As I’m sure all of my readers know by now, the 20th Annual NASPP Conference will be held in New Orleans from October 8-11, 2012. New Orleans is always a lot of fun and a great location for us, so this year’s Conference is not to be missed–I know I’m already looking forward to it! In today’s blog, I offer some last minute tips for submitting a speaking proposal for the Conference.
(NASPP followers on Twitter and Facebook knew the location of the NASPP Conference before anyone else. Follow the NASPP on Twitter and Facebook to make sure you don’t miss the next big announcement.)
Tips for Getting Accepted to Speak at the NASPP Conference
1. Don’t be late! Speaking proposals are due by next Friday, March 2–no excuses, no matter how dire the circumstances. If you feel a cold coming on now, plan accordingly. Timeliness is very important in a speaker–we need you to submit your materials on time, show up for your session on time, finish your presentation on time. This is a test–submitting your proposal on time demonstrates that you’ll take our deadlines seriously.
2. Be unique! We’re looking for presentations that haven’t been done before–by you or anyone else. Fresh out of ideas? Consider trolling the NASPP Q&A Discussion Forum. The questions posed in the forum are an indication of the issues our members are currently struggling with and can be a great source of ideas for speaking proposals. If you’re a service provider, the questions your own clients are asking you can also be a great source of ideas. And, whether you’re a provider or an issuer, think about what you do well–your best presentation topic is the one you are most comfortable with.
3. Be clever and get to the point! Don’t underestimate the importance of a compelling title and description that gets right to the point. We receive over 150 proposals–those that stand out are more likely to be accepted.
4. Be practical! We’re looking for sessions where attendees will walk away with a list of strategies, tools, and action items that they can take back to the office and implement.
5. Don’t stop at one! Every firm can submit up to three proposals–increase your odds by maxing out your submissions. Even better, network with colleagues to see if they have proposals you could participate in. The more proposals you are included on, the better your chances of getting selected to speak.
6. Be a good speaker! If invited to speak, submit your materials on time, submit more than just the minimum required materials, cover the topics in your proposal thoroughly, keep your panel running on time and on topic, and be an engaging presenter. When it comes to our Conference speakers, we believe that past performance IS indicative of future performance. Speakers that don’t submit materials on time or that are on poorly organized panels aren’t likely to be invited back.
See ten more tips for creating a successful proposal.
Register Now for Early-Bird Savings If you aren’t submitting a speaking proposal but plan on attending the Conference, register by April 13 for the early-bird rate. This rate won’t be extended, so don’t dawdle!
I am writing from the 19th Annual NASPP Conference in San Francisco, which has a great turnout this year–close to 2,000 people! For today’s blog entry, I feature some scenes from the pre-Conference sessions and last night’s opening reception.
Ed Hauder of Exequity and Fred Whittlesey of Compensation Venture Group discuss the design of performance-based award plans.
2,000 conference bags don’t take up as much space as you’d think.
The opening reception was hopping!
The AON team wore their black Scholes jerseys. It’s a soccer-actuary joke.
Ed Burmeister of Baker & McKenzie, who holds the title to the world record for the most NASPP Conference attended. It’s in the official Guinness Book of World Records.
See more scenes from the NASPP Conference on our Facebook page.
Wondering what the hottest topics in stock compensation are today? You can find out at the 19th Annual NASPP Conference, with the session “Today’s Hottest Topics in Stock Compensation.” I happen to have caught a glimpse of the panel’s slide presentation, so, in today’s blog entry, I “leak” a few of the topics that will covered.
Today’s Hottest Topics in Stock Compensation I’ve been saying all year that performance-based awards are red-hot and I’m pleased to see that our expert panel agrees (it’s always nice to be right). The panel plans to discuss a number of tricky issues relating to performance-based pay that have emerged over the past year, including:
Setting long-term performance goals in today’s volatile economy without jeopardizing 162(m) deductibility.
Best approaches for disclosing in the CD&A the use of non-GAAP financials for performance awards.
Trends and emerging practices with respect to double-trigger CIC vesting of performance-based awards.
The panel also plans to discuss whether stock options will become more performance-based in light of ISS concerns.
