The NASPP’s 2014 Domestic Stock Plan Administration Survey (co-sponsored by Deloitte Consulting LLP) is now open for participation. This is the industry’s most comprehensive survey on stock plan administration, easily worth the cost of NASPP membership. Seriously–consulting firms charge upwards of $1,000 to participate in surveys that offer less data with fewer respondents. We let you participate for free–but issuers have to participate to receive the full survey results. Don’t put it off; you’re going to want this data and you only have until April 25 to complete the survey.
For today’s blog, I highlight just a few of the many data points in the survey that I am eagerly anticipating an update on. These are hot topics today and I’m looking forward to finding out where current practices stand with respect to them:
The Latest Trends in ESPPs: Rumor has it that companies have been implementing new ESPPs and have been enhancing the benefits (discount, lookback, etc.) in their existing ESPPs. We saw a decline in both the number of ESPPs and the benefits offered under ESPPs in the last survey, so I’m very excited to see if this trend really has turned around.
Automatic Exercise on Expiration: For the first time ever, the survey collects data on this emerging practice. I think it makes a lot of sense so I’m very interested to see what percentage of respondents have implemented this program.
Rule 10b51 Plans: Has the recent negative attention that Rule 10b5-1 plans have received from academics and the media impacted the use of these plans? My money says no; if anything, I expect usage to have increased a bit; we’ll see if I’m right when the survey results are published.
Stock Ownership Guidelines: The 2011 Stock Plan Administration survey saw a 35% increase in the percentage of companies that have stock ownership guidelines, a remarkable increase–far higher than we expected based on responses to the 2007 survey. If everyone that said they were considering implementing stock ownership guidelines in 2011 survey did actually implement them, close to 80% of all respondents will now have these guidelines in place.
Social Media: The topic du jour when it comes to educating employees these days is the use of social media (Facebook, Twitter, LinkedIn, etc.) I think these tools have significant potential for reaching younger employees. I look forward to finding out what percentage of respondents use them now and setting a baseline that we can use for comparison purposes in future years.
April 25 will be here before you know it and you are definitely going to want to have access to the full survey results. If you are an issuer, register to participate today. (Service providers that are not eligible to complete the survey can access the full survey results at no cost, provided they are members of the NASPP. This access is available to service providers only; issuer companies must complete the survey to access the full survey results.)
It’s been a while since we’ve had major regulatory updates that impact stock compensation. Knowing that, I sometimes find myself scanning the horizon, looking for the next “thing” that’s going to have us examining our practices, changing procedures or implementing something new. This week my radar went into action when I heard that SEC Chair Mary Jo White had laid out quite a list of upcoming initiatives in a recent address.
Technology on the Brain
In spite of some significant cutbacks in technology dollars available to the SEC for long term initiatives, the SEC seems to still have advancement in this area on the brain. Chair White announced that the SEC has deployed a new analytical tool called “NEAT” (National Exam Analytics Tool) to help identify possible insider trading or other misconduct. This tool can identify red flags in a fraction of the time it took to do so in the past. I’m guessing this means that the wave of insider trading investigations and scrutiny is not over.
In the spring of 2013, the SEC issued guidance permitting issuers to use social media sites to communicate company announcements (see the NASPP Blog, May 16, 2013). White has now indicated that the SEC is broadly rethinking disclosure requirements for public companies and the role of technology in sharing information with investors. Last month the SEC recommended to Congress in a report (which was mandated by the JOBS Act) that the disclosure rules undergo comprehensive reexamination and reform. White shared some insight into the SEC’s thinking: “I believe we should rethink not only the type of information we ask companies to disclose, but also how that information is presented, where and how that information is disclosed, and how we can take advantage of technology to facilitate investors’ access to information and make it more meaningful to them.” Saying it and issuing a report doesn’t mean new rules are imminent, but it is perhaps a hint of things to come. It seems within the realm of possibility that this type of reform may be fairly significant if and when it happens.
New Investigation Focus
White says that as the SEC wraps up investigations stemming from the financial crisis, attention is now shifting to other areas of enforcement – namely financial reporting fraud and accounting irregularities amongst others. This is a good time to make sure our controls, checks and balances are operating full force. While we can’t control other areas of financial reporting beyond stock administration, we can ensure that the areas under our realm can stand up to the possibility of an intense audit or investigation. This seems particularly wise, since Chair White also said that “The coming year promises to be an incredibly active year in enforcement, as we continue to vigorously pursue wrongdoers and bring enforcement actions across the entire industry spectrum.”
