Our popular “Meet the Speaker” series, featuring interviews with speakers at the 22nd Annual NASPP Conference, is a 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 an interview with Takis Makridis of Equity Methods, who will lead the session “Accounting Principles for Stock Plan Administrators.” Here is what Takis had to say:
NASPP: What is a common misperception about ASC 718?
Takis: ASC 718 can feel very arbitrary. There’s a laundry list of “rules” to memorize, which is stressful and contributes to the feeling that ASC 718 just amounts to a bunch of hocus pocus. Our topic is NOT about reiterating all those rules so that people can memorize them just a little bit better. Rather, our session is motivated by the view that ASC 718 is not a laundry list of arbitrary rules. Conventions like dynamic forfeiture rates, equity classification versus liability classification, deferred taxes, and the floor provision tie back to a conceptual framework in accounting. Our goal is to share key aspects of that conceptual framework—which is far bigger than ASC 718—so that all the ASC 718-specific conventions can be understood as existing within a broader accounting policy ecosystem. By understanding the concepts that lead to the rules, our hope is that the rules are not only easier to implement, but also that grey areas can be more readily resolved. This is how we hope to make our presentation different and meaningful.
NASPP: What actions should companies be taking now?
Takis: Companies should take a careful look at their accounting calculations and procedures with an eye toward WHY things are being done the way they are. Link every calculation back to a principle in ASC 718. When there is not a clear principle to link to (e.g., an elaborate performance-based award), what is the reasoning and documentation in support of the current approach? Does it make sense in light of the accounting concepts underpinning ASC 718? “We do it this way because we’ve always done it this way” can be a very dangerous strategy.
NASPP: What is the silver lining to ASC 718?
Takis: ASC 718 makes a lot of sense! <Cringe> ASC 718 is much more “principles-based” than many other standards in US GAAP. Of course the standard is filled with rules, but an effort was made to base those rules off fundamental accounting principles. When you can see the rules as stemming from the broader concepts underlying US GAAP, it becomes much easier to resolve complex cases involving a lot of grey and no specific guidance.
NASPP: What is something you learned from the NASPP?
Takis: The NASPP does an incredible job of bringing experts together from very different disciplines. This is extremely cool and also rare, but it leads to far more holistic perspectives. When we all leave the Conference and go back to “the real world,” it’s essential that we have the tools to look at unique problems holistically, and I feel the NASPP has challenged me to do that in a productive way.
About the NASPP Conference
The 22nd Annual NASPP Conference will be held from September 29-October 2 in Las Vegas. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today!
NASPP Conference Hotel Is Nearly Sold Out
Don’t wait any longer to make your hotel reservations for the 22nd Annual NASPP Conference; the hotel is very close to selling out. Call (877) 632-9001 to make your reservations and mention the NASPP Conference to get the best rate. If the hotel tells you that our room block is sold out, be sure to ask if there are rooms available outside of the block. Don’t wait; we expect the hotel to be completely sold out! If you have trouble making your hotel reservations, contact us at naspp@naspp.com.
To Do List Here is your NASPP to do list for this week:
Make your hotel reservations for the 22nd Annual NASPP Conference. The hotel is nearly sold out; don’t wait or you’ll end up having to stay at a different hotel.
It’s not too late to participate in our newest online program, “Performance Award Essentials.” All of the webcasts have been archived for you to listen to at your convenience.
Check out the fantastic program for the 22nd Annual NASPP Conference. The Conference will be held from September 29-October 2, 2014 at the Mandalay Bay in Las Vegas.
Our popular “Meet the Speaker” series, featuring interviews with speakers at the 22nd Annual NASPP Conference, is a 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 an interview with Marsha Tepper of CompIntelligence, who will lead the session “Manual Manipulation Madness.” Here is what Marsha had to say:
NASPP: Why is the topic of manually preparing calculations and reports so timely right now and how can people struggling with this benefit from your session?
Marsha: Every individual working in stock plan has challenges with the amount and type of manual work that must be done. Even the best administration platforms are not flexible enough to satisfy all the processing, reporting and communication needs. This session will spotlight two well-known large companies and what they are doing to reduce manual work in their stock plan departments. I think this topic will be informative to anyone struggling to find cost-effective solutions and help them take a step back and really look think about how they do their job today.
