We are excited to bring our popular “Meet the Speaker” series back to the NASPP Blog, featuring interviews with speakers at the 22nd Annual NASPP Conference. This 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 Valerie Diamond of Baker & McKenzie, who will lead the session “Key International Updates.” Here is what Valerie had to say:
NASPP: Why are global updates particularly timely right now?
Valerie: Just about every company is global these days. Companies are growing into new locations at a faster pace than ever before and there is a real need to stay on top of the securities laws, exchange controls and tax issues. The tax authorities in Ireland, UK, Hong Kong and Australia are not willing to overlook a US company’s ignorance of tax obligations. We are also seeing companies penalized by the China SAFE exchange control authorities and the Philippines securities authorities for not registering their plans. Key international updates is a critical session for any company that is global—whether they have operated for 10 years or 10 days. The rules change all the time and this session will walk you through those changes and make sure that you get some real insights from the global practitioners at Baker & McKenzie and Ernst & Young as to how to manage global equity compliance.
NASPP: What are some best practices companies should implement for their global stock plans?
Valerie:
Consider a global form of award agreement—and by that, I mean one that covers all countries you offer equity in, not a separate form for each country. The reason—employees move over the life of the equity award and you really need to make sure that your agreement is drafted to take that into account. Plus, it’s a whole lot easier to administer.
Do a quarterly assessment of any new tax or legal developments affecting equity awards and update your agreements and compliance strategy accordingly.
Document what you did to comply with the rules and why and make sure everyone who needs to know, knows what decision was made and why.
Talk to someone who offers equity in a country if you have not granted there before. There are lots of practical tips that you can get from those who have done it before.
NASPP: What is the silver lining to global stock plan compliance?
Valerie: The silver lining is that because there are more people granting equity globally, there is a better understanding of how to do it and the traps to avoid. It’s great to have both Baker & McKenzie and EY speakers on this panel because we are able to cover all of the issues from tax and securities laws to data privacy and exchange controls. This gives the audience a complete picture of the new developments and good practical tips.
NASPP: Tell us three things people don’t know about you.
Valerie:
I grew up in Los Angeles, the daughter of two (would-be) actors.
I’m a former professional ballet dancer.
I worked at the Federal Deposit Insurance Corporation as a paralegal prior to attending law school.
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!
Quick Survey on Mobile Employees
The NASPP and Morgan Stanley are pleased to announce a joint survey on tax compliance for mobile employees. Take this quick survey today. The survey has only 13 questions; you can complete it in less than ten minutes—do it today, before you forget. The deadline to complete the survey is July 25, 2014.
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.
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 Doreen Lilienfeld of Shearman & Sterling, who will lead the session “Top Compensation Traps in Mergers and Acquisitions.” Here is what Doreen had to say:
NASPP: Why is the treatment of compensation in mergers and acquisitions a particularly timely topic right now?
Doreen: M&A activity is once again at a high. Given the complexities of the ever-changing legal landscape, keeping up to date with the changing rules and best practices is essential.
NASPP: What common mistake do companies make with their stock awards?
Doreen: One common mistake is not planning in advance for all potential outcomes when making equity grants. A company has the most flexibility at the time of grant, as opposed to trying to make amendments later.
NASPP: What is the silver lining to the treatment of awards in a CIC?
Doreen: On the positive side, with proper advance planning and good business direction, a company can anticipate many common situations that arise in M&A transactions and plan accordingly.
NASPP: Tell us three things people don’t know about you.
Doreen: Three things people don’t know about me:
I have worked in six offices of Shearman & Sterling (New York, San Francisco, London, Frankfurt, Paris and Palo Alto).
Although I am a native New Yorker, I have taken (and passed) the California bar.
I take long subway rides to the outer boroughs of New York with great frequency with my six-year old.
