Ready, Set, Implement

Transcription

1 Ready, Set, Implement Mike Albert, Equity Compensation Managing Director, Fidelity Investments, US Whitney Coons, Global HR Business Analyst, HomeAway, Inc. US Steve Pennacchio, Senior Vice President, Executive Compensation Strategy and Programs, Pfizer, US

2 Implementation Process and Methodology Initiation Definition Design Preparation Implementation Aftercare Communicate Communicate Communicate

3 Critical Success Factors An implementation methodology requires several critical elements to ensure success. Dedicated project staff Partnership among project staff a successful project is their key goal Clear expectations set, revisited periodically and adhered to A focus on project milestones and deliverables For data intensive projects, the quality and handling of data is paramount Status meetings are not just informalities Senior management is kept informed Operational controls are central - monitored and complied with

4 Equity Provider Conversion Austin based Retailer 11 Week Conversion 60,000 employees Stock Option Plan RSU Plan Employee Stock Purchase Plan New functionality

5 Equity Provider Conversion Austin based Retailer Pre-work - RFP, RFP analysis, demos, negotiations, interviews, etc. Resources Vendor A Vendor B Priority Value Total Priority Value Total Question Question Question Question Question Question Question Question Question Totals Vendor A 32 Vendor B 36 Vendor Project Mgr, IT Mgr, Accounting Mgr, Project Plan In-house Project Mgr, Stock Admin, Business Analyst, Equity Accountant

6 Equity Provider Conversion Austin based Retailer Kick-off meeting All parties that will participate in the implementation Contracts Stick with the Project Plan Stagger go-live dates, working sessions, conference rooms, temps, etc Communication Educate employees on change Audit Stock Administration, Accounting, Tax, Payroll and IT Celebrate the wins You and your team have worked hard!

7 Key Takeaways Garbage in Garbage out Name, Title, Company (2 letters for Country, i.e (UK), (NL) Name, Title, Company (2 letters for Country, i.e (UK), (NL) Don t get overwhelmed Name, Title, Company (2 letters for Country, i.e (UK), (NL) Audit, Audit, Audit

8 Pfizer s Total Shareholder Return Units (TSRUs) Steve Pennacchio Senior Vice President Executive Compensation Strategy and Programs

9 Total Shareholder Return Units (TSRUs) Long-term incentive vehicle perfectly aligned with shareholders Generates value based on change in stock price PLUS dividends over a fixed period of time Number of TSRUs granted to recipient is determined using option valuation model (Monte Carlo simulation) Useful to reward recipients at companies with high dividend yields and/or companies with slow stock price growth 9

10 TSRUs Key Points The number of 5- or 7-Year TSRUs granted is calculated by dividing the portion of the total ELTI grant value attributable to 5- or 7-Year TSRUs by the accounting value for each of the 5- or 7-Year TSRU TSRUs vest three years from the grant date, contingent on continued employment 5-Year TSRUs are settled five years from the grant date and 7-Year TSRUs are settled seven years from the grant date Dividend equivalents are accumulated on TSRUs during the five- or seven-year period The Settlement Price is the 20-day average of the closing prices of Pfizer common stock prior to settlement Number of shares delivered is based on the settlement price, net of applicable taxes The number of shares at settlement: # of TSRUs x [Settlement Price - Grant Price + Dividend Equivalents] Settlement Price 10

11 TSRUs Example TSRU Calculation* Total ELTI Grant Value: $100,000 Value attributable to 5- or 7-Year TSRUs: $25,000 TSRU Accounting Value for 5-Year TSRU: $4.00 TSRU Accounting Value for 7-Year TSRU: $4.80 # of 5-Year TSRUs Granted: 6,250 # of 7-Year TSRUs Granted: 5,208 Stock Price at Grant: $21.00 Settlement Price: $ Year TSRU Dividend: $4.40 ($.88 per year x 5 yrs) 7-Year TSRU Dividend: $6.16 ($.88 per year x 7 yrs) The number of shares at settlement for 5-Year TSRUs: 6,250 x [$ $ $4.40] $26.00 = 2,260** The number of shares at settlement for 7-Year TSRUs: 5,208 x [$ $ $6.16] $26.00 = 2,235** *For illustrative purposes only **Actual number of shares delivered is net of applicable taxes 11

12 Implementation Communicate: What, When and How What they are... When they reward... How they reward... Administration Work with plan administrator to design and operate recordkeeping system with full functionality Did not exist managed manually for ~180 recipients with work arounds Broadening the number of recipients requires fully functional system Partnering with Fidelity in anticipation of broad implementation in

13 Key Takeaways TSRUs are the ideal long-term incentive vehicle as they provide perfect alignment with shareholders and can generate value in slow or no price appreciation environments Essentially are performance shares Communication is key in understanding their value 13

14 Thank you! Mike Albert Whitney Coons Steve Pennacchio HomeAway, Inc., and Pfizer are not affiliated with Fidelity Investments