The NASPP Blog

Our popular “Meet the Speaker” series, featuring interviews with speakers at the 24th Annual NASPP Conference, is great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.

For today’s “Meet the Speaker” interview, we feature Elena Thomas of Plan Management Corp., who will lead the session “7 Deadly Sins: Avoid These Plan Administration Mistakes at All Costs!”

Here is what Elena had to say:

NASPP: What is a common misperception about stock plan administration?

Elena: Everyone believes that once you are an experienced administrator, there is little chance of making a mistake with regards to the administration processes.  What we’ve found, however, is that often knowing “too much” can lead to trouble if we don’t stay on guard.  Being very comfortable with a topic can lead to dangerous assumptions (e.g., “the meaning of this term or phrase is obvious”).  Particularly in an area like equity compensation, where there are so many stakeholders involved, it is easy to forget that groups outside of the plan administration team may require detailed and specific communication, or may not interpret unclear terms in the same manner as a knowledgeable administrator. Of course the experience gained as an administrator is incredibly valuable, but it is important to remember that in many cases, reviewing a communication or process as someone with fresh eyes to the space can  prevent a host of possible issues from cropping up down the road.

NASPP: What is one action should companies be taking now?

Elena: If you haven’t yet, now is the time to sit down with all of the teams involved (HR, Payroll, Finance, Legal) and review the administration processes together.  Sending around emails and checklists isn’t sufficient until all parties involved have sat around the table together and gone through the processes step-by-step so that everyone understands the entire process and can raise any questions or red flags to the group. If you don’t do this, then inevitably these things will be raised when you are trying to actually execute the process—and likely when you’ve got a payout or reporting deadline to meet!

NASPP: What is the worst horror story you can tell about administrating stock plans?

Elena: At a client that was fairly new to us, there was an administrator who had been managing equity compensation for quite a long time, though was fairly new to the specific company.  The plan wasn’t huge, so she managed most of the day-to-day administration herself.  Things went smoothly until one of the executives came to her asking why a restricted award had vested at a certain price.  Only then did she realize that she had been processing all of the vests with the wrong price.  At her previous company they had used the closing price the day prior to lapse, and without being told otherwise when she took over the plan, she assumed the same (it makes sense, right—gives them time to process the lapse the day of, get an adjusted close, etc.).  Her new employer, however, was using the day-of-lapse close price! While a seemingly tiny difference, some of the execs had large enough vests that the difference for tax purposes mattered, and the company had to bring in a law firm as well as their tax team to identify the best way to address the solution with regards to both taxes reported and paid and disclosure reporting. All of the items were resolved, but needless to say, a simple mistake caused a tremendous headache!

NASPP: What is something people don’t know about you?

Elena: Prior to entering the world of equity compensation, I was a management consultant and did work with microfinance in developing markets. I had the opportunity to spend months working in Peru, Bolivia and Nicaragua with organizations that give loans as small as $50 to women to start or run local businesses.  It was amazing to see that a loan of this size could have as much (or more!) impact on a community as do much larger incentives in developed markets. This experience is part of what drew me to Plan Management Corp.—the focus on working with small to mid-cap companies to provide equity compensation as a way to invest in their employees and their business, even when they don’t have the same access to capital or cash as larger companies. I still believe that’s one of the most impactful aspects of equity compensation.

Don’t miss Elena’s session, “7 Deadly Sins: Avoid These Plan Administration Mistakes at All Costs!,” at the NASPP Conference!

About the NASPP Conference

The 24th Annual NASPP Conference will be held from October 24-27 in Houston. This year’s program features close to 100 sessions on today’s most timely topics in stock and executive compensation; check out the full agenda and register today!