Last week a tiny blurb in the CompensationStandards.com blog caught my eye. What it said was: “Last week, the Council of Institutional Investors approved a policy opposing automatic accelerated vesting of unearned equity in the event of a merger or other change-in-control. The recommended best-practice policy states that boards should have discretion to permit full, partial or no accelerated vesting of equity awards not yet awarded, paid or vested.” What’s the big deal about that? In today’s NASPP blog I’ll explore whether this means the death of automatic vesting provisions in the stock plan for change in control situations.
A Popularity Tug of War
Institutional investors and their advisers haven’t been shy in labeling automatic vesting upon change in control (“CIC”) as a negative stock plan feature. ISS’s new Equity Plan Scorecard (as explained in the EPSC FAQs) puts this type of provision into the “could be negative and work against you” category (my loose liberty taken in interpreting here). In some cases, automatic CIC vesting could be considered egregious and result in an automatic “no” vote against a plan. And yet, according to the NASPP/Deloitte 2013 Stock Plan Design survey, the majority of companies who do allow for vesting acceleration upon a change of control have an automatic provision; far more than the number of companies who have incorporated board discretion into the determination about whether to accelerate vesting on all or some stock options and awards. With the Council of Institutional Investors taking a firm policy stance on the topic, a figurative tug-of-war seems to be more imminent – many stock plans have a feature providing for automatic acceleration upon CIC; the institutional investors are becoming stronger and more vocal in fighting the “automatic” aspect of these provisions. So who will win out? Does this mean that a new wave of stock plan amendments that will eliminate automatic vesting and implement more board discretion over these decisions? Time will tell, but it’s not inconceivable that next time your plan is up approval or amendment, this feature may need to be reconsidered.
Best Practice vs. Practice
If provisions that allow for automatic vesting upon a CIC event are not favorable, then what is? As described in the first part of this blog, a scenario where the company’s board has the ultimate say in whether or not vesting should accelerate appears to be the emerging preferred and best practice. It seems like this would be a win-win – the board would still retain ultimate decision making control, and shareholders would be reassured that automatic vesting is off the table. Given that many plans do currently have automatic vesting provisions, it seems there is some plan amendment work to be done. The timing and mechanics obviously are left to each company to determine based on their own internal factors. If, however, your company is in the process of drafting a new plan, or considering other amendments to the existing plan, the topic of change-in-control provisions may warrant some discussion with your advisers.
In thinking back through some of my past blog entries, I notice several have focused on failures in internal controls. In recent months I’ve covered lapses in keeping tabs on plan limits and the SEC’s interest in late Section 16 filings, among others. As administrators, the concept of an audit is a daily process component. In theory pretty much everything that happens from a process standpoint is (or should be) audited. There is a lot of checking and balancing. I can’t possibly cover all of the audit spectrum in one blog, but for today I will cover 5 of them that, in my mind, can prevent many headaches down the road.
Audit, Defined
Audit: “a careful check or review of something” (Merriam-Webster).
I think many times the word “audit” signifies something big in our heads. Like when the auditor comes and performs an extensive or extended review of a process. For today’s purposes, let’s just assume that an audit is simply a careful review of something. It could be big or small, quick or more prolonged. That’s really it, though. All of the audits I’m going to suggest can be performed relatively quickly, with lots of bang for the time invested. A few minutes now can save hours of headaches later on. The headaches I’m talking about include disclosing control failures internally and publicly, increased shareholder scrutiny and litigation, unwinding grants, purchases or awards, and more.
3 Areas of Audit
1. Review Plan Limits. In my blog “Share Limit Lessons the Hard Way – Part II” (January 15, 2015), I covered some examples of control failures and the resulting repercussions in this area. Your stock plan could have several different limitations on shares or other provisions, often easily identified by the use of the words “minimum” or “maximum”. Common plan limits include the total number of shares issued under the plan, a cap on the quantity of shares that can be issued to an individual – over the life of the plan or within a specified time period (or both), a minimum required vesting period (for example, awards that must have a minimum of a one-year vesting period), and share ratios (fungible or flexible ratios). The easiest way to monitor these limits is to maintain a list of all the “limits” specified under the plan and review them regularly. Educate those involved in the grant process about share limits so that any potential for exceeding them can be headed off before the grant is made. This type of audit should be performed at least quarterly, with interim reviews performed when there is significant related activity, such as a large grant.
