Buck Consultants’ 2013 Global Long-Term Incentives survey returned insight into some of the trends that capture the pulse of the global happenings in stock plans. In today’s blog, I’ll highlight some of the key observations.
It’s a Small World, After All
Oops, as soon as I wrote the above caption, the song from Disney’s “It’s a Small World” ride has been looping in my head. Sorry if it’s happening to you now, too (although misery does love company).
What I was reaching for is that some of the global trends point to a fairly consistent and uniform approach across the global board. Among them:
- Full value awards (time and performance based) are squarely the dominant form of equity compensation, with RSUs presently delivering the most value, globally.
- Stock options are out; their use globally continues to decline.
- The use of broad based equity globally is on the decline, and usage rates are projected to stay fairly flat in 2014. Senior management levels and above are most targeted to receive grants from the equity plan.
There weren’t any big surprises there – these trends have existed in the U.S. for a while now, but it is nice to have some confirmation that this truly is a global trend.
I was reminded when reviewing the summary of the survey of the key factors that drive global equity plan decisions:
- Overall objective: the company’s high level objectives filter down to many decisions, including how and when to use equity compensation.
- Local talent market: Sometimes it’s easy to forget that there are many other job markets and economies outside of the U.S. The dynamics of the local market can be a huge factor in determining a compensation approach. The survey summary cited the examples of China, India and the Philippines – all of whom have hot labor markets right now.
- Red tape: This has long been a consideration for U.S. parent companies looking to extend their compensation programs abroad. Just how many legal, securities, and employment considerations exist are largely specific to each country and therefore need to be considered in advance of adopting an equity approach in those regions.
- Taxes: The tax implications of certain award types are a big driver in determining what will maximize the value to the participant. Employer taxes are also a consideration.
- Administration: Last, but not least, the cost and burden to administer these programs abroad is considered. There are only so many resources available, and in some cases it may not make sense to issue equity once the administrative analysis comes into play.
One of my favorite NASPP resources is the bundle of Country Guides in our Global Stock Plans portal. The Guides provide a lay of the land on a myriad of considerations (including commentary from the practitioners who work on these guides) for 34 countries. If you are looking to expand into new regions, or offer additional equity types in existing countries, the Country Guides should be your first stop. There are a myriad of other resources available in the portal as well, all contributed by the folks and firms who specialize in global stock plans – a true gold mine of information.
-Jennifer
Tags: Global, global compliance, global stock plans portal, global trends
Global stock plan administration is more complex than ever. As more companies venture into foreign jurisdictions, more stock plan administrators become tasked with managing this new and ongoing growth relative to the company’s stock incentive programs. The NASPP recognizes the importance of identifying and understanding global stock plan practices and trends; that’s why, in partnership with PwC, we’re conducting the most comprehensive industry survey on this topic: the NASPP-PwC 2012 Global Equity Incentive Survey.
The last global survey was conducted in 2008 (in partnership with Deloitte), and even back then more than 60% of respondents had at least 2,500 employees based outside of the U.S. That’s a good sized population, and I’m betting those numbers have only increased since then, meaning that understanding global practices is even more important than ever. Back in 2008, non-qualified stock options ranked as the most popular form of stock compensation for employees outside of the U.S.; it will be interesting to see how much the use of Restricted Stock Units has risen in usage since that time.
In 2008, about half of responding companies indicated they make adjustments to the size of grants for their non-U.S. employees. 42% of companies had reported having recharge agreements in place with subsidiaries for stock plan arrangements. Have those trends continued to rise since then? This past year, our 2011 Domestic Stock Plan Administration Survey (in partnership with Deloitte), revealed some domestic trends that were somewhat surprising – for example, a dramatic rise in the use of stock ownership guidelines. Certainly we had expected this trend to continue to penetrate organizations, but the percentage of companies in 2011 (73%, vs. 54% from the prior survey in 2007) that had implemented such guidelines surpassed even our own informal projections. A lot can happen in four years, and we’re expecting to see some new trends on the global front, even some that may surprise us. You don’t want to miss out on the opportunity to have the full results available at your fingertips.
Time is running out to complete the survey (you must complete it by May 25th,) and, if you are an issuer, you must finish the entire survey to obtain the full results. To help you get started, I reiterate some tips to help submit your survey:
1. Don’t wait until the last minute. This is the industry’s most comprehensive survey; it includes loads of valuable information but it takes a while to complete. Start now, so you have plenty of time.
2. Don’t try to complete the whole survey in one sitting. The survey is divided into seven sections so that you can complete it in several sittings. If you complete just one section at a time, you’ll be done before you know it.
3. Get some help. Ask others at your company to complete the sections related to their responsibilities–everyone at your company will benefit from this data; there’s no reason for you to do all the work.
Incentives
There are benefits to completing the survey. First, as mentioned, you’ll have access to the full results (non-issuers who are NASPP members will also have access since they can’t complete the survey.) Second, you’ll receive a 10% discount on your registration to the 20th Annual NASPP Conference*, to be held this year from October 8-11 in New Orleans. This is a great opportunity (and added incentive) to attend the industry’s premier conference!
I hope I’ve given you enough reasons to click on over to the survey and start it today. I know I personally can’t wait to see the results.
-Jennifer
**The 10% discount applies to the rate in effect at the time you have both completed the survey and registered for the Conference.
Tags: Global, Global Survey, global trends, Survey