Next year’s proxy season is also clearly on everyone’s minds these days. Here are the proxy-related topics that the panel plans on discussing:
Under what circumstances might a company defy ISS guidance and how should they prepare for the consequences?
Drafting the CD&A disclosure of the Compensation Committee’s response to Say-on-Pay votes.
How will ISS’s new policy (currently in draft form–see the NASPP alert “ISS Issues Draft of 2012 Policy for Comment“) regarding the evaluation of executive pay affect plan design, benchmarking, and support for management’s Say-on-Pay proposals?
What best practices have evolved for developing a strategy for shareholder Say-on-Pay?
The panel will also discuss clawback provisions (particularly what to do about them if the SEC doesn’t finalize rules before the 2012 proxy season).
Don’t miss “Today’s Hottest Topics in Stock Compensation” at this year’s NASPP Conference. The panel wil be moderated by Art Meyers of Choate Hall & Stewart (and of the NASPP Executive Advisory Committee). Art’s co-panelists will be Mike Melbinger of Winston & Strawn (and author of Melbinger’s Compensation Blog on CompensationStandards.com), Mark Borges of Compensia (and author of Borges’ Proxy Disclosure Blog on CompensationStandards.com), and Paula Todd of Towers Watson (and of the NASPP Advisory Board).
See You Next Week in San Francisco! It’s hard to believe, but the 19th Annual NASPP Conference is next week! I hope to see all of my readers at the Conference, which starts next Tuesday, November 1, in San Francisco. We expect to have around 2,000 attendees–it’s going to be a very exciting event; 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.
Oh No! Equity-Related Mistakes and How to Prevent and Fix Them (When You Can) By Matthew E. Johnson, Sidley Austin
We all know the feeling–your heart starts beating fast, and you feel dizzy and become short of breath. From out of nowhere, it has dawned on you that a mistake has been under your company’s equity plan. The error was something that could have been prevented, and might be blamed on you and your colleagues. To make matters worse, the error might relate to an equity award held by one of the company’s most senior executives!
Equity plans and other executive compensation arrangements are subject to increasingly complex regulatory requirements and shareholder scrutiny. We wrestle daily with securities law requirements, complicated tax rules, ISS scrutiny, accounting implications, stock exchange listing requirements and ambiguities in plans and award agreements.
In addition, we are all expected to operate consistently with the speed of email, and we depend on communication from a number of sources, which is often far from clear. It is no surprise that mistakes are made routinely in the administration of equity plans and awards.
We must remember that everyone makes mistakes and that, regardless of the consequences, we must focus on the best path of resolving the problem. Criminal and other serious sanctions are imposed on employees who commit fraud, not on those who make innocent mistakes and do their best to remedy them.
At the 19th Annual NASPP Conference in November, I will join John Kelsh (Partner, Sidley Austin LLP) and Rich Robbins (General Counsel and Corporate Secretary, Morningstar, Inc.) in discussing specific, real-life scenarios that seem to plague plan administrators with some regularity. However, there are certain guiding principles that apply generally when addressing a mistake under an equity plan or award:
Once you have gathered all the facts and determined the scope of the problem, talk to legal counsel (internal, then external) to develop a correction plan.
Be realistic about the potential consequences–your superiors would rather be disappointed now than surprised later.
With the help of legal counsel, determine whether the company has a reasonable position to take that in fact there was not an error–weigh the strength of the arguments, the potential exposure and the correction alternatives.
Be sure that communications relating to the issue are confidential–communication with counsel will be privileged, but keep in mind that other external communications may be discoverable in the event of litigation.
If corrective action is necessary, consider all legal and ethical alternatives, taking into account SEC disclosure, tax consequences, accounting consequences, investor reaction and corporate expense.
More importantly, invest the time now to establish policies, procedures and systems that will allow your company to avoid or reduce the likelihood of error.
Don’t Miss the 19th Annual NASPP Conference The 19th Annual NASPP Conference will be held from November 1-4 in San Francisco. With Dodd-Frank and Say-on-Pay dramatically impacting pay practices, you cannot afford to fall behind in this rapidly changing environment; it is critical that you–and your staff–have the best possible guidance. The NASPP Conference brings together top industry luminaries to provide the latest essential–and practical–implementation guidance that you need. This is the one Conference you can’t afford to miss. Don’t wait–the hotel is filling up fast; register today to make sure you’ll be able to attend.
