faceted and require further exploration.

-Jennifer