Equity Expert: A Podcast from the NASPP

In this episode of the Equity Expert podcast, we are joined by Stepan Kzrtian a former corporate lawyer with over a decade of experience helping founders navigate the legal journey across all stages of the startup lifecycle.

The key points of this episode include:

• Understanding the 83(b) Election
  
  
• Issuing Founder Stock
  
  
• Cap Table Management
  
  
• Should You Grant Equity as a Percentage

Additional Resources:

83(b) Election: The Multi-Million-Dollar Ticking Time Bomb

What is the 83(b) election?

Kathy Son on the key moments that helped her career in equity compensation and tactics that can help you grow your own career. 

Episode Notes:

• Kathy’s start in equity compensation (1:06)
• When she realized she wanted to pursue this profession (3:14)
• Key moments in getting to her current role (5:33)
• Strategies to advance yourself in equity comp (8:06)
• Advice to her younger self (10:52)
• Advice for advocating for yourself (14:54)
• Current goals (18:27)

Learn how to prepare for T+1 and how the shortened settlement cycle will change stock plan administration from a day-to-day and strategic perspective.

Episode Notes:

•  Effect of T+1 on day-to-day operations (0:11)
•  Impact of T+1 on strategy for stock plans (3:32)
• Trading windows and T+1 (6:50)
• Risks created by a shorter settlement period (8:58)
• Working with internal and external partners to ensure a smooth transition (10:35)
• How T+1 will change the future of stock plan administration (14:34)

Complying with SAFE, Circular 35, and other complexities of offering equity awards in China.

Episode Notes:

• SAFE registration for options and awards (1:52)
• SAFE registration for ESPPs (5:10)
• Establishing a foreign exchange bank account (7:42)
• Taxation of equity awards in China (10:06)
• Possible elimination of preferential tax treatment (14:57)
• Where to hold shares for Chinese nationals (21:22)
• Mandatory cashless or same-day-sale programs (22:28)
• Current events (25:15)
• Best practices (27:31)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends

Additional Podcasts in This Series:

• Trends in Mobility Compliance
• Tax Withholding Practices for Equity Awards

Data on how companies manage on-time tax deposits, determine tax withholding rates, respond to employee requests for additional withholding on equity plan transactions and more.

Episode Notes:

• Complying with IRS deposit deadlines (1:36)
• Tips for depositing taxes on time (3:45)
• Pre-funding tax deposits (5:25)
• Defining FMV as the prior day’s closing price (6:59)
• Allowing employees to request additional withholding on equity plan transactions (8:35)
• Determining tax withholding rates for non-US employees (14:00)
• Frequency of reviews for global tax compliance (21:06)
• Methods of staying informed of global developments affecting equity plans (22:37)
• Working with local in-country personnel to stay informed (24:49)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends
• Podcast: Trends in Mobility Compliance

How companies track mobile employees and manage tax compliance for their equity awards.

Episode Notes:

• Global vs. Us domestic mobility (1:44)
• Business travelers (10:19)
• Remote workers (14:30)
• Getting budget for mobility compliance (21:06)
• Tracking employee locations (22:37)
• Use of third-party advisors to assist with tax calculations (26:51)
• How to approach mobility compliance (29:55)
• Tracking mobility employees is important even with no other compliance (36:44)

Resources Mentioned in This Episode:

• Equity Administration Survey
• Webinar: Best Practices in Stock Plan Administration
• Webinar: Global Stock Plan Administration Trends

Why stock price volatility is a problem when it comes to sizing grants and how using a multiday average and other approaches can help you manage your burn rate.

Episode Notes:

• How companies typically determine grant sizes (0:58)
• The effect of declining stock prices on grant sizes (2:15)
• Pay equity considerations (4:19)
• Using a multiday average to denominate grants (7:14)
• What averaging period to use (10:09)
• Disadvantages of a multiday average approach (14:15)
• Other approaches to manage share usage (15:47)
• Restricting award eligibility to control burn rates (18:38)

Resources Mentioned in This Episode:

• Sizing Grants During Periods of Market Volatility
• 2 Reasons Multiday Averages Make Sense for Grant Sizing

Galahad Dong on how his experience in the military helps him lead HRIS and Total Rewards (and equity compensation) at Simpson Strong-Tie.

