Gary Levine - At Two Step Software, we sometimes feel like the Good Samaritans hot line when a CFO, Controller, or stock plan administrator tells us confidentially that they think they may have a “spreadsheet problem.” They don’t know who to turn to. They call us, often late at night, since we’re just a warm body at the other end of the line. Someone to talk to. Some don’t even call. They use email. A few … anonymously.
Well, we know what they’re going through and it’s so much more common than they realize. We see it every day, but they think they’re the only one who’s ended up this way. They imagine they’re the last CFO in Silicon Valley who’s afraid to move away from the comfort of their old, trusted Excel spreadsheets. There’s no question that converting to a fully-automated stock plan administration system is a big step. But like so many other important decisions in life, there are classic tell tale signs that it may be the right time.
At Two Step, we use a list of 10 warning signs to determine whether it's time for someone to stop using spreadsheets for stock plan administration:
- You’re starting to feel pressure from those who care about you (maybe the CFO, General Counsel, or your auditors) to get control of your spreadsheets.
- You’re no longer proud of your capitalization tables and corporate governance practices.
- Handling stock option exercises and vesting schedules is starting to get in the way of other work and even family matters.
- You haven’t been honest with your colleagues about how much time you’ve been spending updating the fully-diluted capitalization tables.
- You’ve been postponing getting up to speed on FAS 123R and once you even “blacked out” doing a Black-Scholes valuation with a high expected volatility.
- You’ve exceeded the 100 stock and option record limit.
- You have a dangerous combination of common stock, convertible preferred stock, and stock options.
- You’re using more than 3 spreadsheets at the same and you can no longer figure out how to calculate the number vested and exercisable at any point in time.
- You’re required to report your capitalization information to third party stakeholders, such as outside investors, lenders, an insurance company and the Board of Directors.
- You plan to seek outside financing in the next 12-24 months or your exit strategy includes being acquired by a publicly-held company.
If you answered yes to at least three of those cases, “you have a problem.” It’s not too late to seek help, but it is time to consider moving to a fully-integrated, consolidated, browser-based, stock plan administration system. You’ll not only improve your stock and option tracking, but you’ll be able to automate complex calculations, generate great looking reports that you can be proud of, create fully-diluted capitalization tables in real time, and ease the accounting burden of FAS 123R reporting.
Like so many other major decisions in life, if you postpone for another week, another month, or another year, it will only make the eventual transition even more difficult. As the camera pans around the cheap motel room full of family, friends and co-workers, you hear their voices calling out: “Do it today. You’re a wreck. We’re only looking out for your best interests.”