NASPP: What common mistake do companies make when it comes to manual calculations?
Marsha: One common mistake is to convince yourself that you are too busy to review how you work. So many of us say “I am too busy to figure out how to do this task differently, I just need to get the work done.” It is a project to change but usually very worthwhile.
NASPP: What is the most innovative solution/response you’ve seen to automate a manual process?
Marsha: I believe we are going to talk about one of the most innovative solutions I have seen to reduce manual work during our session. We will discuss how a very, very manually intensive process was automated by creating a rules-based engine to analyze the data.
NASPP: What is something you learned from the NASPP?
Marsha: I learned how to play roulette at a NASPP Conference in Vegas years ago! Seriously, I have learned that we are a small community of dedicated professionals all excited and passionate about stock plans. There are some people I see only at the NASPP Conference but I feel like they are my friends as we are all part of this industry. I learn something new every Conference and I have been in this industry 30 years!
About the NASPP Conference The 22nd Annual NASPP Conference will be held from September 29-October 2 in Las Vegas. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today!
Connecticut: AmyLynn Flood of PwC, Stephen Antuna of GuideSpark, and Heather Royce of The Priceline Group present on educating stock plan participants. (Wednesday, August 20, 9:30 AM)
Las Vegas/Phoenix: The Las Vegas and Phoenix chapters host a joint webinar on “New Frontiers: Emerging Trends in Employee Equity Plan Engagement and Education,” co-Presented by Frank Guido of Solium and John Wolff of GuideSpark. (Wednesday, August 20, noon)
Orange Co./San Fernando Valley/San Diego: The Orange Co., San Fernando Valley, and San Diego chapters host a joint webinar on “What I did on My Summer Vacation: Top 10 Stock Administration Tips to Make the Most of Your ‘Downtime,'” co-presented by Tami Bohm of Radian, Jen Baehr of the NASPP, and Jen Tardif of Solium. (Wednesday, August 20, 11:30 AM)
Salt Lake City: John Ludlum of Holland & Hart and Jonathan Golightly of Fusion-io present “The Tax Man Cometh: Hot Items for an IRS Payroll Tax Auditor!” (Wednesday, August 20, noon)
Michigan: Stephanie Glashow of E*TRADE presents “Inside the Participants’ Minds: How Well Do They Understand Their Equity Compensation Plans?” (Thursday, August 21)
Seattle: Ken Stoler, Matthew McKittrick, and Kari Piehl of PwC present “Equity Compensation Viewpoints Other than Stock Administration!” (Thursday, August 21, 11:30 AM)
This is a topic I’ve covered in the past: blatant insider trading; colorful schemes to profit from material, non-public information; even the SEC’s recent and ongoing crackdown in this area. This week I was hit with two stories and it was a sign that I had to, once again, share. Even if you’ve read other blogs on insider trading, you’ll want to stick with this one. Today’s has all the makings of a James Bond movie: pre-paid disposable cell phones and cash traveling in unmarked envelopes. I almost have to wonder what the bigger draw is for those who engage in insider trading: the possibility of illegally making a lot of money and getting away with it or the (albeit short) thrill of taking covert spy-like steps in an attempt to conceal your trail?
It’s an Inside Job
First, let’s get to topic du jour number one: a study that is being published this month that seems to conclude that a significant number of information leaks that lead to insider trading come from, well, insiders. Okay, okay. That’s not a story, I know. We all know that. What the study actually pointed to was the seemingly high number of information leaks that appear to be coming from state and regulatory agencies—those who should be protecting the sensitive information in their care. An article on the study quotes one of the researchers:
“Our findings are somewhat controversial in that we’re saying the presumed protectors of the shareholders and general public interests appear to be using their positions to their advantage,” Zhao said. “The evidence shows it is happening. There is more insider trading within regulated firms than within unregulated firms. There is very, very strong indirect evidence that this is due to people involved in the regulatory agencies.”
The best way to articulate this is to use an example. Let’s say there’s a pharmaceutical company seeking FDA approval for a new drug. In theory, nobody at this point knows if the drug will be approved or not. But a couple of days before the decision is announced, there is a spike in trading of the company’s stock. It appears that somebody did know the outcome and leaked the information. In this hypothetical, the leak is likely from the regulatory agency that was tasked with approving the drug, not from the company itself.
