service provides, overseeing the proposal assistance program, the conference RFP process and serves as the point of contact for conference speakers. Jen started in the industry in 2000. Prior to joining the NASPP she was the Sr. Manager of Product & Industry Relations at OptionEase where she was responsible for enhancing the product strategy and offerings. She also worked at Transcentive in several areas including: consulting, training, product strategy and product management.
Jen has been a speaker at the NASPP Annual Conference, the CEP Symposium, Transcentive Source Conferences, and local NASPP chapter meetings on financial reporting and other topics.
She holds a bachelor’s degree in accounting from Central Connecticut State University, and graduate degrees in Management and Business Administration from Albertus Magnus College. Jen earned her CEP designation in November 2005, and is a volunteer for the Certified Equity Professional Institute (CEPI), serving on the curriculum committee for CEP Institute, and serves as the Public Relations Director for the CT NASPP Chapter.
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John Hammond, CEP – SVP Strategy, AST Equity Plan Solutions
John joined AST Equity Plan Solutions in 2010 to provide strategic direction for partnerships, product and industry relations. John has 13 years in the stock plan industry in a variety of strategy, industry relations, product and sales management roles. Prior to joining AST, John served in a variety of positions with Transcentive – Computershare for seven years in sales management, strategy, industry relations and product functions. Prior to his work with stock plan services, John spent 10 years in financial services in financial planning and retirement plans. John has been a long-term member of NASPP and is a former President of the Carolinas Chapter and currently serves on the Executive Advisory Committee of the NASPP and as Vice President of the Philadelphia Chapter. John currently also serves on the Advisory Board for the Certified Equity Professional Institute and has worked in a variety of volunteer and committee roles with the CEP Institute for the last 9 years. John has been a speaker at a variety of stock plan meetings and conferences on a wide range of issues surrounding equity compensation, administration and reporting requirements.
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Why is Technology Important?
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State of Technology
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Equity Administration Challenges
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Technology today
– SSAE-16
– What are the norms?
– What’s cutting edge?
– Let’s face it, you’re not getting a body
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Reduce errors: No matter how much technology you wrap-around stock admin, there is
always the human factor
– BUT…do you trust your technology?!?
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Internal and/or SOX Controls: Technology can help support and reduce the activities for
Controls testing
– Is this a check-the-box or do you actually test it? What about your auditor?
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Improved flexibility: Allow the team to better absorb the ad hoc requests that come up
with short notice
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Shrinking participant base post-FAS 123(R)
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Flat Stock Prices
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Move to full value shares cut average trade size by
50%...and not many companies are trading now are they
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Financial reporting, globalization, consolidation…a couple
wars…shareholder revolts…one very distinct meltdown
– do you think your vendor cares?!?
– do you think they have the money to care?!? – Occasional predatory pricing doesn’t help you
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Session isn’t called Top 10 ways your provider pitches vaporware and does
the bare minimum to get by
– That’s next time…
– Some of the development is real
• Primarily vendor-centric
• If it helps the vendor, it can help you
–Think fewer errors and better controls…that’s the one goal you have in common
• Don’t worry about the motive, worry about the gain
–
Keeping up with the Joneses
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Sarbanes-Oxley led to SAS-70s that led to vendors
tightening their controls.
– You want a SAS-70…our files…our way...every
time…
– You asked for controls…you got ‘em!
• Where did the work fall?
