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: What are you planning on covering during your session?
Cathy: Companies are now taking mobility to the next level and addressing the next tier of risk associated with business travelers holding equity awards. We are going to share some of the challenges and considerations that leading companies have experienced during this journey.
NASPP: What actions should companies be taking now with respect to business travelers?
Cathy: Companies should be educating themselves on the current domestic and global risks. They should be trying to quantify the exposure they have today and project for the next several years. From this, they can make decisions on policies and an approach forward.
NASPP: What is the silver lining here?
Cathy: If you haven’t fully tackled this, you are far from alone. However, it is trending as the next wave in audits and compliance efforts.
NASPP: If you had a store on Etsy, what would you sell in it?
Cathy: Probably short stories for children. I really enjoy making up stories with my daughter to teach, entertain and humor her.
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 our first Meet the Speaker interview, we feature Mike Andresino of Posternak Blankstein & Lund, who will moderate the session “10b5-1 Plan Twists & Turns.”
NASPP: What is the most critical thing NASPP Conference attendees need to know about Rule 10b5-1 plans?
Mike: If your company does not yet use 10b5-1 plans as part of its insider compliance program, you are missing out on an important tool. If you do use these plans, there are important best practices that companies ignore at their peril.
NASPP: What are some best practices companies should implement for 10b5-1 plans?
Mike: Companies need to address, up-front, the expectations that plan participants should have regarding issues such as suspension, amendment or termination of 10b5-1 plans, SEC disclosure of their plans, price targets and other hot button issues that are not addressed in the 10b5-1 regulations but are part of the administrative environment for the plans.
NASPP: What is the worst horror story you have heard about a 10b5-1 plan gone wrong?
Mike: Angelo Mozilo, former CEO of Countrywide Financial, agreed in 2010 to a $67.5 million settlement with the SEC over charges that he abused his 10b5-1 plans for trading gains. If I’m trying to get directors and officers to pay attention to compliance issues, sixty-eight million bucks will usually do it!
NASPP: And last, just for fun, if you had a store on Etsy, what would you sell in it?
Mike: One word–Marinade! More specifically, I would bottle and sell a marinade that I use for salmon and other fish, that uses oil, soy sauce, honey and dark rum. Maybe I would package it in a kit with the rub I use. Hmm, now I just need a good design for the bottle….
NASPP: Why is systems integration a particularly timely topic right now and how does your panel plan on addressing it?
Gary: In today’s world of data we all need information now. With different systems such as HR, Payroll, Stock Administration, etc. it is more imperative that these systems communicate with each other. Our session will address real life experiences with integrating multiple systems thereby eliminating the need for manual entry and allowing the data to be accessible exactly when needed.
NASPP: What actions should companies take when preparing to integrate systems?
Gary: System integration is not a simple task. It takes time and expertise. Talk with people and companies who have done this to learn what your focus should be and what pitfalls to avoid.
NASPP: What is the silver lining to systems integration?
Gary: Once the integration and automation is complete, you’ll now have time to focus on your core business and responsibilities. You’ll have a high comfort level know the data is up to date and accurate.
NASPP: Tell us three things people don’t know about you.
Gary:
I am a new Grandfather.
I am a Police Commissioner in my town.
My college degree is in electrical engineering–nothing to do with this industry.
NASPP: Why are ESPPs a particularly timely topic right now?
Landy: ESPP is in style again. Companies are launching new plans, changinge plan features or adding new countries. Come see what others are doing and hear some of the common challenges and best practices.
NASPP: What is the biggest challenge companies face when going global with their ESPP?
Landy: Tery Williams from HP, one of the issuers on my panel, said one of their toughest challenges is to balance the cost of compliance with the ability to offer this benefit to employees around the world.
NASPP: What is the worst horror story you can tell about administering a global ESPP?
Landy: From a provider perspective, we have seen many horror stories; some caused by the companies and some by system/process errors. One that happens more often than we like is using the wrong exchange rate for local currency conversion for payroll deduction and purchases. But come to our session and hear from our panelists on their horror stories.
NASPP: Tell us three things people don’t know about you.
Landy:
I hate water chestnuts.
I made up my name when I was five.
I am listed as one of the inventors for a US patent.
The 21st Annual NASPP Conference is just two weeks away and I have Conference-brain. In light of that and the fact that this is my last entry before the Conference, I thought we’d have a little fun today.
If you’ve been paying attention, you know that we’ve been publishing interviews with our Conference speakers for the past few months. Each interview includes a question in which the speaker shares something personal. Today I’ve created a short quiz based on the interviews. I’ll raffle a jar of my coveted, limited edition homemade jam or apple butter (from fruit grown in my very own backyard) to those of you that score the highest. Don’t wait–you must complete the quiz by 11:00 PM tonight to be eligible for the raffle.
I’ll post the answers with the NASPP To Do List tomorrow morning.
