How Does Your Stock Plan Team Stack Up?

Stock Plan BenchmarkingBy Donna Bell. More than 200 public and private companies recently participated in our stock plan administration benchmark survey.  From technology providers to healthcare and pharmaceutical companies, there was a wide range of participation across industries and equity plan design. Here is what we found to be true around how teams are spending their time, weaknesses and strengths in regards to technical skills, and a few ideas on how you can improve processes.

We found in regards to the most time spent on stock plan specific tasks, stock plan administration, such as loading grants, is the winner, followed by accounting & tax and financial reporting & disclosures. We found there to be a strong correlation between how time is spent and a team’s strengths. 71% say that accounting is one of their team’s top three strengths, followed by internal financial reporting (58%) and working with the administrative software (50%).

Given the complexities of stock plan taxation, it’s not surprising that 53% of respondents reported that this is one of their team’s top three weaknesses. In a related question, handling taxes for award transactions is named as the process that teams struggle with the most – and among companies that outsource some of their stock plan functions, one-third outsource taxation.

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In regards to saving time, think about automating wisely. Many companies find that an investment in automation pays dividends by saving time and improving efficiencies. Of course, not every task can be automated, but if you are looking for the biggest bang for your buck, consider automating employee demographic updates from your HR/payroll system. The benefits of doing so are significant, ensuring that employee information is always up-to-date. This can eliminate the need to update tax information in the stock plan system before options are exercised or restricted stock is released. It also streamlines some of the steps involved in termination processing.

If true automation of employee updates isn’t an option for you at this time, one short-term solution is to regularly download a report from your payroll system and upload it to your stock plan system. Setting up a calendar trigger can help you do this on a regular and timely basis, and may reduce the number of times that you have to make ad hoc updates when an employee chooses to exercise options or when you need to process a termination.

One way to strengthen team weaknesses is to consider outsourcing these processes you have the least experience with. While full outsourcing may not be feasible within your budget, many companies are finding success with this partial outsourcing approach.  It gives you the leverage to determine exactly what functions are most appropriate for outsourcing, and it allows you to maintain in-house control for others. You can learn a little more about the benefits in our white paper, Is Outsourcing Right for You?

This is just the tips of the survey iceberg of information we gathered.  Interested in hearing more?  Sign up for our upcoming webinar, Raising the Bar: Best Practices in Stock Plan Operations where we will explore even more key findings from the survey and share with you related best practices.

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