Episode Notes:

• Galahad’s origin story (0:36)
• His current role as director of HRIS and Total Rewards (2:06)
• How military experience helps in managing stock plans (3:49)
• Background on Simpson Strong-Tie (4:53)
• How Simpson-Strong-Tie uses equity (6:21)
• DEI programs at Simpson Strong-Tie (8:52)
• Diversity at the NASPP and Galahad’s role on the DEI Task Force (11:53)
• Advice on growing your career in compensation (13:35)

Resources Mentioned in This Episode:

• The NASPP’s DEI Initiative

Additional Podcasts in This Series:

• Conversation with Christine Zwerling
• Conversation with Paz Dizon
• Conversation with Dana Hall

Episode Notes:

• A note on this episode (1:34)
• Section 423 qualified vs. nonqualified plans (2:13)
• Fractional vs. whole share purchases (9:21)
• Cashless funding vs. limiting funding to payroll contributions (17:14)
• Lookback pricing vs. purchase date only pricing (28:04)

Resources Mentioned in This Episode:

• Four Ideas to Make Your ESPP More Equitable
• Could Fractional Shares Benefit Your Stock Plan Participants?
• Overlooked and Underrated: Why Fractional Shares Matter
• Should You Consider a Cashless ESPP?
• 2020 NASPP Deloitte Domestic Stock Plan Administration Survey

Additional Podcasts in This Series:

• Half Empty, Half Full: A Closer Look at TSR Awards
• Half Empty, Half Full: Thoughts on the SEC's Rule 10b5-1 Proposal
• Half Empty, Half Full: Our Thoughts on Four Stock Plan Topics

Episode Notes:

• What are cashless ESPPs and how do they work? (3:50)
• Outset Medical’s path to a cashless ESPP (9:08)
• Features of Outset Medical’s new cashless ESPP (11:44)
• Employee reaction to Outset Medical’s new ESPP (13:31)
• Common concerns about cashless ESPPs (15:01)
• Current interest in cashless ESPPs (17:56)

Resources Mentioned in this Episode

• The Problem with ESPPs
• Should You Consider a Cashless ESPP?
• Four Ideas to Make Your ESPP More Equitable
• Are You Overvaluing Your ESPP?

Episode Notes: 

• What is spring-loading? (00:40)
• Reminiscing about the option backdating scandal (4:58)
• Summary of the SEC’s guidance (8:49)
• Impact of SAB 120 on grant valuation (10:31)
• Practical implications of SAB 120 (14:27)
• Disclosures required for spring-loaded grants (19:06)
• Tips to avoid inadvertently spring-loading equity awards (23:30)

Other Resources on This Topic:

• Examining the SEC’s New Guidance on Spring-Loaded Grants
• SEC Targets Spring-Loaded Equity Awards
• Staff Accounting Bulletin No. 120
• Why I Did Not Go To Jail 

Christine Zwerling of Twilio describes her career path in equity compensation, offers tips to be more productive, and discusses her experience and interest in DEI and her interest in the NASPP's DEI Task Force. 

Episode Notes:

• Christine’s origin story (1:06)
• Career challenges (8:39)
• Getting the advice you need (14:01)
• Productivity hacks (15:51)
• Superpowers (20:27)
• Diversity at the NASPP and Christine’s work on the NASPP’s DEI task force (21:57)

Hear how Paz Dizon, the current Head of Stock Plan Services at Jazz Pharmaceuticals, has crafted her career in equity compensation, including finding her superpower and leveraging relationships to drive learning and success. 

In this replay of one of our classic episodes, Sandra Sussman of SAP describes how they are able to offer an ESPP with a 40% match, offer financial assistance to help nonexecutives participate, and solve the challenge of tax withholding at the same time.

Episode Notes:

• SAP's path to the Own SAP plan (1:55)
• How Own SAP works (3:30)
• The 40% Match and 20 Euro subsidy (4:45)
• How SAP manages tax withholding on the plan (5:57)
• Administering the plan (7:08)
• Participation in the plan (8:26)

Other Resources on This Topic:

• Blog: Solving the Challenges of a Global ESPP
• Blog: Four Ideas to Make Your ESPP More Equitable
• Blog: Could Fractional Shares Benefit Your ESPP Participants
• Video: ESPP Design: Match vs. Discount
• Video: Let's Talk About Equity Rights, Equality, and ESPPs

The latest data on how companies pay out equity awards to retirees and how retirement eligibility is determined. Plus, a discussion of the treatment of equity awards in the event of death and disability.