Did It Pass? Understanding Shareholder Voting Issues By Keith Bishop of Allen Matkins
Because we live in a democracy, we are likely to feel that we have a good understanding of voting. The basic principle is that whoever or whatever gets the most votes wins. Voting, however, is a far more complicated subject than many governance professionals may realize.
When determining whether a proposal has passed, the first step is to determine the applicable voting rule. This will be a function of state corporate law and the corporation’s charter documents. For Delaware corporations, Section 216 provides a general (there are some exceptions) default rule for matters other than the election of directors – the affirmative vote of the majority of the shares present and entitled to vote present in person or by proxy at the meeting. However, this default rule is not immutable. It can be changed by the certificate of incorporation or the bylaws. Some Delaware corporations, for example, have adopted a majority of the votes cast rule for shareholder action. Thus, it is important to review a company’s charter documents when determining whether a matter has been approved.
What’s the difference between these two rules? Under Delaware’s default rule, broker non-votes are not counted as votes against because they are not considered present and entitled to vote. Under a “votes cast” standard, abstentions and broker non-votes aren’t counted as votes against because neither is a vote against.
But wait, there’s more. In determining whether a proposal has passed, it is critical that companies ask the question “why are we seeking shareholder approval?” If shareholder approval is being sought to meet listing, tax or other requirements, additional, and even conflicting, voting requirements may come in to play.
For example, the New York Stock Exchange (Rule 303A.08) generally requires listed companies to obtain shareholder approval of equity compensation plans. The requisite standard for approval appears to be similar to a majority of the votes cast standard – “the minimum vote which will constitute shareholder approval for listing purposes is defined as approval by a majority of votes cast on a proposal in a proxy bearing on the particular matter, provided that the total vote cast on the proposal represents over 50% in interest of all securities entitled to vote on the proposal.” Rule 312.07. However, the NYSE treats abstentions as votes cast regardless of their treatment under state law. Consequently, a measure may pass as a matter of state law and yet fail to meet the NYSE’s requirement.
Determination of whether a proposal has passed is not as easy as it may seem. It requires an understanding of applicable state law as well as other applicable listing and legal requirements.
Don’t Miss the 19th Annual NASPP Conference The 19th Annual NASPP Conference will be held from November 1-4 in San Francisco. With Dodd-Frank and Say-on-Pay dramatically impacting pay practices, you cannot afford to fall behind in this rapidly changing environment; it is critical that you–and your staff–have the best possible guidance. The NASPP Conference brings together top industry luminaries to provide the latest essential–and practical–implementation guidance that you need. This is the one Conference you can’t afford to miss. Don’t wait–the hotel is filling up fast; register today to make sure you’ll be able to attend.
If you’ve been thinking about beginning the Certified Equity Professional (CEP) program or pursuing the next level, this year’s NASPP Conference is a great time to do it. Because the NASPP Conference is in November, for this year only, you have a unique opportunity to attend the Conference and take the CEP exam at the same time. To make it even more convenient, the CEP is hosting an exam site at the Conference hotel in San Francisco!
Take the CEP Exam, Attend the NASPP Conference, and Save! The Certified Equity Professional (CEP) Institute will host an exam site at the 19th Annual NASPP Conference in San Francisco. The exam will be held on Saturday, November 5, following the conclusion of the NASPP Conference (which will be held from November 1-4). Catch up on the latest industry developments–including Dodd-Frank and Say-on-Pay–with the NASPP Conference and then reinforce your core knowledge with the CEP exam.
Why Take the Exam at the NASPP Conference?