Numerous factors were looked at to reach these conclusions. Researchers say they evaluated factors like cumulative abnormal return and short sale data.
Let’s face it, nobody wants to be in the middle of an insider trading investigation. Regardless of who acted on the information, how they got it, and why it happened, it’s still cumbersome to participate in an investigation, it diverts time and attention away from the normal course of business, and creates lots of publicity that the company would probably prefer to avoid. If it’s beyond our control, how do we mitigate against the possibility of an investigation? That’s the big question.
Insider Trading—James Bond Style
Sometimes smart people do bad things. They just do. And the insider trading case in the media this week falls into that category. I can’t do the full story justice in today’s blog, but it’s worth a read. Seriously, I could see a made for TV movie coming out of this one. A Microsoft employee, dad of four kids, making $130K a year, is struggling to pay his kids’ private school tuition. So what does he do? He concocts an insider trading scheme in which he passes along information to a day trading former colleague who then trades on their behalf to the tune of $400,000 over time. Using prepaid cell phones, plain envelopes to deliver cash profits, and other covert tactics, the plan unfolds. The first trade goes off without a hitch. Later there is a second, then a third. They get so excited they even talk about starting their own hedge fund using their newfound fortune. Eventually (and can I say predictably—after all, there is an insider trading crackdown going on), he gets caught by the SEC. Yes, it can happen to you. Long story short, all the painstaking steps taken to hide the scheme didn’t work. He got caught, his partner got caught, and both are going to jail. The Microsoft employee was sentenced to two years in jail. His partner got 18 months. One thing that stood out to me: the former Microsoft employee was very candid in saying that yes, he knew this was wrong. He even described his struggle with the scheme and how he rationalized it to himself saying that if members of Congress could do it, he could too. It’s not often you get to hear a full admission in these cases, nor the thought process behind it.
Many of us come into contact with material, non public information routinely. It’s the nature of our work. While it’s clear we can’t control others—our colleagues or even the regulators who engage with some of our firms—we can control ourselves. It’s never going to be worth it. I’ve covered the gamete of insider trading cases in this blog, mostly because it seems there is a new angle every time. The people getting caught doing this are not just CEOs and heavy hitters. Husbands have gleaned inside information from their unknowing wives. In a prior blog, I noted how the U.S. Government tracked an insider trading suspect to Hong Kong and extradited him back to face the music in the U.S.—all over a $7,900 trade. I continue to cover this topic because smart, ordinary people with decent jobs, families and seemingly good upwardly mobile career prospects keep getting entangled in these schemes. So I will beat the drum a little bit more. Insider trading is never going to be worth it. We must be vigilant about the information in our care: the data we hold, the information we receive. The vast majority of us are too ethical to deliberately trade on inside information, but as I’ve highlighted before, tipping can often be unintentional. I leave you with a phrase of the day to consider: “persistent vigilance.”
NASPP Conference Hotel Is Nearly Sold Out
Don’t wait any longer to make your hotel reservations for the 22nd Annual NASPP Conference; the hotel is very close to selling out. Call (877) 632-9001 to make your reservations and mention the NASPP Conference to get the best rate. If the hotel tells you that our room block is sold out, be sure to ask if there are rooms available outside of the block. Don’t wait; we expect the hotel to be completely sold out! If you have trouble making your hotel reservations, contact us at naspp@naspp.com.
It’s Not Too Late to Learn About Performance Awards
It’s not too late to get into the Performance Awards Essentials course. The first webcast has been archived for you to listen to at your convenience. Register today so you don’t miss the next webcast on Thursday, August 14.
To Do List
Here is your NASPP to do list for this week:
Make your hotel reservations for the 22nd Annual NASPP Conference. The hotel is nearly sold out; don’t wait or you’ll end up having to stay at a different hotel.
Register for our newest online program, “Performance Award Essentials.” Don’t miss the next webcast on August 12.
Check out the fantastic program for the 22nd Annual NASPP Conference. The Conference will be held from September 29-October 2, 2014 at the Mandalay Bay in Las Vegas.