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:
Boston/CT: The Boston & CT chapters host their 6th annual regional conference. This one-day event includes sessions on crowdsourcing LTI programs, employee education, perfecting period close, the latest in tax reform, global stock plan compliance, making the most of your down time, the CEO pay ratio disclosure, and equity compensation when executives are hired and fired. (Monday, July 14, 8:00 AM)
Denver: Dan Walter of Performensation presents “The Inequity of Equity–Have We Lost Our Way and Can We Find Our Way Back?” (Tuesday, July 15, noon)
Twin Cities: John Roe of ISS presents on trends and issues in this year’s proxy reports. (Thursday, July 17, 7:30 AM)
We are excited to bring our popular “Meet the Speaker” series back to the NASPP Blog, featuring interviews with speakers at the 22nd Annual NASPP Conference. This 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.
NASPP: Why is are financial and reporting controls a particularly timely topic right now?
Berni: It’s been in the news and on NASPP blogs: SEC Chair Mary Jo White has stated “This coming year promises to be an incredibly active year in enforcement, as we continue to vigorously pursue wrongdoers and bring enforcement actions across the entire industry spectrum.” Their focus? Financial reporting fraud and accounting irregularities, amongst others. So ask yourself: would you be prepared for an audit if the SEC showed up on your doorstep tomorrow?
NASPP: What actions should companies be taking now?
Berni: Companies should take the time to implement processes to demonstrate that controls are in place. In addition, document the policies and procedures.
NASPP: What is the worst that can happen if a company doesn’t have good controls in place?
Berni: Non-compliance and/or fraud can land executives in jail.
NASPP: If you had a store on Etsy, what would you sell in it?
Berni: If I had a store on Etsy, I would sell dance classes or crochet/knitted scarves.
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!
Time Is Running Out! This is the last week to take advantage of the discounted pricing for the 22nd Annual NASPP Conference and our newest online program, “Performance Award Essentials.” Don’t miss out–register for both programs by this Friday, July 11. The discounted rates will not be extended–don’t pay more than you have to!
Here is your NASPP to do list for this week:
Check out the newest podcast in our Equity Expert series–an interview with Tami Bohm of Radian.
Read Andrea Best’s newest blog, “4 Steps to De-Stress” in the NASPP Career Center.
Register for our newest online program, “Performance Award Essentials.” Don’t wait–the early-bird rate is only available until July 11.
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. Don’t wait to register–discounted registration is only available until July 11.
Today I look at recent litigation relating to the use of non-compete provisions in award agreements. The case (Newell Rubbermaid v. Storm) involves an employee, Sandy Storm (yes, that’s her real name), of Newell Rubbermaid. Storm was responsible for the sale of infant and juvenile products (sold under the Graco brand) by Newell Rubbermaid to Target. In 2013, Storm signed an RSU agreement that included a number of post-employment restrictive covenants (e.g., relating to confidentiality, use of trade secrets, and non-solicitation) that effectively prohibited her from competing with Newell Rubbermaid. In 2014–you guessed it–she resigned from Newell Rubbermaid to work for one of their competitors (Artsana) selling infant and juvenile products (including to Target).
What is interesting here is that the Delaware Chancery Court agreed that the restrictive covenants are enforceable and issued a temporary restraining order against Storm. In today’s entry, I discuss some other aspects of the case that I think are interesting.
An Online Agreement and Acceptance
The agreement was distributed online and Storm consented to it with an electronic signature. The court did not seem to view this any differently than if the agreements had been in paper format and she had manually signed them, saying “Agreements may, of course, be made online.”
You Really Should Read All Those Online Agreements
Storm had not read the agreement, so she didn’t know about the restrictions. She knew that other employees had been asked to sign separate non-compete agreements, so, before resigning, she checked several other sources for prohibitions against working for a competitor (including her personnel file and the company intranet) and didn’t find anything. But she didn’t think to check her RSU agreement. And who can blame her–she thought that agreement related solely to her RSU award, which she was going to forfeit anyway because it wasn’t vested, and she’d signed RSU agreements in 2011 and 2012 that didn’t contain these provisions.
