San Francisco Treat

For those of you with employees in San Francisco, keep your eyes and ears open for the outcome to the proposal brought before the city officials this Tuesday. If passed, it will eliminate the inclusion of equity compensation from income subject to the city’s payroll tax.

On a side note, while looking for more information on the city payroll tax I found this somewhat disturbing article from earlier in the year. What scares me about it is both the false statement that the federal government doesn’t tax income from stock options and the author’s apparent promotion of company withholding policies that assume tax regulations won’t be enforced.

Pay Ratios

Of course, executive compensation continues to be a focus in the news. From the reports, it really does look like executives’ pay (particularly CEO and CFO pay) is rebounding significantly faster than their companies’ profits are. It’s a difficult balance for companies to retain quality leadership and not make a bad impression on the media and investors. If you are watching this issue closely, CompensationStandards.com is keeping a great list of companies who have failed say-on-pay votes and also those who are combating negative reactions from proxy advisors through supplemental proxy solicitations.

Also, remember that difficult little requirement in the Dodd-Frank Act that companies disclose the ratio of CEO pay to the median pay of all other employees? The AFL-CIO recently launched its improved Executive Pay Watch site which dedicated to drilling down and making public these ratios. I would love to know what calculations they use and how they will ultimately compare to the calculations required in the final regulations once they are out.

I also wonder if a growing focus on the pay differences will be something that companies will need to address with their employees as well. Equity compensation is a major factor in executive pay levels. If your company has a broad-based equity compensation program, communicating the company’s compensation philosophy and practices is an important part of fostering employee satisfaction. As executive compensation practices become increasingly transparent, I think it’s the perfect time to take a closer look at your communication practices as they relate to your equity compensation policy and to initiate a dialogue with your investor relations team to better understand how the company will be managing the public perception of your company’s pay practices.

Financial Reporting for Stock Plan Professionals

Finally, I want to highlight the NASPP University’s upcoming course, Financial Reporting for Stock Plan Professionals. If you want to test your skills and see if this course is right for you, we’ve got a short financial reporting quiz to help gauge your financial reporting skills. It’s not too late to take advantage of the early-bird rate on this course!

-Rachel