2. Compare Plan Activity to the Form S-8. This sounds straightforward, but I have seen this time and time again. The company files an S-8 to register shares to be issued from the plan, and then the balance registered is never compared to actual plan activity. It sometimes feels more like an item to be checked off a to-do list at plan inception, rather than an area of ongoing review. Problems can occur when the company ends up issuing more shares from the plan than are registered on the S-8. How does this happen? There are a number of possibilities – among them are adding new shares to the plan, and not counting the re-issuance of forfeited shares. To recap, the S-8 does not register the plan itself with the SEC, but is for the offer and sale of the securities under the plan. In tracking shares issued under the plan against the number of shares recorded on the S-8, there are a number of factors to consider – like how forfeitures of restricted stock (and subsequent re-grants of those shares) will impact the number of shares remaining for issuance. Subscribers to The Corporate Counsel may benefit from reviewing the article “Form S-8: Share Counting, Fee Calculations, and Other Tricks of the Trade.” It’s time to dust off the Form S-8 filings and review them against shares issued from the corresponding stock plans.
3. Monitor Section 16 Transactions. I’ve talked before about the SEC’s recent interest in Section 16 reporting violations (see “Section 16 Reporting: Low Hanging Fruit for SEC“, November 6, 2014). Because of the short time frame to disclose most Section 16 reportable transactions to the SEC, many companies have controls designed to monitor daily activity from the stock plans. However, common causes of reporting violations include out of box transactions and corrections that fail to be reported. This is an area of audit that will require some creativity to fully embrace. How do you proactively audit for things that are not in the company’s control, for example a situation where an officer ceases to be trustee of the family’s trust (releasing him from beneficial ownership of the shares)? Another opportunity for a “miss” in reporting is adding or removing executives and directors to/from the list of those obligated to comply with Section 16 reporting. This is an area where auditing may involve the contributions of many. It may take you away from your traditional view of an “audit”. In monitoring Section 16 activity, building relationships is an essential component. You’ll want to be proactive in building relationships with your compliance officer and other executives who may regularly interact with board members and can inquire about ongoing activity. You’ll want to build an alliance with the trusted advisors who assist your Section 16 reporting persons in managing their finances/portfolio/estate. The reporting person may forget to tell you about something, but it may be the professional advisor that tips you off to a change that warrants reporting. This doesn’t replace other forms of trying to monitor activity – like proactively inquiring to brokers and asking Section 16 officers/directors about activity. If you’ve had reporting failures in the past couple of years, it’s time to examine the controls to make sure you have enough of the right audit steps in place. Think outside of the box.
There are probably a hundred audits that can encompass stock plan activity and their related disclosure/compliance requirements. We have only tackled three in today’s blog. None of these are grossly time consuming and could work in your favor, heading off potentially messy situations down the road. If there’s one thing to remember, “audit” doesn’t have to mean an all encompassing days long event. It can be as simple as a quick inquiry, review, or analysis designed to stay ahead of the curve in managing your stock plans. Implement these (and more) audits, and you’ll thank yourself later!
I think it’s safe to say that if you work in this industry, you’re familiar with the concept of insider trading. What do we know? You can’t trade in a company’s stock based on material non-public information. If you do, the Securities and Exchange Commission (“SEC”) could hunt you down and make your life very, very miserable. Isn’t that what time and experience have taught us? In the past, I’ve blogged about the SEC’s renewed and aggressive interest in pursuing a variety of insider trading violations (see Husbands and Wives Insider Trading and “There’s a Reason They Call it “Insider” Trading). With more sophisticated technology and monitoring mechanisms, even the smallest trades are not below the line of scrutiny, and it’s an area where I’ve been advocating the use of caution for a while now. However, what was left unsaid in those many recounts of insider trading crackdowns was the fact that although there have been prosecutions and penalties and repercussions for trading based on material non-public information, there isn’t actually a federal law that specifically makes insider trading illegal. Now, that tide may be changing, with multiple bills in pending in Congress that intend to create a federal statute to address this legislative hole. In today’s blog I’ll catch you up on what’s happening on that front.
How Can That Be?