Episode Notes:

• Criteria for determining retirement eligibility (1:06)
• Minimum age requirements (4:31)
• Minimum service requirements (6:43)
• Treatment of equity awards upon achieving retirement eligibility (7:45)
• Prevalence of equity award payouts to retirees (9:32)
• Accelerating vs. continuing vesting upon retirement (11:43)
• Full vs. pro rata payouts to retirees (15:31)
• Treatment of equity awards in the event of death or termination due to disability (17:04)

Resources Mentioned in this Episode:

• NASPP Webinar:   Top Trends from the 2021 Equity Incentives Design Survey
• NASPP Webinar: Trends in Global Equity Incentives
• Equity Expert Podcast: Trends in Equity Award Usage and Eligibility
• Equity Expert Podcast: Trends in Global Equity Incentives
• Equity Expert Podcast: Trends in Performance Awards
• 2021 Equity Incentives Design Survey, cosponsored by the NASPP and Deloitte Consulting
• Blog: Pros and Cons of Accelerating vs. Continuing Vesting Upon Retirement

Episode Notes:

• Prevalence of performance awards at tech companies vs. other industries (2:36)
• The growth of TSR Awards (4:52)
• Types of operational metrics that companies commonly tie vesting to (8:29)
• Use of ESG metrics in long-term incentives (9:46)
• Use of multiple performance metrics (11:43)
• Treatment of performance awards in changes in control (15:38)

Resources Mentioned in this Episode:

• NASPP Webinar:   Top Trends from the 2021 Equity Incentives Design Survey
• NASPP Webinar: Trends in Global Equity Incentives
• Equity Expert Podcast: Trends in Equity Award Usage and Eligibility
• Equity Expert Podcast: Trends in Global Equity Incentives
• 2021 Equity Incentives Design Survey, cosponsored by the NASPP and Deloitte Consulting

We ask Terry Adamson of Infinite Equity what he thinks about paying out TSR awards when performance is negative, using TSR as a modifier, custom peer groups and more.

Episode Notes:

• How much more usage of TSR awards can we expect (1:50)
• Custom peer groups (4:06)
• Paying out awards for negative TSR performance (8:44)
• Using TSR as a payout modifier for other metrics (11:35)
• The benefits our measuring outperformance (13:38)
• Barbara uses a football metaphor (19:37)
• Other market-based alternatives to TSR awards (20:34)
• Barbara and Terry plan a follow-up podcast on relative Sharpe-Ratio awards (24:20)

Resources Mentioned in this Episode

• A Better Way to Calculate Volatility
• Constructing the Pentagon of Incentives
• How to Size Relative TSR Grants with a Stub Period

Episode Notes:

• Mark's background (1:33)
• Types of equity vehicles offered globally (2:07)
• Practices on adjusting awards by location (4:05)
• Prevalence of tax-qualified plans (8:09)
• Update on the UK (13:09)
• Update on Canada (16:35)

Resources Mentioned in this Episode:

• NASPP Webinar:   Top Trends from the 2021 Equity Incentives Design Survey
• NASPP Webinar: Trends in Global Equity Incentives
• Equity Expert Podcast: Trends in Equity Award Usage and Eligibility
• 2021 Equity Incentives Design Survey, cosponsored by the NASPP and Deloitte Consulting

Host: Barbara Baksa, Executive Director, NASPP

Guest: Dana Hall, Designer Brands

Episode Notes:

• About the NASPP’s DEI Initiative
• Dana’s career path (2:12)
• Majoring in human resources (3:14)
• Dana’s role at Designer Brands (7:35)
• What Dana likes about working in compensation (9:06)
• Dana’s role on the NASPP’s DEI Task Force (11:49)
• Dana’s leadership role in Designer Brands’ African American BRG (13:55)
• Internships at Designer Brands (15:35)
• Shoe-related puns (16:47)
• Dana’s advice for growing your career in compensation (17:27)

Resources Mentioned in this Episode:

• NASPP DEI Initiative

Thank you to Bank of America for sponsoring the NASPP's DEI Initiative.

About Our Guest

Dana is a native of Columbus, Ohio and currently works as the Senior Manager of Compensation for the Corporate Offices of Designer Brands Inc. Her team manages the compensation programs for their business segments in the United States. This includes base compensation, short-term and long-term incentive plans. Dana has worked in the field of compensation for over 22 years, primarily in the retail industry.

Dana majored in human resources and graduated with a bachelor’s degree from The Ohio State University. She is a Certified Compensation Professional (CCP) and has also earned her Equity Compensation Associate (ECA) designation.

Host: Barbara Baksa, Executive Director, NASPP

Guest: Ian Dawson, Deloitte Consulting

Episode Notes:

• Ian's Background (1:39)
• Overall trends in the types of equity vehicles public companies grant (2:34)
• Options vs. full value awards (5:18)
• Levels of employees eligible to receive equity awards (7:15)
• Grants to lower ranking employees (8:52)
• Comparison of practices at technology vs. nontechnogy companies (12:47)
• Prevalence of ESPPs (14:34)

Resources Mentioned in this Episode:

• NASPP Webcast:  Top Trends from the 2021 Equity Incentives Design Survey
• 2021 Equity Incentives Design Survey, cosponsored by the NASPP and Deloitte Consulting