I’m a big fan of learning from my own mistakes, but if given the opportunity, I’m an even bigger fan of learning from the mistakes of others. And frankly, when it comes to our jobs, it can cost everyone involved a lot less to learn from the mistakes others have made than repeating the mistakes ourselves. Thanks to the National Center for Employee Ownership, this is now possible!

Earlier this year, the NCEO asked some of the industry’s leading equity compensation lawyers, plan administrators (including yours truly), tax and accounting consultants and software vendors to share some of the mistakes they’ve made in equity compensation and what they did about them. The stories that came in were riveting and provided enough content for an entire book!

The book was recently published and is appropriately titled, “If I’d Only Known That.” It is information packed with a focus on better understanding the complex relationships between accounting, tax, securities law, plan design, administration, and humanity, using stories of how bad things happen to good people in equity compensation, and is written by industry professionals for people who work in the industry. It is arranged into three categories–communication and education; plan design and modifications; and administration, policy and process. So, for instance, you could expect to find stories about ESPP contribution carryover and fair market value nightmares (see below for a summary of a related story I contributed to the book) in the “administration, policy and process” chapter.

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Throughout my career I have been a big proponent of validating fair market values. This obsession derives from a story I share in the book titled, “Check and Double Check.” Here is an overview of the story and the lesson learned:

Summary of Story: A mid-size semiconductor company offers a tax qualified ESPP to its employees. Immediately following the close of the stock market on the day of purchase, the plan administrator entered the company’s stock price (obtained from Yahoo! Finance) in its stock plan system, which was the resulting purchase price for the offering. The purchase was processed, and shares were distributed to participants’ accounts. Several months later, an employee contacted the company because they had identified a difference between the company-referenced purchase price and various online resources, including Yahoo! Finance. The employee’s information was accurate. As a result, the company had to reverse and reprocess the purchase, which meant that all interim activity had to be reprocessed, e.g., reversing terminations/withdrawals that occurred following the purchase and communicating the mistake to employees.

Lesson: Companies should incorporate a FMV validation into their SOX controls, e.g., obtain a sign-off from a second person that FMV’s entered into the stock plan database agree to two primary credible sources.

Fair market values touch so many areas of stock compensation. Be sure you have processes in place to ensure the fair market values you use to do your jobs are accurate.

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“If I’d Only Known That” is a great resource for both service providers and plan administrators. For service providers, it’s a great marketing tool for conveying the necessity of professional assistance to clients and prospects. For plan administrators, it’s an invaluable tool to help skirt mistakes before they happen. Invest in your career–purchase a copy of this book now!

Special pricing on all book orders! The NCEO is offering special member pricing to all NASPP members who purchase a copy of the book. To get the NCEO member price ($25), add the book to your cart and then enter the appropriate code (“Known” for the print version and “KnownPDF” for the digital version) in the “Payment code” field on the shopping cart page and click the “Enter” button to the right. Codes are not case-sensitive.

-Robyn