Taking the Pain out of Year-End Equity Management with Automation

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With less than four months remaining before year end, I recently attended a webinar hosted by Stock & Option Solutions on taking the pain out of year-end equity management and reporting. The webinar went through five common mistakes made in year-end planning and the most effective "automation" secrets to avoid them. This was an excellent webinar that any stock plan administrator or equity compensation professional should view.

In summary, their list of the five most common mistakes made by stock plan administrators in the year-end equity management process include:

  1. "Failure to restock the toolbox" - meaning forgetting to review the tools at your disposal and your internal processes until the very end of the year
  2. Making tax mistakes - such as forgetting to send out 6039 notices to participants who exercised incentive stock options during the year
  3. Making mistakes with disqualifying dispositions - such as not accounting for terminated employees
  4. Not communicating effectively with plan participants - such as not getting the information to the participants in a timely manner
  5. Forgetting to prep for 2010 - meaning you finish your 2009 work, but you don't proactively look at the work needed in 2010. For example, did you check to make sure you had plenty of shares in your plan for 2010?

The automation secrets that were discussed included the following suggestions:

  1. Stop using spreadsheets (or at least improve the use)
  2. Use mail merge and other tools to send out electronic notices
  3. Automate reconciliations
  4. Record webcasts for employee education
  5. Upgrade to the most recent version of your software tool and talk to your vendor about any changes in the software

With all of us trying to be more productive as equity management staffs are shrinking, these automation suggestions will save countless hours and actually produce better and more accurate results. We've summarized Two Step's tips for year-end reporting in a white paper entitled: A Five Step Framework to Create Auditable Stock Option Records and Comply with FAS 123R.

My two primary takeaways from this webinar are:

  1. If you're still using spreadsheets for stock plan administration work, consider moving to an automated system to save time and prevent mistakes.
  2. Don't wait until the end of the year to start thinking about of all of the year-end tasks and reporting. Halloween and Thanksgiving are around the corner and all of a sudden we'll be in 2010.

Again, I highly recommend that anyone involved in end of the year stock plan administration watch the Stock & Option Solutions webinar and then think of just a few things you can do today to improve your year-end equity management and reporting. I guarantee the investment of time will pay handsome dividends in your short and long term equity management practices. At the time of this writing, the materials for the presentation are available, but the recording is not.

This blog post was contributed by Jeremy S. Wright, Vice President of Customer Services at Two Step Software.

Gary D. Levine, President and CEO
Two Step Software, Inc.

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