I already know what you are thinking: “Huh? Insider trading is illegal.” I mean, isn’t that why we’ve seen dozens of successful prosecutions in the last few years? You know what I’m talking about – and we’ve seen it all. CEOs, hedge fund managers, employees who accidentally passed on inside information to their wives, friends having brunch together and sharing small talk about their jobs. I think the variety of circumstances is broad, with one commonality: the SEC has been successful in working with the Justice Department to bring charges, obtain convictions and levy penalties. Jail time has been a very real outcome in some of these cases. So how could this all happen if insider trading is NOT illegal? Well, technically it’s not. And, although the SEC has been successful in pursuing these cases, they have had to use loopholes to do so – relying on general antitrust laws and decades of case law (and, I’m not a lawyer, but I’m told that case law is subject to interpretation by individual judges, so the application of that could vary widely). The bottom line is there isn’t a statute that specifically addresses insider trading, which leads to potential ambiguity and inconsistencies in the courts.
Why the Interest Now?
We’ve established that there are no clear federal insider trading laws on the books, but what’s the sudden interest in creating one? The initial catalyst was a landmark ruling (December 2014) by the Second U.S. Circuit Court of Appeals (U.S. v. Newman) that overturned two “key” insider trading convictions, dealing a blow to the Justice Department and the SEC. At the time, the Wall Street Journal summarized the situation as follows: “…a federal appeals court overturned two insider-trading convictions and ruled it isn’t always illegal to buy or sell stocks using inside information.
The ruling raised the bar for prosecutors on a crime that is already hard to prove, and it will likely limit the types of cases the government can pursue.
Specifically, the three-judge panel of the Second U.S. Circuit Court of Appeals said prosecutors must prove traders knew that the person who provided an inside tip gained some sort of tangible reward for doing so. The judges also said it may be legal to trade on inside information, even if it gives an investor an unfair advantage in the markets, as long as the tipper didn’t commit an illegal breach of his or her duty.”
What’s the Fallout?
The Newman decision has created a still ongoing fallout, making it more challenging for the SEC and Justice Department to pursue insider trading cases. As a result, some pending cases have been dropped, others who were successfully convicted are now seeking review of their cases, and Congress is taking action to statutorily define insider trading and also to reverse the requirement under the appellate decision that:
“the tippee know both that the tipper breached a duty of confidentiality and
the tipper received a personal benefit of “some consequence.”
What’s Happening in Congress?
There are currently three bills pending in Congress that seek to define insider trading. The National Law Review describes them as follows:
“Two bills introduced by Democrats have been pending without bipartisan support and have stalled. The broadest of these is the Stop Illegal Insider Trading Act, which was introduced by Sen. Jack Reed (D – RI) and Sen. Robert Menendez (D – NJ). The Stop Illegal Insider Trading Act would make it illegal to trade on “material information” that the person “knows or has reason to know” is not publicly available – excluding information a person developed from publicly available sources.
The second bill is the Ban Insider Trading Act of 2015, which was introduced by Rep. Stephen Lynch (D – MA), and would redefine “material” nonpublic information as information that would likely affect the stock’s price if it were made public.
Most recently, Rep. Jim Himes (D – CT) and Rep. Steven Woman (R – AK), introduced the first bill with bipartisan support, which would ban trading based on material, nonpublic information that the person knew or recklessly disregarded was wrongfully obtained.”
What’s Next?
It’s not clear what the outcome of any of these efforts will be, but what we do know is that the fallout from the Newman decision has caused a ruckus, and there is more pressure than ever to find a consistent way for the courts to define insider trading. It’s quite possible that any new legislation in this area will trigger a need to revamp the insider trading policy, educate employees and possibly adjust some practices and procedures. We’ll keep you informed on any new developments in this area.
It’s a week of “happys”: happy St. Patrick’s day, happy spring (for those of us who have been counting the minutes until spring hits, that will happen at 6:45 pm EDT, 5:45 pm CDT, 4:45 pm MDT and 3:45pm PDT tomorrow, March 20th.) In such a lighthearted week, I decided to keep today’s blog on the lighter side as well.
In a recent survey of our members, it wasn’t surprising that our Global Stock Plans portal ranked in the top 3 of favorite portals (out of 45+ portals). With a myriad of complex issues ranging from securities and tax laws to exchange controls to labor laws to mobile populations (and on, and on), we know stock plan administrators and those who support them continue to place global administration near the top of the priority list.
We’ve heard you loud and clear, and now I need some additional help. We know you love the Global Stock Plans portal; now, please let us know what type of education and content most interests you in administering global stock plans. There is a brief poll below, but if it doesn’t appear, click here. For those who were so gracious to participate in Barbara Baksa’s “Hot or Not” poll last week, this is entirely unrelated. I guess we should call it “poll” month here in the NASPP Blog.
