The NASPP Blog

Many of us in stock compensation do our best (either formally or informally) to avoid deep dive conversations with stock plan participants around “year end” logistics. The logistics I refer to mostly center on the dreaded concept of tax and/or financial planning. Fearful of meandering into the realm of giving financial or tax “advice,” the policy among stock administrators is quite often to be silent or provide limited information on those topics. Not surprisingly, this can result in a communication gap between the participant and the issuer – creating a void. Looking for ways to bridge that gap without putting on an adviser hat? I have some ideas.

Pre-Approve Communications that Include Details

For a while now, I’ve really liked the idea of a pre-approved FAQ. This is an FAQ that anticipates the most common questions participants are likely to ask (think lots of tax questions) and provides an answer that is approved by the company’s counsel and advisers. Getting ahead of the questions and answers allows time to craft a response that is likely to include some details that you may have been wary to discuss without first passing the question to advisers – something that can be time consuming and cause delays in communication when a question is asked on the spot. An advance FAQ is as simple as drafting a list of questions and answers, sending them to advisers to review, edit and approve, and then determining how to distribute these answers to employees. I’ve seen the entire FAQ distributed, and I’ve seen the FAQ answers used as piecemeal responses when someone asks a question. This approach can work well with year end questions, but can also work with other communications as well (think merger, large vesting event, ESPP offering/purchase, new equity roll out or new terms).

Third Party Resources

Another option in bridging the gap in participant year-end communications is to send employees to 3rd party resources for information. This seems like it would reduce the possibility of the administrator playing the role of potential adviser, and gives the participant more of what they seek. One website I often use when looking for participant oriented communications is myStockOptions.com. And, lucky for stock plan participants everywhere, they’ve recently updated their year-end planning information for 2017 (Top Ideas for Year-End Planning With Stock Compensation – Part 1). What I like about this resource is that it gives a detailed lay-of-the land about the current and prospective tax landscape, as relates to stock compensation. It takes that information and creates a series of considerations and recommendations around year end. Additionally, there are alerts, editor notes, and even a chart that shows how changes in income can push a participant to a different tax bracket. This article is free (other content on the site is premium).

Finally, your own advisers likely work with many clients who offer stock compensation. It’s also worth an inquiry to find out if these advisers have prepared any communications of their own that may be participant friendly in addressing year-end questions.

The year will be over soon, and some of your participants are already contemplating whether they need to take any action with stock compensation before year-end, and mulling over the tax considerations. It’s time to arm them with as much information as possible.

-Jennifer