I know you are thinking that you should spend the week before the CEP exam holed up in a conference room somewhere, all by yourself, meticulously reading the exam materials to the exclusion of everything else in your life and that the NASPP Conference is the last place you would want to prepare for the exam. But I think that’s the wrong strategy; here’s why you should consider taking the exam at the Conference:
You’ll be surrounded by industry leaders, including many of the authors of the CEP exam texts. I’ll be there, as well as Takis Makridis, Mark Borges, Bill Dunn, Joshua McGinn, Christine Zwerling, Blair Jones, Scott Rodrick, and Dan Walter–to name just a few of the authors. These are the folks that, literally, wrote the books you are being tested on. The Conference is a great opportunity to meet them and clarify any points you are having trouble with in their texts.
The CEP Institute staff will be on hand, as well as probably the largest population of CEPs to congregate in one place all year. If you stay home to prepare for the exam, it’s just you alone in that room and, frankly, if you had all the answers, you wouldn’t have had to sequester yourself like that. If you have questions as you prepare for the exam, the folks that can help you are going to be in San Francisco–don’t you want to be there with them?
Let’s be honest, the “you in a room by yourself” scenario isn’t really going to happen. That conference room you’ve reserved is going to sit empty while you spend your week running reports for finance, putting out the fire caused by your CEO’s problematic stock trade, arguing with your spouse about who is going to pick the kids up from school and cook dinner, and helping your kids with their math homework. Wouldn’t it be better to just leave all that behind for someone else to deal with and spend the week before the exam really focusing on stock compensation to the exclusion of everything else?
Special Offer
Candidates that take the CEP exam at the San Francisco site can receive 10% off NASPP Conference registration and can receive 50% off NASPP membership for 2012. As an added bonus, candidates that take advantage of the membership offer will receive membership in the NASPP for the rest of 2011 for free, qualifying them for the member rate on the Conference. And, if that’s not enough of a deal, NASPP members that are issuers can receive $200 off the CEP exam.*
To receive the discount on NASPP membership and registration, first register for the CEP exam by calling the CEP Institute at 408-554-2187. Mention this offer to receive the $200 discount on the exam. Once you have registered for the exam, contact the NASPP at 925-685-9271 or naspp@naspp.com to register for the NASPP Conference and mention this offer to receive the discount on the Conference and, if you aren’t already an NASPP member, NASPP membership.
What is the CEP?
The CEPI’s self-study curriculum serves as the industry’s educational standard, focusing on the core disciplines of equity compensation: accounting; equity plan design, analysis and administration; corporate and securities law; and taxation. The CEP designation is granted to individuals who have passed the three program exams (Level 1, basic, through Level 3, advanced). Candidates can select to complete one, two or all three levels of the program.
I completed the program when I first began working in stock compensation and the knowledge I developed has been key to my success in this industry. I highly recommend the CEP program for anyone involved in any aspect of stock compensation.
*The Fine Print
The discount on NASPP Conference registration is available for new registrations only and the discount on NASPP membership is available to new members only. I’m sorry, but I can’t offer the discounts on a retroactive basis, for membership renewals for 2011 or 2012, or for additions to existing corporate memberships.
The CEP exam discount is available for new registrations for issuing companies only. Individuals already registered for the exam are not eligible for a retroactive discount. For full eligibility details contact the CEPI at cepi@scu.edu.
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.
Don’t miss your local NASPP chapter meetings in Chicago and Sacramento. The Sacramento chapter meeting features a “Beat the Heat” theme: Wear your favorite summertime or Hawaiian shirt or outfit and win a prize (please be professional–no thongs or Speedos)!
Not-So-Stupid Equity Plan Questions: What Your Employees Are REALLY Asking By Pam Ellis of Solium Capital
Ever get those head-scratching questions from employees where you just don’t have a clue what they’re thinking, let alone asking? Let’s face it, this happens all the time, and often way more often than we’d like. But rather than throwing the question immediately in your circular file, you can turn this into a valuable lesson to understand the employee’s perspective better and learn what you can do to enhance your communication techniques.
At this year’s conference, I am leading a panel presentation that goes through this very analysis. Entitled “Not-So-Stupid Equity Plan Questions: What Your Employees Are REALLY Asking,” the panel consists of several service providers and an issuer who will review a list of common questions they have received and dig deeper to see what each one can teach us. Panelists include Bank of America Merrill Lynch, Prometheus Laboratories, Solium Capital, and UBS. The speakers from the various service providers are either involved in or have direct oversight of their stock plan call centers, so they hear firsthand the range and multitude of questions that come in across their broad base of clients.
