Operational Considerations When Implementing and Administering Employee Stock Plans

1
Operational Considerations When Implementing and
Administering Employee Stock Plans

• Dominic Jones, Partner, Mourant, UK
• Javed Rahman, Vice President, Salomon Smith
  Barney, New York
• Carine M. Schneider, Partner,
• PricewaterhouseCoopers LLP, San Francisco

2
The stages of administration

• Design
• Implementation
• Ongoing administration
• Critical periods
• Improvements

Dominic Jones, Mourant and Carine Schneider, PwC
3
Introduction

• Set-up and implementation
• Team
• Timetable
• Due diligence
• Other implementation tasks and impact of new
  technology
• Ongoing administration
• Invitation process
• Data management and exchange
• Employee communications
• Maturity and vesting
• Reporting and other issues

Dominic Jones, Mourant and Carine Schneider, PwC
4
Set-Up Team

• Identify internal project team
• Human Resources and payroll (central and
  regional)
• Legal, tax, treasury and finance
• Technology
• Plan Champions/management
• Identify external project team
• In-house or outsourced administrator ?
• Broker and bank
• Tax, legal and regulatory advisers design
  consultants
• Selection process Beauty Parade

Dominic Jones, Mourant and Carine Schneider, PwC
5
Set-Up Timetable

• Project Timetable
• Key milestones
• Regular meetings and conference calls
• Target launch date
• Staggered country roll-out ?

Dominic Jones, Mourant and Carine Schneider, PwC
6
Set-Up Due diligence

• Due diligence tasks
• Legal and regulatory
• Tax and social security
• Working with advisers
• Relevant local country regulatory bodies
• Revenue authorities and financial services
  regulatory bodies
• Relevant local country employee stock plan
  organizations (ProShare, NCEO, Fondact etc)

Dominic Jones, Mourant and Carine Schneider, PwC
7
Set-Up Other Tasks

• Other implementation tasks
• Allocate tasks to team members
• Finalize plan design for each country
• Define procedures and processes
• Draft administration manual and plan
  documentation
• Agree service levels and fees with external
  providers
• Design, build and test IT systems

Dominic Jones, Mourant and Carine Schneider, PwC
8
Ongoing Administration

• Invitation, offer and grant process
• Plan documentation and communication process
• Difference between employee stock purchase plan
  (ESPP) and stock option/share award plans
• Grant - options
• Offer and enrolment - ESPP

Dominic Jones, Mourant and Carine Schneider, PwC
9
Ongoing Administration

• Data management and exchange
• Relationship between payroll, HR and
  administrator
• Method and timing of data exchange
• Reconciliation
• Importance of up-to-date and correct data
• Leavers and terminated employees

Dominic Jones, Mourant and Carine Schneider, PwC
10
Ongoing Administration

• Employee communications
• Confirmation of grant/enrolment
• Statements
• Call center
• Internet/Intranet
• Reports and returns for employer company
• Tax returns/wage statements
• Statistical filings
• Regulatory filings
• Annual report and accounts

Dominic Jones, Mourant and Carine Schneider, PwC
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Ongoing Administration

• Post-maturity and vesting issues
• ESPPs and option plans
• Exercises, sales and transfers
• Transfer of sale/exercise proceeds
• Tax and social security withholding
• Impact of currency and multiple listings

Dominic Jones, Mourant and Carine Schneider, PwC
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Impact of Technology

• Impact on five areas
• Administration database
• Communication with participants
• Communication with employer
• Integration with third-party providers
• Administrators internal procedures

Dominic Jones, Mourant and Carine Schneider, PwC
13
Ongoing Administration

• Other issues
• Corporate actions
• Voting
• Dividends
• Dealing with time zones
• Cultural issues
• Communications
• External forces

Dominic Jones, Mourant and Carine Schneider, PwC
14
Conclusion
Dominic Jones, Mourant and Carine Schneider, PwC
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Dominic Jones Mourant22 Grenville StreetSt
Helier, Jersey, Channel IslandsJE3 8PX T 44 (0)
1534 609 385 F 44 (0) 1534 609 333 e-mail
dominic.jones_at_mourant.com Mourant Equity
Compensation Solutions is a trading style of
Mourant Co. Capital Trustees Limited.
Registered in England No. 3275677. Registered
Address 4th Floor, 35 New Bridge Street, London,
EC4V 6BW. Regulated by the FSA.
Carine Schneider PricewaterhouseCoopers LLP 199
Fremont St. San Francisco, California
94105 United States T 1 415 498 5916 F 1 415
498 5166 E-mail carine.m.schneider_at_us.pwcglobal.
com
Dominic Jones, Mourant and Carine Schneider, PwC
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About Mourant

• Global, UK domestic and offshore stock plan
  administration
• 800 plans (over 100 global)
• Client base
• 47 of the FTSE 100
• 10 of the DJIA 30
• 33 of the FTSE Eurotop 100
• Team of 200 in United Kingdom and Jersey, C.I.

Dominic Jones, Mourant and Carine Schneider, PwC