It looks like the SEC continues on their roll of assertive enforcement actions and attempt to progress into more modern times. Let’s see what the horizon holds in that regard.
Happy New Year! We’re barely a week into the new year, so I figure I can still get away with squeezing some celebration into today’s blog. It turns out that we at the NASPP have a fair amount of congratulating to do!
Lucky on LinkedIn
Congrats to Jessica Laddon, CEP, for being the 600th person to follow the NASPP on LinkedIn. The NASPP is very social – follow us this year on LinkedIn, Facebook and Twitter.
Question of the Week WINNER!
Many of our celebratory thoughts go to the winner and runners up of our Question of the Week contest. For those of you who are asking “What’s the Question of the Week Contest?“, it’s a weekly quiz challenge designed for stock plan professionals to test their know-how in a variety of areas, while competing against their peers. There’s a new question each week, and a correct answer earns points.
And the Winners Are…
A big congrats to screen name alias mamandmore for coming out on top of our 2013 contest, with a score of 515. The screen names of the top 5 scorers are:
In reviewing the scores from last year’s challenge, I couldn’t help but observe the originality of some of the screen names users are deploying in our contest. It seems nothing was off limits, from the range of “equity” and “stock” possibilities (Dividend Dame, Shera Queen of Equity, StockNerd, 2013 Scrambled Regs) to the patriotic (Starspangled) to impersonators (Paul Bunyan, Peter Pan, Scooby and Jane Austen, to name a few). Of course our sports fans were abundant as well (RedsFan, Patriots Fan), in addition to a few that would probably require a happy hour and some time to explain (Duke City Dude, No name game player, The Colorful Finch).
Work Hard, Play Hard
We’ve just reset scores and this week’s challenge starts a whole new contest, so this is the perfect time for NASPP members to sign up, create your screen alias and jump into the Question of the Week Contest. We leave all of January’s questions active for the entire month, so you have plenty of time to complete the first quizzes of the new game.
Equity Expert Podcast
We’d love for you to join us in celebrating our very first NASPP podcast series: Equity Expert. That’s right, you can download short episodes right to your computer, smartphone or other device and listen to them at your leisure. This series focuses on short interviews with some of the industry’s best and brightest. The first few episodes will offer general advice for establishing yourself as an expert in this industry. Later episodes will capture short bits of “how to” advice on very specific topics. Our inaugural episode features the NASPP’s Executive Director, Barbara Baksa. Next week’s episode will be an interview with John Hammond of Plan Management Corporation. It’s free: subscribe now!
This week I admit to having holiday brain already. Somehow it’s just hard to think about serious topics when my mind is wandering to the mechanics and food of Thanksgiving Day. So keeping with the lighter side, I’m going to brainstorm a list of things you can do when your own mind goes into distraction mode.
1. Read the highlights of the 2013 Stock Plan Design Survey (co-sponsored by Deloitte Consulting LLP) – hot off the press. Who doesn’t love good survey data to back up practices or shed light on new trends? Take a few minutes to learn about what’s hot and what’s not.
3. Be social. We can’t all park ourselves around the same physical water cooler, but we can meet virtually, via social media. The NASPP continues to evolve socially – with very active LinkedIn, Twitter and Facebook pages. We’ve got lots of content out there, but we also capture the “fun” of being in this industry – our latest posts feature great photos from some recent chapter events. If you find yourself daydreaming, take a minute to follow us or Like us online. This will ensure you don’t miss any hot off the press updates, either.
4. Take some “me” time. Has it been a while since you took stock of yourself, or invested time in building your brand and furthering your career? I recently came across a quote by Warren Buffet that says “Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you. They can run up huge deficits and the dollar can become worth far less. You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold.” If it’s been a short or long while since you’ve put some of your time into your own growth and development, it’s time to put “you” back on the list. Give yourself the gift of personal growth this holiday season. A great start would be to explore our NASPP Career Center. It has its own blog, Career Corner, guest authored by Andrea Best of Stock & Option Solutions. It’s a great way to spend some quality down time minutes.
5. Keeping with the theme of #4 above (“me” time), consider updating your LinkedIn profile. Even if you aren’t looking for a job, it’s becoming “standard” practice to put lots of detail in your profile and post regular updates.
Hopefully you’ve gained a couple of ideas on how to spend your holiday distraction time. I wish everyone a very happy Thanksgiving holiday.
