Free Webcast: Work Smarter Not Harder: Building Your Stock Plan Group - May 21st

Follow this link to register for our next webinar:
https://sosevents.webex.com/sosevents/onstage/g.php?t=a&d=660294080

Please join us for our next free webinar on Thursday, May 21st at 11am Pacific Time.

Description
Is your stock plan group (or department of one) functioning at peak efficiency? Are you working well with your internal partners? Are there gaps you need to fill in your team's knowledge or skill sets? How do you identify areas for growth and build your department without breaking the bank?

This webcast will delve into the steps you can take to develop yourself or your department into your company's optimal stock plan team without extensive time investment or cost.

This panel of stock plan staffing experts will discuss:

Challenges

• Why is a strong, well–developed stock administration organization necessary
• Implications and risk factors – limited resources, inadequate knowledge base, lack of controls/oversight, high turnover costs
Assessment
• Assessing your programs: equity types, plans, vendors, platforms, etc. – what do you need to get the job done
• Assessing your staff and skill sets – does your team have the skill sets to support the job required
• Identifying areas for improvement – can the required skills be learned or obtained elsewhere
Development
• Easy ways to develop or obtain missing skill sets and knowledge
• Sources to help you expand your knowledge and skills
• Ways to encouraging staff to branch out into new and unfamiliar areas
• Guidance on building a successful long–term stock administration organization

Speakers:

• Pam Van Gordon-Ellis, CEP, Stock & Option Solutions
• Emily Cervino, CEP, Certified Equity Professional Institute
• Jule Torre, Applied Materials, Inc.

(One hour of Certified Equity Professional continuing education credit is available for attending. See the CEPI website for more information on CEP continuing education requirements.)

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SOS Focus: Money Makes the World Go 'Round: Tips for Tackling China SAFE Registration

China and India are often grouped together, either as part of the "BRIC" countries (along with Brazil and Russia), or as twin emerging forces in global markets. Recent regulatory changes have put them near the top of "difficult" countries from an equity compensation point of view, for reasons having to do with everyone's favorite topic: money. China is trying to get a better view of funds flowing in and out of the country, while India wants to ensure it is getting its fair share of taxes by shifting taxation on equity income from employees to employers. 

China implemented new exchange control regulations requiring foreign companies to complete registration with the State Administration of Foreign Exchange (“SAFE”) and ensure all funds flowing in and out of China go through a registered foreign exchange bank account. India, which had liberalized foreign exchange rules in the recent past, expanded its existing Fringe Benefits Tax (“FBT”) regime to include income from equity based compensation. This month's Xtra looks at SAFE registration in detail. We'll cover the India FBT requirements and challenges next month.

China SAFE Registration: What & Who?
What exactly is SAFE? It is a governing body which directs and controls all foreign exchange regulations in China. There is a federal office and local, provincial offices. Similar to the U.S., where states can have varying implementations of federal guidelines, local SAFE offices have different rules regarding specific registration requirements, making it even more challenging for multinational companies to comply.

Under the broad requirements, foreign issuers must register all equity incentive plans offered to Chinese national employees; this includes options, restricted stock, RSUs, SARs, ESPPs, and potentially, cash plans offered by the parent company. Additionally, the company must establish a foreign exchange account through which all funds for purchase or from sale of equity must flow. The regulations apply to all public multinational companies; registration is currently not available for private companies.

A mountain of documentation must be submitted with the application. Documents required include: a copy of your agreement with your broker and statements of risk management and internal controls for repatriation of funds, copies of Board resolution(s) approving your stock plan(s), translated copies of plans and agreements, a letter confirming the labor relationship with your participants, and a list of employees by entity.

Issuer Challenges and Concerns
SAFE registration is no easy task. From a survey conducted by SOS in March, 2009, of 22 firms who currently grant or have granted in China, only three companies had completed registration, while six were in process. Of those who had begun the process, half had spent 6-12 months, while the other half spent 12-24 months.