In last week’s blog, I polled readers about how interested certain topics are to them. I thought you might be interested in the results, so here they are. The graphs are a little small, but there’s no need to get out your cheaters; if you click on them, they will expand to a clearly readable size.
Hot or Not: Administration Round
Hot or Not: CIC Round
Hot or Not: Hodge Podge Round
Happy St. Patrick’s Day. I realize now that I should have worked some green into these charts.
Here’s what’s happening with your local NASPP chapter this week:
Seattle: Jon Burg of Aon Hewitt/Radford and David Thomas of Wilson Sonsini Goodrich & Rosati present “Post Vest Holding Periods: The Intersection of Corporate Governance, Plan Design, & Financial Accounting.” (Tuesday, March 17, 11:30 AM)
Chicago: Robin Struve And Diana Doyle of Latham & Watkins present “Inversion Transactions and Equity Compensation—What You Should Know!” (Thursday, March 19, 7:30 AM)
KS/MO and Wisconsin: The chapters host a joint webinar featuring Bruce Brumberg of myStockOptions.com on “Tax Return Reporting: What You Need to Know & Communicate With Employees.” (Thursday, March 19, 12:00 PM)
It’s once again time to play the Hot or Not game. I have a list of possible topics for the 23rd Annual NASPP Conference; your job is to tell me whether each topic is “hot” (or not). Some quick guidelines:
Sizzling hot means you’d definitely want to attend a session the topic
Toasty warm means you might be interested in this topic
Ice cold means that you have no interest in this topic
No opinion means you don’t really know what the topic is or otherwise don’t have an opinion on it
The survey should appear below. If you don’t see it or can’t access it, click here to participate.
In a prior installment of this blog, I explored the renewed interest in mandatory holding periods for equity compensation post vest. In today’s blog, we’ll look at some of the scenarios where this makes the most sense.
We’ve looked at some general reasons why companies may find it attractive to implement a requirement for a participant to hold shares after they are vested. Among the top considerations are ease of facilitating clawbacks, good corporate governance, points on the ISS Equity Plan Scorecard, and the possibility of a reduced fair value accounting expense. I now want to dive into the nuances of where these holding periods seem to make the most sense.
Does One Size Fit All?
While there are many compelling reasons to implement a post vest holding period, a closer look suggests that this may not be a one size fits all approach. This means that not all employees and not all forms of equity compensation are considered “equal” in determining if and how to apply mandatory holding periods. Let’s cover the “who” first, and then the “what.”
Who Should be Subject to Post-Vest Holding Periods?
In contemplating the intent behind the post-vest holding periods (ease of clawbacks, good governance, ISS scorecard points, etc.) it becomes clear that the ideal target for mandatory holding is the executive population. Not only are they the subject of most of the logic behind the holding periods, but this is also a population that tends to have significant amounts of equity compensation. Beyond that level within the organization, there are likely to be varied opinions about who else should be subject to mandated holding periods. There may be a case to include other levels of management, such as middle or senior managers who receive equity compensation. Should post-vest holding periods be broad based? Probably not. Employees who have no equity have nothing to “hold” and those with limited equity (such as only via participation in the ESPP and/or a limited amount of stock options) don’t appear to fit the profile that supports the “why” behind implementing holding periods. Additionally, employees within the non managerial ranks of the organization have tend to have no influence over governance practices, are not subject to clawbacks, and don’t typically represent a significant piece of the accounting expense pie.
What Types of Equity Compensation Make the Most Sense?
We’ll explore three major categories of equity compensation: restricted and performance awards, employee stock purchase plans (ESPPs) and stock options. According to the sources I’ve heard from on this topic, stock options are the least likely candidate for a post-vest holding period. Any mandatory holding period would be tied to the shares post exercise and since the vast majority of stock options are exercised in a same-day-sale transaction, there are most often no shares to tie to a holding period.
With stock options generally off the table, we are left with ESPP shares and restricted stock and performance awards. In my opinion, ESPPs fall into the “maybe” category. Certainly a company could implement a post purchase holding period. However, a key question is whether the population most engaged in ESPP is the same population that would be targeted by post-vest holding periods. We’ll explore the “who” should be affected shortly, but that is a key question in determining whether ESPP shares should be subject to such a mandated holding. Even if executives participate in the ESPP, they are most often likely to have other forms of equity compensation that would be more significant targets for holding periods. Additionally, employees contribute their own funds to the ESPP, and this may be an additional concern in evaluating whether a holding period makes sense (not so much at the executive level where it’s usually deemed good to have skin in the game, but at the mid or lower levels of the company).