Our popular “Meet the Speaker” series, featuring interviews with speakers at the 22nd Annual NASPP Conference, is a 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 an interview with Ellie Kehmeier of Steele Consulting, who will lead the session “What You Don’t Know About Tax Accounting CAN Hurt You.” Here is what Ellie had to say:
NASPP: What is a common misperception about your topic?
Ellie: A very common misperception is that tax accounting for equity compensation is only relevant to members of the tax department. However, this issue is just one of many that the tax department deals with, and most tax professionals don’t specialize in equity compensation. A stock plan administrator that understands these concepts can help make sure numbers are correct, errors in the financial statements are avoided, and can streamline the process by making sure the right reports are run the first time around.
NASPP: What common mistake do companies make and how can they avoid it?
Ellie: One common mistake that I see relates to the requirement that companies reclassify excess tax benefits (“windfalls”) from operating to financing cash flow on the statement of cash flows. I can look at a company’s financial statements and spot potential problems in two minutes. This reporting requirement is often handled by the SEC reporting group instead of tax, with data from stock plan administration. If the stock plan administration professional knows what is needed here, this is a really easy mistake to avoid. A number of other common mistakes are made because people don’t understand this area very well or don’t understand when they need some specialized help. Our panel’s goal is to demystify the issues, and help the tax and stock plan admin people learn ways to help each other get it right with the least amount of pain possible!
NASPP: What is the silver lining to your topic?
Ellie: A silver lining to the complexities of tax accounting for equity comp? Does having this be my main source of revenue for the last ten years count? Okay, a silver lining to this topic is that if people follow our suggestions, then tax and stock plan admin will develop a deeper appreciation and (we hope) fondness for each other. And the stock plan admin professionals will minimize the time they spend running reports out of their equity-tracking software, because they’ll better understand what they need, and what questions they need to ask of their tax counterparts, to get it right the first time and keep the tax folks out of trouble!
NASPP: Tell us three things people don’t know about you.
Ellie: Gosh, I’m such an open book. Okay, let me try:
I was supposed to be a forest ranger when I grew up.
Related to number 1, I love camping. When our youngest goes off to college in the fall, we’re going off camping with our new air mattress and sleeping bags. Looking forward to waking up to birds chirping and my husband’s mean camp “mcmuffins.”
I’m a chocoholic, especially good dark chocolate with nuts. I’m currently addicted to home-made banana splits with vanilla ice-cream, peanuts and chocolate sauce (and it doesn’t even have to the good stuff).
About the NASPP Conference
The 22nd Annual NASPP Conference will be held from September 29-October 2 in Las Vegas. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today!
Here’s what’s happening at your local NASPP chapter this week:
Philadelphia: Emily Cervino and Mike Palermo of Fidelity will present “Hot Topics! What’s Happening With Today’s Equity Compensation.” Be sure to stick around for the after party at xfinity Live! It looks like it will be a fun time! (Tuesday, August 12, 3:30 PM)
Western PA: The next stop for Emily and Mike is Pittsburgh, where they will again present “Hot Topics! What’s Happening With Today’s Equity Compensation.” (Wednesday, August 13, 8:00 AM)
Atlanta: Nathan O’Connor and Amit Tekwani of Equity Methods present “2014 State of the Union in Equity Compensation Design, Valuation, and Accounting.” (Friday, August 15, 11:30 AM)
Our popular “Meet the Speaker” series, featuring interviews with speakers at the 22nd Annual NASPP Conference, is a great way to get to know our many distinguished speakers and find out a little more about their sessions in advance of the Conference.
About the NASPP Conference
The 22nd Annual NASPP Conference will be held from September 29-October 2 in Las Vegas. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today!
Win a GoPro Camera!
Join the focus group to provide feedback on the NASPP Conference app and get a head start on qualifying for a chance to win a GoPro camera at the 21st Annual NASPP Conference. Participants will be asked to complete several tasks within the app and provide feedback on how the app performed. Space in the focus group is limited; apply here. You must be registered for the NASPP Conference to participate in the focus group.
To Do List
Here is your NASPP to do list for this week:
Register for our newest online program, “Performance Award Essentials.” Don’t miss the first webcast on August 12.
Check out the fantastic program for the 22nd Annual NASPP Conference. The Conference will be held from September 29-October 2, 2014 at the Mandalay Bay in Las Vegas.