– Nothing has hurt installed-software market more
• A legit SAS-70 cannot cover anything other
than controls
• If the vendor doesn’t control the
environment, there can be no SAS-70
– unless of course you buy the magic arm package available at some vendors
»Slaps your hand when you try to push the red
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Some of the things you do to yourself…
– Use of brokers other than company preferred broker
– “Hand holding” regular employees
– 10b5-1 plans becoming more common
• Increased activity as market improves
• Not an executive plan anymore
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Movement from Options to Restricted Stock
– Shifted significant administration work load from broker to stock administration – Increased staff resources needed to support growing number of releases over time
• Complexity not understood by management • Timing, structure and planning are critical
–One company ‘woke up’ needing to sell a million shares on an average trading volume of 300k
– Tax withholding treatment differs between US and Rest of World, i.e. net share withholding vs. sell to cover
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Employee Education & Communication
– Stock plan benefits not intuitive • Ongoing education required
• Easy access to information critical – “High-touch” vs. self service
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Budget to support global education limited
– Responsibility not always clear, i.e. HR or Stock Administration – Centralized or decentralized
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Mobile Employees
– US – State to State; Country to country – Tracking often is manual
– Critical data not available in HR systems
– Complicated and treatment differs among countries • Income sourcing
• Tax withholding
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Calculations completed internally vs. service provider
– Internal process often not scalable – Automation is expensive
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System & Data Integrity
– Audits and reconciliations critical
• General ledger accounts relating to company stock • Financial reporting, tax reporting
• Global tax withholdings and remittances • Employee data
– Movement of employees across states and countries
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Data capture
– Reconcile with HR system, i.e. terminations
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Company Evolution – from small to large
– Inadequate company infrastructure
– Company growth outpaced systems capabilities
– System interface to stock administration system difficult – HR systems are US centric, not global
– Multiple global payroll systems
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Service Models – outsourcing, partial administration and self-administration
– Self-admin with non-automated broker almost dead
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Self-admin platforms focus on usability, not automation
– Why can’t you have both?
– Ideal would be configured at implementation, streamlined after that – If the activity level is low, do you need automation?
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Platform flexibility is in direct conflict with automation and controls
What is a SSAE-16?
Covers the controls in
place of managing a
service
• Could be SaaS or
outsourcing
• Not installed software • Controls specified by the
vendor
SOC Type I / SOC Type II
What & Who Does it
Cover?
Is it an application or a
service SSAE-16?
Is it the same exact
service offering you are
– ]
– 1 SSAE-16 report + 1 SSAE-16 report = anywhere from .5 – 1.5 SSAE-16 reports
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Multiple SSAE16 = multiple problems
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The more flexible your vendor is, the
more service models they support, the
more likely you will see gaps in coverage
of the controls
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One consultant told me they found 30+
discrepancies in one RFP for a
multi-provider outsourcing model
Are you the SSAE-16 police?
Auditor Process owner may be required to
review and signoff
Decide if you are worried about it – then decide what to do
Deficiencies Beware of exclusions
Expect low hurdles, but understand what matters and what doesn’t
Timing is the biggest thing to look for
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If you do not have these, you’re fighting it
– E-mail communication as primary method – Employee Web Access
– Online executions
– Online grant delivery/acceptance – Online document library
– Automated payroll/HRIS feed for demographic/tax updates – Daily price feeds
– Financial reporting solution
•
Not really the technology itself, just everyone isn’t using it yet…
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System and HRIS/Payroll/Tax feeds
– Tax extracts directly into payroll system – File translators/genies
• Automatically formats files into an importable format
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Spreadsheets, databases and web-based solutions are greatly under-utilized
– What extent do you utilize the tools you have available? – Improve and learn new skills through continuing education
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Custom reports
– If cost, need to look at cost-benefit tradeoff considerations – Enhanced data integrity
– Excel macros automatically populate the following items from broker summary report • DWAC/Issuance Letter
• Share Control Log
• Accounts Receivable log for Treasury
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Other
– Transfer Agent Systems
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Employee Communications/Education
– Company intranet site
– Social media, i.e. Facebook, LinkedIn – Simplified video production
– App
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Outlook reminders
– ESPP enrollment periods, tax election, etc
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Information Exchange
– Document your processes
• Have these available for other departments – Company Intranet
• Uploaded to a shared site • SharePoint
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Knowing your software/platform
– Read and understand the software documentation – Identify and utilize any available audit features – Understand impact of changes in new versions – Attend training classes, webinars or conferences – Network with other users
– Utilize your software support help desk or account manager
– Identify and review every financial reporting report available in your software – Learn how to:
• Import and export data
• Sort, filter and group information on reports
• Use spreadsheet and/or database programs to audit (e.g., Excel, Access) • Tie out results from various reports
• Audit results of most critical financial reporting reports – Ask for the formulas used in the application
Account Reconciliations
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Reconciles Taxes Collected/Payable with Taxes paid to tax authorities
– Database management software, i.e. MS Access to collect and compare/match amounts collected to reported/remitted
– Facilitates identification of discrepancies and/or mismatched items for research – Ability to handle large volumes of transaction
What’s next?
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Mobility…on your phone
– Leave the smartphones and laptops at home when you go to Aruba…