The court didn’t care, saying “Storm is understandably unhappy that she did not read the 2013 Agreements…She altered her post-employment rights in a manner she appears to regret now, but it was her choice to modify her rights without fully investigating the terms to which she agreed.” Harsh! Something to keep in mind the next time you accept an online service agreement without reading it.
Enforcement Went Beyond Forfeiture of the Award
What we typically see with non-compete provisions in awards is that the award is forfeited (or, if vested, clawed back) if the employee violates the provision. The employee essentially has a choice of (A) keeping the award or (B) competing. That wasn’t the case here. The restrictive covenants apply regardless of whether the award is forfeited. In fact, the award had not yet vested by the time Storm terminated, so she forfeited it regardless of where she went to work after leaving Newell Rubbermaid. The question is not whether she gets to keep the award but whether she can work for Newell Rubbermaid’s competitor at all. It’s a lose-lose situation for her; she already forfeited the award and now she’s out of work.
New Possibilities and Challenges
This certainly opens up some new possibilities for award agreements. Mike Melbinger of Winston & Strawn and blogger at CompensationStandards.com thinks, given Storm’s level in the organization and access to sensitive information, this particular scenario might even withstand a challenge in California.
But a provision like this would be a darn good reason for an employee to refuse to accept an award. Storm’s future employment opportunities were limited as soon as she accepted the award agreement (without even reading it!). Enforcing acceptance of award agreements is already a challenge (see the NASPP webcast “Is Silence the Answer? Acceptance of Grant Agreements“), giving employees a legitimate reason to decline them makes this process even harder.
Moreover, a key consideration for the court was that Storm checked a box labeled “I have read and agree to the terms of the Grant Agreement,” and clicked a button labeled “Accept.” The court reviewed screen shots of the page that Storm used to accept the agreement and emphasized this in its decision. I’m not sure that the court would have sided with Newell Rubbermaid if Storm hadn’t had to voluntarily take action to accept the award. And many companies don’t get serious about enforcing acceptance until awards are about to vest. Storm’s award hadn’t vested yet; if Newell Rubbermaid had taken that approach, Storm would probably be happily working at their competitor today.
The Boston and Connecticut NASPP chapters will host their 6th Annual Regional Conference next Monday, July 14. The full day of learning and networking includes 8 topics in 5 sessions. The panel topics are:
Crowd-Sourcing with Long-Term Incentive Plans
Lights, Camera, Action! Viral Videos in Stock Compensation
Everything We Do In Compensation Is Communications
“What’s Next. . . the Latest in Tax Reform?”
Global Equity Compliance and Best Practices
Perfecting Period Close
What I Did on My Summer Vacation: Top Ten Tips to Make the Most of Your “Downtime”
Hiring and Firing Executives: Equity Compensation Issues
Pay Ratio: Exploring Some “Other Statistical Methods”
It’s the eve of 4th of July and most of us are already in holiday weekend mode. Recognizing that attention spans may be running short today, I’ve decided to keep it light, but still touch on something important that I’m co-presenting at our upcoming 22nd Annual NASPP Conference: how to communicate successfully when attention spans are shorter than ever, and the variety of communication mediums are greater than ever. This summer we’ll be featuring a host of guest blogs written by speakers who will be presenting at the Conference. Today I’ll add to that content by interviewing myself (a first for me!). I’ll be playing the role of interviewer and interviewee. Let’s get started.
What’s in a Name?
NASPP: I don’t think we’ve ever had a session at a conference with a title quite like yours: “Gone in 60 Seconds: Communication for Short Attention…Ooh Candy!” – certainly one that didn’t mention candy. Is this a play on a movie? What’s the significance of the title?
