The NASPP Blog

If you’ve read any of my prior blogs, it’s no secret that I’m a fan of employee education. Good employee education. Comprehensive employee education. Normally I don’t rant in the forum of the NASPP Blog, and today I will do my very best to avoid doing so, but I’m on the verge of it so be warned.

It’s Section 6039 reporting time, W-2s are on their way, cost basis reporting is on the brain (are employees going to figure this all out?) So my mind has naturally been on – education. Educating never stops, but it’s definitely at a peak this time of the year. Which then brings me to the question – did we educate enough? Did we put enough good information in our employees’ hands to help them navigate their questions without giving them the dreaded “advice” or leaving them short on facts?

Advice Gone Bad

Picture this: I’m thinking through all the questions I just posed above, when someone suggests that I check out a recent episode of a national radio broadcast. The topic of the show is financial advice. People call in, they get financial advice. Over the radio. Okay, so I’m already thinking – well, if someone calls in over a radio show to get financial advice, they probably should know that it’s really hard to know all the factors in that format, so take whatever it is with with a grain of salt, right?  I listened to the show, and here’s that part that makes me want to vent. Someone calls in and asks a question about an Employee Stock Purchase Plan (ESPP). The caller wants to know if they should invest in their company’s ESPP plan. Oh yay, there’s a plug for ESPP! Except that the radio host got it all wrong. He asks if the discount is 15%, and then says something to the effect of “yeah, that’s the law – they’re all 15%.” Then he goes on to tell the person not to invest in it. He doesn’t ask about whether there is a look back, or if it’s a Section 423 plan or not, or how the company’s stock has performed. And, to those who know ESPPs, we know there is no “law” dictating a 15% discount. Then, the host went on to remind his audience about all the licenses he used to hold (I’m assuming investment licenses), which came across to this listener as an effort to boost his position on why ESPP was a no-no. I started frothing at the mouth.

I did some additional digging and found that this show has millions of listeners per week. Now, maybe not all are interested in investing in their ESPP, but I bet some have an ESPP. And then it hit me – how frustrating it would be if the caller (or listeners) were employees of my company, and my educational efforts were going up against a famous radio personality who has ESPP all wrong. And, this isn’t the first time the same show has put out incorrect information on ESPPs – I found another blog from 6 years ago highlighting the same issue from the same personality. It’s frustrating when someone in a position of influence and giving financial advice in the earshot of millions gets it wrong.

Own the Message

And then it hit me – although we can’t control what education (no matter how bad or inaccurate) comes from other sources, we can control our own messaging and we have to do a darn good job at it or someone else is going to do it for us. That’s the point of my blog today.

Let’s face it – there are great, good and bad advisers in every category. It’s safe to assume that many of our employees are going to turn outside the company (as we often encourage them to do) to seek advice. This definitely is not a knock against all the advisers out there that get it right. There are plenty of those inside this industry and outside – and they are a valuable resource to our participants. The hard part is when they get bad advice from advisers who don’t understand equity plans. My conclusion is this – we obviously can’t control if a radio host gives bad ESPP advice to millions of listeners. Or, which advisers our employees choose. What can control is what we put out there. We don’t want to leave our employees in the position of having to fill in the blanks. The advice line is a fine one, but I have to think there are ways to put out enough factual information that employees can take that and make sense (or not) of what they are being told from their advisers – even famous ones.

So where can employees go for good information? In addition to your own internal communication efforts, employees can also seek information from myStockOptions.com, your service provider web site (which may also offer them access to advisers who have equity compensation knowledge) and even sites like the IRS’s website. There are several consultants out there that would be happy to come in and educate your employees. And, don’t forget the NASPP also has an Employee Communications portal – we’re always looking for more sample communications that can be shared generically in the portal, so if you’ve got samples send them to me at jnamazi@naspp.com.

I’m hopeful that one communication effort at a time, we can equip our participants with the information needed to recognize inaccurate information and bad advice.

-Jennifer