The Internet and cell phones (now smartphones) have completely changed the way the world communicates. It hasn’t been a slow process; the evolution is occurring at lightning speed. What was “new” a few years ago is now mainstream; what’s coming down the pike will soon be the norm. If you’re with the camp of stock plan professionals that have been using the same modes and strategies to communicate with participants for a while now (let’s say more than a couple of years – and I’d guess there are many of us in this camp), it’s time to rethink the tools and resources available. In today’s blog I share a few things to consider in getting off the dinosaur and focusing on emerging ways to communicate with participants.
A New Era Underway
The modes of communication are changing…rapidly. Long emails, newsletters, static intranet sites and hard copy mailings are losing their luster in the shiny new world of communication. What’s in? Video, blogs, podcasts, Google “hangouts”, mobile friendly apps and social media, for starters. Of all of these, the use of video is my prediction for the next king of communication tools. With the birth of YouTube, anyone with a smartphone, tablet or webcam can create and distribute a video. So if you’re thinking “big budget” when it comes to video, think again. There are a range of possibilities – from done-for-you video service firms to do-it-yourself and host/access on sites like YouTube or Google Plus. With the array of mobile devices now in our hands, video is also accessible on the fly, allowing you to engage with participants around the clock. As with any mode of communication, you’ll want to get buy-in from other key decision makers (legal for starters) before you start creating videos and distributing them. The take away here is that it’s much easier than you think, and will show participants that you’re ready to engage in modern fashion,on their terms. There was a fantastic session at our recent 21st Annual Conference (“Stock Compensation Goes Hollywood”) on using video for stock plan communications – if this has perked your interest, I highly recommend accessing the session materials (free for conference attendees) and audio (available for purchase).
How Well Do You Know Your Participants?
Get to know your audience and expand your communication vehicles. Communication is not a one size fits all approach, nor is it a one mode per generation concept. It’s short-sighted to think that employees over 55 won’t be receptive to social media (in fact, 2013 surveys show that 60%+ of 50-64 year olds are active on social media). Likewise, it’s equally limiting to expect that your 20-something population will only want to receive communications via social media. The fact is, there are distinct patterns of communication emerging. So much depends on age, location, culture and other factors. One mistake communication “senders” can make is to deliver content in their own preferred method of communicating. This may not work for the “receiver.” If you have multiple generations in your stock plan population, you may want to consider a quick survey to identify preferred methods of communication. Additionally, it’s wise to consult with contacts in non-U.S. jurisdictions to evaluate preferred modes along with cultural considerations. The bottom line? Consider adopting a multi-mode approach to delivering your equity compensation content to participants. Broaden the Content Horizon
When crafting communications, think in terms of “benefits,” in addition to features. Features are great, but a list of them in a communication doesn’t always answer the question in participant minds: “What’s in it for me?” Let’s face it – we’re living in the era of “me,” and employees want to know what they are going to gain at any given point in time. When highlighting the “features” of various plans, awards or programs, try to also list the benefits. A simple way that I like to think about benefits? A benefit follows the phrase “…so you can…”. For example:
Join the new ABC Company ESPP Plan! The plan offers:
15% discount on company stock (feature)
Change your contribution at any time (feature)
Simply adding in the benefit behind the feature can give the employee answers to questions they may have about why it’s a good thing for them to be involved in these programs. If you tweak the language to incorporate the feature and the benefit, it may look like this:
Automatic 15% discount on company stock, so you can be assured that your purchase price will be less than the fair market value of the stock on the date of purchase.
Contribution rates may be changed at any time, so you can have peace of mind knowing that even if your circumstances change during the offering, you can make adjustments as needed.
I’m not a lawyer, so please do check with your legal advisers about this approach. At minimum you’ll want to make sure that you aren’t selling participants on an investment decision (so note that the benefits I’m talking about are not “financial” reward related or promises about future gains).
It’s time to move into the next era of communication. With so many possibilities, it’s an exciting time and a great opportunity to really get in touch with your participants on a whole new level.
The world is a social place. With the advent of social media and other avenues to interact online, people turn to the web to communicate, learn and interface. With online member profiles (Meet our Members), the NASPP has opened the door for you to get to know more about our member population – both personally and professionally. If you are an NASPP member and haven’t yet created a profile, I’ll use today’s blog to highlight the reasons why you should do this now!