The Fine Print: Only one entry per person. If you figure out a way to complete the survey more than once, only your first entry counts for the raffle. Sorry, but you have to have a US mailing address to win; I don’t have any way to ship jam overseas. Quiz must be completed by 11:00 PM Pacific September 10, 2013 to be eligible for the raffle.
Things to Do in DC While we’re on the topic of fun + the NASPP Conference, Broc Romanek, who lives in the DC area has filmed a video of things to do while you are the Conference (besides attending all the great sessions, of course). Check it out. Did you know that there’s basketball court above the Supreme Court?
For our Meet the Speaker interview this week, we feature…me…discussing the session I’m co-facilitating with Tara Tays of Deloitte that will highlight the results of the 2013 NASPP and Deloitte Domestic Stock Plan Design Survey. Yes, that’s right–I interviewed myself!
NASPP: Last week the Wall Street Journal ran an article predicting the demise of stock options. Based on the data in the 2013 survey, is this true?
Barbara: I’m not sure I would go quite that far, but we did see a marked decline in the prevalence of stock option plans this year. Only 68% of respondents report having a stock option plan, down from 92% in 2010. But that’s still well over half of the respondents that have stock option plans, so I think that option plans still have their place and will continue to be utilized by some companies, particularly start-ups and high-growth companies.
NASPP: If stock options are declining in use, what is taking their place?
Barbara: It’s pretty clearly full value awards, both time-based and performance-based. Prevalence of time-based award plans is at 91% of respondents, up from 89% in 2010. Performance plans are where we’ve seen the most growth, with 87% of respondents reporting a performance plan, up from 71% in 2010.
These numbers are even more dramatic when we look at the results from ten years ago: at that time only 52% of respondents reported a time-based full value award plan and only 30% reported a performance plan, but 99% reported having a stock option plan. Over the last decade, the landscape for stock compensation has completely shifted.
NASPP: We been hearing for years now that the future is in TSR awards. Where do these come out in the survey?
Barbara: I think the predictions about TSR awards might be bearing out. In our 2010 survey, EPS and TSR were tied as the two most popular performance targets but with this year’s survey, TSR has really moved into the lead. 43% of respondents report that TSR is a target for their performance awards; the only other targets that were remotely close to that in terms of prevalence were EPS (27% of respondents) and revenue (21% of respondents). It’s clear that there’s been an increase in usage of TSR awards over the past three years. There are a lot of very compelling reasons to choose relative TSR as a target and I expect that we’ll see this trend continue.
NASPP: What are three things people don’t know about you:
One of my high school math teachers, Mr. Cieply, told me I was “wasting my brain” because I didn’t take calculus. In retrospect, however, I have to say that Mr. Cieply vastly overestimated my aptitude for math.
I am a big fan of Rex Stout’s Nero Wolfe novels. I’ve read the entire 46-book series multiple times. As a leading man, Archie Goodwin beats the pants off both Edward Cullen and that guy from the Shades of Gray books.
I really just don’t like pork belly. I will be very glad when the foodies move on to another trend, hopefully one that doesn’t involve animal fat. Ew.
NASPP: Why is ongoing global compliance a hot topic right now?
Jon: Companies spend a great deal of time and money when they initially to offer their stock plans around the world. However, even when no new grants are made, there is an increasing amount of ongoing tax and regulatory compliance requirements that arise after the initial grant. Our panel of seasoned experts will discuss these ongoing compliance requirements, as well as the most efficient and cost-effective ways to comply with and to stay on top of the increasing number of compliance obligations around the world.
NASPP: What common mistake do companies make when issuing awards outside the United States?
Jon: They fail to sufficiently focus on the ongoing tax and regulatory obligations following the intial grants.
NASPP: What is the worst horror story you can tell relating to global compliance?
Jon: We worked with a very large multinational company some years ago that failed to report and withhold taxes on stock plan benefits for more than a decade in more than 20 countries. A considerable amount of time and money was spent to correct the situation.
NASPP: What is your favorite NASPP Conference memory?
Jon: Playing BlackJack with clients and friends at the 14th Annual NASPP Conference in Las Vegas.
Who doesn’t love a celebrity sighting? For today’s “Meet the Speaker “interview, we take a detour from DC to Hollywood, to interview Emily Cervino of Fidelity, who will moderate the panel “Stock Compensation Goes Hollywood.” Here is what Emily had to say:
NASPP: What is the most important thing attendees should know about bringing a little Hollywood to their stock plan education program?