The last category is restricted stock and performance awards/units. This appears to be the most likely area of focus for post-vest holding periods. In considering subjecting these types of award to mandatory holding post-vest, companies will need to consider the timing of taxation for awards and units. Restricted stock awards (absent an 83(b) election) are taxed upon vest, and the existence of a mandatory holding period can complicate matters if the participant is not permitted to sell shares to cover the taxes. Restricted stock units are subject to income tax when the award is distributed, making it more attractive to attach these types of awards to post-vest holding. Since income tax isn’t due until the shares are released to the employee, companies could delay settlement until after the post-vest holding period, eliminating the question of how to pay taxes if shares can’t be sold. FICA/FUTA taxes will still be due at vest for both awards and units, but there are ways to collect those taxes over time (such as using the IRS’s Rule of Administrative Convenience) or via payroll deduction from other cash compensation.
Scratching the Surface
This blog can only be so long, and I’ve only scratched the surface on the considerations for post-vest holding periods. One significant evaluation that I left out is the potential for a discount on the fair value for equity compensation subject to mandated hold after vest. This week I was fortunate enough to catch the DC/MD/VA Chapter meeting which (by pure coincidence) was on this exact topic. Terry Adamson of Aon Hewitt and Gustavo Dalanhese of E*TRADE did a great job of bringing companies up to speed on all of these considerations, including a deeper dive into the fair value savings. One thing I learned is that (several factors considered, including stock volatility) the discount can be significant. This is not a minor perk, but could be a strong driver in a company’s evaluation of whether or not to implement a post-vest holding period. We’re out of time today, but the good news is that next week’s NASPP webcast (March 11th) will explore this in much more detail. Be sure to tune in. And, for a quick run down, check out our Hold After Vest podcast episode (it’s much shorter than the webcast, so not as much detail, but definitely a great primer on this topic).
As we wait for the SEC to issue regulations interpreting the clawback requirements under Dodd-Frank, some companies have pressed forward in adopting what they believe to be Dodd-Frank compliant clawback policies. While the intent of this proactive approach appears to be good governance and getting ahead of the curve, hidden amongst the details of these new and existing clawback policies may be unintended consequences that inadvertently trigger variable accounting treatment for share based compensation.
Huh? Say What?
In a May 2014 memo “Do Some Clawback Policies Trigger Variable Stock Plan Accounting?“, Towers Watson brought to light recent memos from two of the big four accounting firms that suggested that companies need to be very careful in designing their clawback policies in order to avoid variable accounting. Of primary concern is the amount of discretion given to the board or compensation committees around determining if a clawback has been triggered and other discretionary factors such as the type/amount of compensation to recoup. How would this trigger variable accounting? The argument cited is that if there is too much discretion in determining when the compensation committee would enforce a clawback, then “a grant date has not taken place because the employee cannot be certain what he or she might actually receive. This would mean that from the initial date of grant until the discretionary clawback period ends, the expense attributable to the equity grant would be valued on a mark-to-market basis, fluctuating along with the company’s stock price.”
Now, before I get a flood of emails pointing out that there seems to be previous guidance on that topic, let me address that (Towers Watson addressed it in their memo as well.) There is existing guidance on how clawbacks affect grant-date-fair value determinations. You can find it in ASC 718-10-30-24. It says: “A contingent feature of an award that might cause an employee to return to the entity either equity instruments earned or realized gains from the sale of equity instruments earned for consideration that is less than fair value on the date of transfer (including no consideration), such as a clawback feature (see paragraph 718-10-55-8), shall not be reflected in estimating the grant-date fair value of an equity instrument.” This basically says that clawback features will not impact the determination of grant date fair value for accounting purposes. However, there is one challenge, and this is where the accounting firms are appearing to raise a new question. The provision of ASC 718 that covers this was written during a time when clawbacks were rare, and it was with that understanding that they were excluded from impacting the grant date fair value. With Dodd-Frank now mandating clawback policies, and the SEC to issue final regulations, it seems that at least some of the accounting firms are suggesting that the prior guidance no longer applies based on concern over the amount of discretion companies are including in their clawback policies.
KPMG issued a memo titled “Effect of Discretion Clauses on Share Based Compensation“, and PwC did a 2013 study on clawbacks. Both firms have cited similar concerns over the amount of discretion they are seeing in a number of clawback policies. They do differ in some areas and situations as to how share based compensation may be impacted by discretion.