5 Reasons to Create Your NASPP Member Profile
1. Put a face to your name. I can’t say how many times I’ve heard someone’s name, or heard them speak on a webcast, or had a name thrown in the hat for some idea. Putting a face with a name only helps people to get to know you better. Even if they don’t “know” you, they know you. Or, at least they feel like they do.
2. Self manage your information as it changes. Okay, so you change jobs, get a promotion or add a credential (CEP, anyone?) to your resume. You can self manage your profile details on the NASPP web site and your updated information is always there for the industry to see. Your profile is available to non-members, too, so keep that in mind when you meet that recruiter who may want to learn more about you by searching online. Keep everyone up to date on the status of “you”. You can even take the profile quiz again to “refresh” your answers at anytime, which can be interesting.
3. Let people get to know you personally, and you them. The profiles aren’t limited to just industry specific content. We have lots of “get to know you outside of work” questions in our profile quiz that help you get to know the whole person. Wondering what kind of personal information we incorporate? Take our “Name that Member” quiz below!
4. The member profiles show up in Google searches. Yes, it’s true. I tested this feature firsthand. I started with the first name on our member profile list (in alphabetical order) – Inta Abele of Charles Schwab. Her NASPP profile came up in the top 6 results from a Google search of her name. We all know people do it – they want to learn more about someone and Google them. So why not show the span of your affiliations and brand by having your NASPP profile show up in the results?
5. Build your brand. Building your brand is really a culmination of the above points. Getting your name and face out in the industry, showing that you’re engaged with industry organizations, and letting people know you more personally, all lends to creating the brand called “YOU”!
Have I convinced you to create your profile yet? We have over 100 member profiles on our site, and each week we “feature” a different member on our home page for the entire week! Be sure to update your profile if your contact information changes (click the “submit” link in the Meet our Members section of our web site to edit your profile.)
Name that Member
I thought it would be fun to do a quick guessing game about some of our members. Here are some interesting facts gleaned from some of our existing member profiles. Can you put the name to the fact?
1. Which member would be a U.S. History teacher if he didn’t work in stock compensation?
2. Which member cites her “investigative skills” as the one thing she couldn’t do her job without?
3. Whose favorite vacation idea is to ride her Harley to San Francisco?
4. Who would be running an auto repair shop if she didn’t work in stock compensation?
5. Who loves to play tournament poker in her spare time?
6. This person has been an NASPP member for 21+ years!
It only takes a few minutes to join the ranks of profiled members – why not do it now?
Unless you’ve been under a rock for the past several years, you know that the world of communication as we know it is changing…rapidly. It still amazes me just how small the globe has become with the invent of social media sites like Facebook and Twitter. Information spreads like a wildfire, instantly and with far reach. Finally, the regulatory world is catching up to the new era of information dissemination, starting with the SEC’s recent pronouncement that it’s okay to distribute information to investors through social media channels. I’ll explore the ins and outs in today’s blog.
The Social Media Question
The SEC’s review of social media as a means to communicate started benignly last summer, when the CEO of Netflix posted about a company milestone (exceeding 1 billion video streaming hours in a month for the first time) on his personal Facebook page. The SEC later opened an investigation, wondering if the company was in violation of Regulation Fair Disclosure rules (Reg FD). Essentially, the rule in question requires companies to disseminate information in a way that wouldn’t be expected to give an advantage to one group of investors over another. Usually this is addressed via filing a Form 8-K, or holding an earnings call, and, in some cases, posting on the corporate home page. In essence, investors should know where to look for information, and there shouldn’t be an advantage given to one group over another.
What I find interesting about the Netflix CEO’s post is that he had over 200,000 subscribers to his Facebook page at the time, many of them investors, and the information was probably distributed more quickly than it would have emerged from an SEC filing. Others agree – supporters lobbied the SEC to not pursue charges in this case. Netflix also had maintained that the information was already previously disclosed in a blog on their web site.
The SEC Decides…
Ultimately, the SEC had a “time to get with the times” moment and realized that the present communication reality includes social media, and that companies should be able to use these channels to distribute information. The caveat is that companies need to make it clear to investors which social media sites they will use to share the information. They also need to be wary of making disclosures via an executive’s personal social media page(s). The Netflix CEO was not charged with any wrongdoing.
The SEC’s report into this issue has so far only addressed fair disclosures to investors. However, I think in stock compensation we are also starting to have those “get with the times” moments, as it becomes more apparent that social media is a dominant form of reaching people in our modern era. I’m not suggesting a free-for-all communication campaign via social media, but I am encouraging stock plan professionals to continue to pursue integration of these communication modes into your stock plan communication strategy. I think it’s only a matter of time before these become mainstream in every type of communication campaign.