What are the driving factors behind this lengthy registration? One of our survey respondents summarized the process with this statement:  “Ancient Chinese proverb: No good deed goes unpunished. We've started twice but continue to go very slowly, primarily as a result of the stories we've heard about issues encountered by those who forged ahead and because there seems to be no truly friendly provincial tax authority.” Indeed, the varying requirements between local SAFE offices are causing companies major headaches, since registration must be completed in each province where the company has employees. Other challenges faced by companies trying to be compliant include the cost of translating plans and agreements: We have heard estimates as high as $30,000.

Another big concern for issuers is ensuring all funds flow through the foreign exchange account, even for terminated employees. Employers may need to mandate same-day sales for options or immediate sale on vest/purchase for RSU/ESPP shares. If employees are allowed to hold shares, the company may need to force a sale on termination or make some other arrangement with the broker to transfer funds only through the corporate account; this may entail modifying the broker contract. Once funds have been deposited to the foreign exchange account, the company must then facilitate the transfer of funds to individual accounts.

If your company is starting to review these requirements, take a deep breath and proceed with caution. Consider reviewing alternative compensation methods such as a local cash bonus program or phantom stock. Perform a cost-benefit analysis to look at all the costs (monetary and resources) versus the benefits (corporate culture of ownership, competitive employment market). Engage your vendors too-they may have solutions or tools that can help. Remember, this is a long process and deserves a detailed review as well as a strong commitment from all internal stakeholders, not just stock plan management, to complete.

For more information, please feel free to contact us at xtra@sos-team.com.

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Top 10 Things You Need To Know For Option Exchanges Involving International Employees

> By Valerie Diamond and Barbara Klementz, Baker & McKenzie

Aside from the many U.S. legal issues for an option exchange program, companies also need to consider the various tax and legal issues applicable to an exchange program offered outside the U.S. This article explains those top 10 issues of which companies need to be mindful, such as:

• Ensure that the (different) terms for the non-U.S. offering are properly disclosed in the Tender Offer document;
• Analyze the tax impact of the exchange outside the U.S. (e.g., countries where the exchange itself can cause a taxable event, loss of favorable tax treatment);
• Analyze any new tax withholding/reporting obligations resulting from the exchange program;
• Examine any securities filing obligations triggered by the exchange or the grant of the new awards;
• Examine any exchange control approval requirements triggered by the exchange or the grant of new awards;
• Analyze possible labor law entitlement or acquired right exposure resulting from the exchange; and Examine data privacy issues raised by transfer of personal data in the context of the exchange.

In summary, companies need to plan ahead if they want to offer the exchange program also to employees outside the U.S., because there can be a multitude of tax and compliance issues that have to be considered prior to launching the exchange.

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2009 iQuantic® Global Long-Term Incentive Practices Survey

Buck Consultants' iQuantic® Global Long-Term Incentive Practices Survey has been helping organizations evaluate their LTI programs for over a decade. Participation in the Practices portion of the survey is complimentary. As a participant, you will receive a complimentary PDF copy of the survey's Practices report in mid-July.

Click to register to participate. Upon registration, you will receive a personalized link to the questionnaire. Completed questionnaires are due by May 15, 2009.

For more information, contact 1.800.887.0509 or visit www.bucksurveys.com.

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Congrats!...  Laura Fahnlander, of Sun Microsystems, had a baby girl, Katelyn, on January 28th... Brennan Latham of Fidelity Stock Plan Services welcomed his third daughter, Abby, on April 7th. Jacob Peters of Radford Consulting got engaged to Kim Fish - the wedding date is tentatively set for October!

On the Move!... Patrick Goo joined Blue Coat Systems as Manager of Stock Systems... Eric Tassell joined StockCross Corporate Services as a Senior Vice President.

Players!... The NCEO has a new NCEO issue brief, Equity Compensation in a Down Market: Repricing, Accounting, ESPP, and Employee Communications Issues, which examines issues that arise in dealing with equity compensation plans in a down market... The Sacramento Chapter of the NASPP held their inaugural meeting on April 30th...Barb Richley of E*TRADE Corporate Services, Dan Walter of Performensation Consulting, Arne Blix of Norse-Solutions and Paul Arens of Monidee are excited to be presenting "Why do They Call it Software When it is So Hard for My Provider to Get it Right?" at the Global Equity Organization's Annual Conference in June in Paris, France!