There’s not enough space in this blog to deep dive into all the potential issues around “discretion” in a clawback policy. Today’s we’ve just scratched the surface. For a more detailed analysis on this topic, visit the NASPP’s Stock Plan Expensing portal and view the Towers Watson memo.
Why Aren’t We Hearing More About This?
It seems that while concern exists, no official stance regarding the discretionary elements of these policies and their impact on accounting treatment has been taken. It appears that the accounting firms are awaiting the final Dodd-Frank rules before taking a more aggressive position (if at all) on this issue. However, if this opens up the potential for variable accounting treatment, this could land companies in a very tricky situation. Companies who have already adopted clawback policies, or are in the process of doing so, may be unpleasantly surprised to learn at some point down the road that the discretion afforded to their compensation committee in this area has triggered variable accounting. It seems that although the issue has been raised, there’s no clear or strong indication that clawback policies will often trigger variable accounting treatment for share based awards. However, it’s still a question that has been raised and needs to be clearly answered. Even with Dodd-Frank and the upcoming SEC regulations, clawbacks should still remain a rare situation (giving support to the argument that ASC 718-10-30-24 should apply, excluding these policies from impacting the grant date fair value determination). I echo the sentiment of Towers Watson – let’s hope that the SEC and the big four accounting firms come to some understanding about this before the final clawback regulations are issued and this all becomes a mute point.
Today I’m going to dissect a concept that’s existed in equity compensation for a long time. In fact, it’s nothing “new” per se. Yet, some recent trends, governance practices and changes in other industry areas have brought about new life to the idea. So much that I’m officially calling it the “buzz word” (okay, words) of the month. What is it? Post-vest holding periods. In this week’s blog I’ll explore why the renewed attention to this previously under-used practice. In a later installment we’ll get down to the more detailed mechanics.
What is a Post-Vest Holding Period?
Just to make sure we’re all on the same page, the post-vest holding period that I’m talking about is an additional holding requirement imposed on vested shares. Once vested, you must hold them for a period of time (1 year? 2 years?). This is different from holding the shares until they vest (aka the service or vesting period). Typically a company would include this type of holding period in the governing plan and agreement language, in addition to vesting details.
Participants Are Already Subject to Vesting – Why an Additional Holding Period?
This is where the old concept turned hot topic comes into play. While the idea of holding shares has been around for a long time, we are seeing recent and renewed interest in implementing post vesting holding requirements. There are a number of reasons why this may be attractive to a company, including:
Clawbacks: Having a holding period after vesting maintains a “reserve” of retrievable stock in the event the company needs to clawback income from an executive. After all, once an executive liquidates stock and spends the money, it’s next to impossible to recoup those shares or proceeds in their original form. Does the company really want to try and repossess the executive’s vacation home or new yacht?
ISS Scorecard: When ISS released their new Equity Plan Scorecard (see previous blog on this topic), it became clear that the existence of post-vest holding periods count for something. This is one of the items eligible for points on the scorecard.
Prevalence of Stock Ownership Guidelines: We’ve seen the steady rise of stock ownership guidelines over the past several years, with recent data showing more than 90% of public companies having some form of stock ownership guidelines. Post-vest holding periods can help an executive achieve their ownership targets.
In addition to the reasons outlined above, there are other interesting considerations emerging. In talking with Terry Adamson of Aon Hewitt, he pointed out that in addition to the above, companies may be able to reduce their ASC 718 accounting expense on awards with post vest holding periods. Why? Because the “lack of marketability” of the award deserves a discount.
The above only touches upon the surface. Questions I haven’t explored today include the types of equity that make the most sense to cover with a post-vest holding period and whether this makes sense to implement on a broad basis.
We’ve got some great resources in the works to provide you with those additional details. With Dodd-Frank requirements for clawbacks on the horizon, the new ISS Equity Plan Scorecard coming into play this proxy season, ongoing corporate governance changes and continued interest in minimizing accounting expense, we think the concept of post-vest holding periods may be more than just a passing trend.
For additional information now, check out our latest podcast episode “Hold After Vest” (featuring Terry Adamson of Aon Hewitt). For even deeper details, we’ve got a great team of presenters assembled to address all of the points raised in this blog (including the possibility of reducing accounting expense) in our next webcast: Post-Vest Holding Periods on March 11th.
In the coming weeks I’ll touch on more of the nuances that make this topic so interesting.