A Few Tips
If you’re venturing into social media channels to communicate with your stock plan participants, here’s a few things you’ll want to remember:
Look for Generation Gaps: While people across all generations have embraced social media, the younger generations have come to rely on it as a primary form of communication. Look at your stock plan demographics – if you’ve got a lot of under 34 year old participants (the largest social media user group is reported to be 18-34 year olds), you should know that email is out and social media is in.
Learn the Language: Social media communications should be short, direct and to the point. Forget the formality of email – it may seem like an abrupt change, but those using social media are used to the forward approach. In some cases, your characters are limited (e.g. Twitter – 140 characters) and you have to be short and sweet. Instead of saying “Enrollment time is here! It’s time to enroll in the XYZ Employee Stock Purchase Plan. Enrollment will take place between now and May 31, 2013.”, you’ll need to trim it to something like “ESPP open enrollment now through May 31st.”
Check non-U.S. Requirements: When communicating with employees outside the U.S., you’ll want to determine if there are any policies that restrict the use of social media in a particular jurisdiction.
Check with Counsel: Do get legal advice before undertaking broad communication efforts using social media. Try to get some guidelines for what types of communications will be ideal for this channel, and which to avoid. For example, maybe it would be good to announce that it’s open enrollment for the ESPP, but it may not be appropriate to announce that stock option grants have been approved. You’ll want to review your specific unique circumstances with your legal advisers.
I look forward to seeing what innovative communications rise out of this next generation of modes and channels.
This time of the year always puts me in a state of reflection, thinking about what was accomplished and looking forward to next year. Contemplating next year means setting goals and objectives, both professionally and personally. Have you completed your 2012 planning?
I’m always in favor making things as fun as possible. Setting professional goals and objectives doesn’t have to be a chore! For this week’s blog, I offer three ways to spice up your stock programs in 2012.
1, 2, 3 Ideas
1. Work the Concept of “Perceived Value” into your Stock Plan Communication Strategy. One thing I learned from the session on Maximizing the Perceived Value of Equity Compensation at this year’s Annual Conference, is that the act of giving an employee a stock option is not what motivates them. What motivates the employee is their own perception of what the grant is worth. If the value of that stock option goes up and there’s gain, the employee then feels grateful to the company and works harder. This is called reciprocal behavior, and is a key to how recognizing the role of perceived value can help achieve the intended value proposition. To better align with this concept, companies need to lessen efforts focused on trying to “explain” the value to the employee, and focus on strategies that address the employee’s perception that “it’s worth what I think it’s worth”. Key drivers in achieving plan effectiveness are employee perceptions, behaviors and culture.
2. Bridge the Generation Gap. Most of today’s workforce populations are diverse. Not just culturally and geographically, but age-wise as well. It’s been said before, but I’ll say it again: there is no one-stop method to communications that is guaranteed to meet your employee population’s needs. Using multiple mediums targeted to your company’s various demographics is a must. One generation may be starting to embrace email, while others (think Generation Y) view email as a tool of yesterday! Email blasts alone to your stock plan participants are likely not going to cut it in 2012 and beyond. Start thinking about adding new modes of communication, such as text messaging, social media, and a focus on short, concise messages.
3. Implement a New Technology. We may not be in a position to create an iPhone or Android app for stock plan management (now that would be cool!), but there are many other ways to demonstrate that we’re hip and cutting edge. One idea would be to find a technology to implement in 2012. A great way to generate ideas in this area would be to talk with your IT group to see what technologies they’re implementing in the coming months; there may be an opportunity for you to tap in to something already on the road map. One idea I recently heard about was a company that is exploring implementing a secret Facebook group for their ESPP participants. Employees could receive Facebook updates and information real-time, accessible via multiple technologies (computer, phone, etc.). Competitive concerns were alleviated by making the group secret, such that no-one else could view it or have access.
I’m sure there are many other interesting ways to enhance stock programs in the coming year. Take our poll below to see what others are contemplating for 2012!
On Another Note: A Follow Up
Last month I blogged about the question of whether or not insider trading should be legal. In mid-November, CBS aired a segment on the show 60 Minutes about stock trades made by congressmen/women using inside information. I was surprised to learn that their trades were not in violation of any laws. If you’re interested, view the story here.