Tag Archives: digital signature

October 11, 2011

Trends in Stock Plan Administration

For today’s blog entry, I highlight results from the NASPP’s 2011 Stock Plan Design and Administration Survey (co-sponsored by Deloitte). If you missed our webcast highlighting the results, you can still catch the audio archive (and the transcript will be up in a couple of weeks). The full results will be published later this month; I’ll cover more highlights from the results in future blog entries.

The 2011 Domestic Stock Plan Administration Survey
The last time the Domestic Stock Plan Administration Survey was conducted was in 2007, when it was part of the Domestic Design survey. This is the first time the Domestic Administration survey has been conducted and published independently.

Respondent Demographics

We received 603 responses, compared to 428 responses in 2007. High-tech companies still comprised the single largest industry in the survey, but dropped from 43% of the respondents in 2007 to only 34% of respondents in 2011. We picked up respondents in the “other” industries categories, which is a mish mash of industries that don’t fit into any of the other categories (one thing I like about writing a blog is that I can use words like “mish mash” that I can’t use in anything else I write). Respondents from the western region also dropped from 35% in 2007 to only 29% in 2011. We picked up respondents primarily in southeast and a little in the northeast. 37% of respondents are Fortune 500 companies (this was almost the same as in the 2007 survey).

Staffing and Outsourcing

A question I am asked a lot is what department stock plan administration is located in. 60% of respondents reported that HR/Comp & Benefits has primary responsibility for administering the company’s stock and option plans. This was up from 57% in 2007. I was surprised to see the number of companies that locate primary responsibility for stock plan administration in Treasury/Finance drop from 16% in 2007 to just 5% in the current survey. 9% of respondents task accounting with primary responsibility for stock plan administration, which did not change from the 2007 survey.

The percentage of companies that have no personnel dedicated solely to administering their stock and option plans increased from 31% in 2007 to 39% in 2011. At the same time, the number of companies outsourcing more than 75% of stock plan administration increased to 41%, up from 33% in 2007. Perhaps the increase in outsourcing contributed to the decline in staffing.

The Electronic Age

Companies continue to move to electronic processes. The percentage of respondents distributing grant agreements in paper format dropped to 33%, from 47% in 2007. 47% of respondents permit a digital signature on grant agreements for some or all employees, up from 34% in 2007.

Participant Communications

76% of respondents require employees to accept their grant agreements, which did not change significantly from 2007. Enforcement practices also did not change significantly, but an additional 4% (19%, up from 15% in 2007) of respondents cancel grants if they aren’t acknowledged within a specified period.

We are seeing more companies notify employees of expiring in-the-money options. Only 20% of respondents don’t provide this notice, down from 25% in 2007. And more companies are relying on a third-party to provide the notice (45% of respondents, up from 31% in 2007). I expect that this is the result of the brokers and other third-party administrators developing the functionality to provide these notices to employees and more companies getting comfortable with relying on the brokers to provide this notice.

See You in San Francisco!
I hope to see all of my readers at the 19th Annual NASPP Conference, which is scheduled for November 1-4 in San Francisco. The last Conference in San Francisco sold out a month in advance–and that was without the reality of Dodd-Frank and mandatory Say-on-Pay hanging over our heads. With Conference registrations going strong–on track to reach nearly 2,000 attendees–this year’s event promises to be just as exciting; register today to ensure you don’t miss out (and make your hotel reservations, because the hotel is close to selling out).

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.

Register for the 19th Annual NASPP Conference (November 1-4 in San Francisco).
Make your hotel reservations for the NASPP Conference–don’t wait, the hotel is almost out of rooms!
Check out the NASPP’s Facebook and Twitter pages.
Complete the Compliance-O-Meter quiz on Insider Trading Compliance Policies.
Take the “Question of the Week” challenge.
Renew your NASPP membership for 2011 (if you aren’t an NASPP member, join today).
Attend your local NASPP chapter meetings in Florida, Houston, Ohio, San Diego, Silicon Valley, and Wisconsin. Robyn Shutak, the NASPP’s Education Director, will be at the San Diego meeting and I’ll be at the Silicon Valley meeting; we hope to see you there!

– Barbara

Tags: digital signature, electronic signature, employee communication, employee education, expiration, grant acceptance, grant agreement, option expiration, Stock Plan Design and Administration Survey, Survey

July 8, 2010

Put Your John Hancock Right Here

Fireworks, watermelon, and a mild case of sunburn–yes, the Independence Day celebrations are behind me for another year. Of course, I can’t think about the Declaration of Independence without thinking about John Hancock’s bold, stylish signature and all that it symbolizes.

A signature represents the authenticity of an agreement or statement. The idea is to find something unique to a particular individual that proves his or her identity. In the world of equity compensation, we use signatures to authenticate that our participants have agreed to terms and conditions associated with our equity compensation programs.

Electronic Signature

As online grant acceptance becomes more common, companies should be addressing the issue of electronic signature. Online grant acceptance certainly has the potential to be more time-efficient, trackable, and cost-effective than distributing paper grant agreements and collecting and archiving the original signature records. However, the governing principles for the use of electronic or digital signatures are not universal.

Understanding Jurisdiction

Many countries, including the U.S., have regulations that recognize the legitimacy of the use of an electronic signature in executing official agreements. The requirements for authenticating an electronic signature may differ between countries, states, provinces, and cantons even if there is some form of applicable federal legislation. In the U.S., all 50 states have some form of electronic signature regulations; 47 have adopted the Uniform Electronic Transactions Act (EUTA). For information on electronic signature outside the U.S., refer to the Country Guides or regulatory guide matrices available on our Global Stock Plans portal.

The Technology Battle

There aren’t many areas in equity compensation where technology availability is readily given the ability to influence policy, but electronic grant acceptance could be one. A quick internet search today yielded all sorts of results for companies that authenticate a digital signature with technological breakthroughs like special pens, unique algorithms, or thumbprint/iris/DNA scans. While you won’t necessarily need to fully understand all the technical jargon behind the technology that supports your company’s electronic grant acceptance (or be requiring a blood sample from employees any time soon), it is important to know the general process steps that are available to you.

For example, can you prove that a participant has received a statement, opened a document, or accessed his or her account? Can you require that each document posted to an electronic agreement has been opened before the entire agreement may be accepted? What about requiring the participant to scroll through the documents? Is the same process available for all forms of equity compensation (including ESPP enrollment)?

Practical Application

Once you know exactly what control you have over the electronic grant acceptance process, you can identify the jurisdictions where the technology can support the authentication requirements. You may have some countries where the requirements are more rigorous than others. Your company will need to decide if the overall company policy for grant acceptance will require all participants to accept based on the same requirements or if you will customize the process for different jurisdictions. For locations where your legal advisors have advised against the use of online grant acceptance, you may still be able to use online document delivery where participants sign and return just the grant notice. To see how other companies are addressing this issue, check out our 2008 International Stock Plan Design and Administration Survey, cosponsored by Deloitte.

18th Annual NASPP Conference

For all the most effective and ways you can be communicating electronically, don’t miss the session, “Effective Electronic Education and Communication” at our Conference in Chicago this year!

-Rachel

Tags: digital signature, electronic signature, grant acceptance