Once the group started looking at common questions across the spectrum, they realized this was employee-relations gold and set out to illustrate how a company could use these questions to their advantage. The session focuses on 10 of the panelists’ favorite questions, analyzes the hidden message in each one, and provides recommendations on what the company can do to alleviate or eliminate these concerns altogether.
A great example is the confusion employees have over year-end tax forms; like many people who think taxes are a waste of time and an unnecessary evil, they don’t bother to understand them or make sure the numbers are right. They don’t know what information to provide to a tax advisor, what forms they need to complete on their return, or even what income has to be reported. Tailoring education materials to include visual flowcharts and checklists can go a long way in making the employee feel more comfortable about the tax reporting process – and therefore more positive about their equity awards in general. Other concepts such as exercising underwater options and differences between equity awards and 401ks can create further headaches and incite plenty of brow-furrowing inquiries.
With a little bit of humor and audience participation, the panelists expect to demonstrate how there really are no stupid questions.
Don’t Miss the 19th Annual NASPP Conference The 19th Annual NASPP Conference will be held from November 1-4 in San Francisco. With Dodd-Frank and Say-on-Pay dramatically impacting pay practices, you cannot afford to fall behind in this rapidly changing environment; it is critical that you–and your staff–have the best possible guidance. The NASPP Conference brings together top industry luminaries to provide the latest essential–and practical–implementation guidance that you need. This is the one Conference you can’t afford to miss. Don’t wait–the hotel is filling up fast; register today to make sure you’ll be able to attend.
Mastering ESPP and RSU Withholding Outside the United States By Jennifer Kirk and Narendra Acharya of Baker & McKenzie
In today’s world, your company cannot afford to be noncompliant with its global stock plan withholding and reporting obligations. On a daily basis, we hear about the fiscal challenges affecting governments around the world. In addition to the cutbacks of programs and increased taxes and fees, governments remain focused on greater enforcement of existing tax obligations. In a number of countries, revenue collected from employer tax withholding (including employer and employee contributions to social taxes) is often the largest source of tax revenue–but still not sufficient. Whether through increased frequency of payroll audits, hiring more specialized teams of auditors, and/or more robust or extra reporting requirements, it is reasonable to expect that stock plan withholding practices will be facing increased scrutiny on a global basis.
As a general example, in December 2010, the UK tax authorities (HMRC) published a discussion document aptly titled “Improving the Operation of PAYE – Collecting Real-Time Information.” Not content to rely on payroll filings, which may only be made annually, and the periodic audit, HMRC in the discussion document envisions a process where it is electronically notified whenever payment is made to an employee and would confirm that the appropriate income tax and social taxes (National Insurance Contributions) have been deducted. The latest version of the discussion document no longer contains the more controversial proposal of having the compensation funds flow from the employer to HMRC (as a “central calculator” and disbursement agent) and then to the employee. Regardless of the outcome of the proposals, they are a great example of government’s focus on getting the money sooner and greater review of payroll calculations.
While a “central calculator” may not be imminent in the UK, even the current employer withholding and reporting requirements in the UK, as an example, can be challenging. First, there are additional reporting requirements beyond traditional payroll reporting that apply to equity compensation plans. This includes the annual share schemes return (Form 42) where the details of equity grants need to be specifically reported. The HMRC is then better able to cross-check the annual payroll reporting done by the UK employer to confirm that the taxable amount of equity compensation is indeed reported (and withheld upon) correctly. Second, there are timing requirements such that if the appropriate UK tax is not collected within 90 days, the employee is deemed to receive an additional benefit from the employer equal to the tax that should have been withheld, but on a grossed up basis. In short, noncompliance in the UK can be quite expensive.
During the 19th Annual NASPP Conference, the session “Mastering ESPP and RSU Withholding Outside the United States” will answer the key questions: the who, what, where, why and how of withholding for global stock plans. Don’t allow your company to be an easy target for foreign governments seeking tax revenue, as the penalties (and unwelcome scrutiny from foreign tax agencies) will be a much greater burden than ensuring that it gets done correctly in the first place.