Emily: Education and communication continue to be a challenge for stock compensation. Our plans and technology have evolved, but too often our communication has not kept pace, with printed materials and static intranet sites. Validated by the wild success of viral videos and YouTube, videos are all the rage. You don’t need an all-star cast and legendary Hollywood director to make this medium an Oscar-worthy contender in your stock compensation toolkit. This session explores how video and other digital mediums can help connect and educate today’s stock plan participants. We will provide a comprehensive overview of your digital choices, including live video, custom-animation, computer-based training, voice-enriched video presentations, and others. We will provide a solid understanding of what works in the digital world, and what doesn’t, and cover from concept, to budget, to storyboards, to production.
NASPP: Why is this topic timely right now?
Emily: You don’t have to be a visionary to see that the way we consume information is changing. Printed materials, static intranet sites and long memos and articles are on the decline, while digital content, social media, mobile apps and virtual meetings are on the increase. With more than 40 million videos viewed on a monthly basis on YouTube, 56% of employers using social media for internal communications, and 93% of internal communications professionals seeing video as an important tool for sharing information with employees, it is clear that video is here to stay. Finding new and innovative ways to educate employees on equity and really engage with them is a challenge. Video is well suited to meet that challenge.
NASPP: What is the most innovative solution for companies that want to incorporate video into their educational program?
Emily: The great thing about this session is that it is bursting with innovative solutions. We will view eight different samples of equity compensation digital communications. From in-house to outsourced. From big-budget to no-budget. Live action, custom animation, computer based training…we have it covered. For companies looking for inspiration and innovation for stock plan education, this session is the place to be!
NASPP: What is your favorite NASPP Conference memory?
Emily: Many years ago…. long before I worked for Fidelity, I attended the Fidelity event at the Levi Strauss store in San Francisco. It was a great event, complete with a mechanical bull and a henna artist. But, the best thing was that I brought home a new pair of jeans with a fancy pocket embellishment. Two of my favorite things–shopping and stock compensation–rolled up together. I still have those jeans. Perhaps I’ll dig them out for DC!
The NASPP and Fidelity Investments are not affiliated. Fidelity Brokerage Services LLC, Member NYSE, SIPC. 658022.1.0 Fidelity Stock Plan Services LLC.
NASPP: What are a few key areas your panel will address?
Liz: Among other topics, we will address:
Tax deduction timing issues that arise in mergers and acquisitions
Tax treatment of earnouts
The impact of Section 409A
Differences between actual and phantom equity arrangements.
NASPP: What common mistake do companies make with stock compensation in M&A and how can they avoid it?
Liz: Companies often don’t think about the compensation deduction issues until after the transaction documents are finalized, and they may be blind-sided by the result of what they’ve agreed to. It is essential to address these issues before the transaction documents are finalized, when there is still flexibility to achieve the desired result.
NASPP: What is the silver lining to your topic?
Liz: Advance planning can avoid most pitfalls and any unanticipated results.
NASPP: What is your secret (or not-so-secret) superpower?
Liz: Without a doubt it’s the team I work with at Ernst & Young. I have the pleasure of working with an amazing group of compensation and benefits practitioners, and the ability to collaborate and brainstorm with them on client issues makes me an immeasurably better practitioner than I would be on my own.
NASPP: What are a few key areas your panel will address with respect to your topic?
Patricia: Our panel will examine the different types of communication methods being used by corporate issuers with respect to performance grants, as well as provide recommendations on what to communicate to participants to clarify and convey the importance of these awards. Additionally, Craig Sidell from the NY Times will share how and what his company is communicating to their participants.
NASPP: What is the biggest challenge companies face?
Patricia: The biggest challenge for companies is how and what to communicate to their participants on performance grants to ensure they understand the value of the grants as well as how the grants and their corresponding performance metrics align with the company goals and strategic initiatives. Often this can be a communication challenge on many fronts for the company. They not only have to decide how and what to communicate to ensure the grants’ intended benefit is achieved but they are often constrained by what information can be provided, especially when using technology to provide the communication. Often there are technical limitations as to what information can be displayed and presented to the participant. This results in companies using additional communications methods to supplement. This can lead to further challenges with communication. Bi-bifurcated communication can leave the end participant confused as to the primary source of information and its accuracy.
NASPP: What is the silver lining to your topic?
Patricia: With all of the challenges, it’s easy for a company to get discouraged when it comes to communicating performance grants, but companies shouldn’t throw in the towel by any means! As the workforce becomes more and more tech savvy and technology tools become more flexible, our ability to communicate unique information is expanding. Many online tools are becoming more sophisticated and are allowing companies to communicate their specific needs to their participants. Using multiple communication methods, while challenging, can be complimentary to each other when done thoughtfully based on your company goals and your audience.
NASPP: What is your favorite NASPP Conference memory?
Patricia: My favorite NASPP Conference memory is from the 2006 NASPP Conference in Las Vegas since that is when I accepted my current role with Solium as head of Product Management, plus it was a great venue, and the Conference was packed with many informative sessions. While those who know me, know how much I love to fly–NOT!–it was a wonderful location and Conference. I still hear people mention that Conference all these years later!