Me: I can’t claim credit for the title – that was the creative product of my co-panelist, John Hammond. But I will say that the title pretty much sums up our presentation concept – we are riddled with so many distractions every day and our stock plan participants are no different. They could be viewing or reading your communication and then something distracts them and they are gone. Gone in 60 Seconds is catchy – but in reality it’s even less time – the average attention span in 2013 was 8 seconds – less than that of a goldfish! Speaking of goldfish, I recently got one and he is really smart – when it’s feeding time he wiggles his little body and…
NASPP: Uh, I think you are getting distracted. Back to the interview.
Me: Oh yes, sorry! It’s just when I mentioned goldfish, I got to thinking about mine and…you know, it’s funny, as I was writing this blog, I saw how many times my mind would shift and start thinking about other things. I was looking a the curtains in my office and I’ve been meaning to get an area rug to match them – I wonder if I should look for one online now that I’m thinking about it.
NASPP: Ahem. The interview?
Me: Oh yes, Gone in 60 Seconds. Oh, wait one second, someone just sent me an email that I need to respond to. Be right back.
Me: Okay, I’m back. What were we talking about?
NASPP: Okay, let’s start back near the beginning. So the initial focus of the presentation is the fact that participants are more distracted than ever and the time to get the message across is less than ever. Is that right?
Me: Yes! Absolutely! That’s the biggest challenge – with all the complexity around stock plans, taxation, administrative procedures and other compliance, there’s a lot to say in a very short amount of time. The question becomes how do you do that before their focus shifts to the “candy” or the email, or whatever else is going to distract them. Did you know that the average American adult checks email 30 times an hour? All this talk of candy makes me crave sugar right now. Can I offer you some chocolate?
NASPP: Uh, no, thanks. We’ve established that people are short attentioned these days. So what is the solution? How does a company get the message across to participants?
Me: I remember years ago deciding to “video tape” a presentation for ESPP that I had done over and over again each quarter (we had quarterly enrollments in that company). We hired a video crew to come in and video tape the 30 minute presentation. We posted it on our Intranet and it saved me a lot of time in having to do repeat presentations. That seemed to work back then. However, the world has changed – a 30 minute video on ESPP likely wouldn’t work today. The median of most popular viewed YouTube videos is something like 2 minutes. Our news segments on the evening news are getting shorter (41 seconds for the local news story). There’s a reason for this – the average person won’t stay focused for longer than that. The key has become disseminating information in short, digestible chunks. Our co-panelist, Anthony Pettinelli of GlaxoSmithKline is going to be demonstrating how his company is doing that – via short videos aimed at tackling very specific topics. You don’t have to cover the entire RSU plan in a single communication or video. It’s time to break it down. Wow, I didn’t even get distracted! I am passionate about communications, so I must be in the zone now.
NASPP: Sounds very interesting. We’ll look forward to your session at the Conference! Thank you for your time today (and you realize we could have gotten this interview done much faster if you hadn’t been so distracted!).
Me: Thank you! I’m working on it – but sometimes the “candy” is just so tempting!
Wait, don’t move on just yet – I have a short quiz for you! Please help us learn more about distraction!
Wishing everyone a safe and fun 4th of July weekend.
-Jennifer
Create your free online surveys with SurveyMonkey , the world’s leading questionnaire tool.
Time Is Running Out! You have less than two weeks left to take advantage of the discounted pricing for the 22nd Annual NASPP Conference and our newest online program, “Performance Award Essentials.” Don’t miss out–register for both programs by July 11.
4 Steps to De-Stress
Get in the right frame of mind for the upcoming holiday weekend with Andrea Best’s newest blog in the NASPP Career Center, “4 Steps to De-Stress.”
Here is your NASPP to do list for this week:
Check out the newest podcast in our Equity Expert series–an interview with Tami Bohm of Radian.
Read Andrea Best’s newest blog, “4 Steps to De-Stress” in the NASPP Career Center.
Register for our newest online program, “Performance Award Essentials.” Don’t wait–the early-bird rate is only available until July 11.
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. Don’t wait to register–discounted registration is only available until July 11.