The Current State of Global Share Plan Administration

Transcription

1 The Current State of Global Share Plan Administration Carine Schneider, Global Shares Kathi Myers, Buck Consultants Thursday, 20 May 2010

2 About the Survey In March 2010, Global Shares and Buck conducted their fourth annual survey focused on who and how companies administer their plans Responses from 187 companies from around the world (2010) Focus on the survey was on stock administration practices, not on plan design Buck Consultants provides a separate survey to focus on stock plan design trends (2010 iquantic Global Long-Term Incentive Practices Survey) Currently open for data submission! To find out more about this survey or to participate: Phone: hrsurveys@buckconsultants.com Visit:

3 Survey respondents represent a diversity of organizations

4 and position titles

5 The Results

6 Administrators come from various backgrounds Human Resources provides the most common career path for stock plan professionals. Close to 20% of stock plan administrators started their careers specifically as stock plan professionals.

7 Educational experience About a third have a graduate degree 93% have a minimum of a 2 year college degree

8 Professional certifications are common 45% of survey respondents report having some certification or other professional qualification. *Respondents were allowed to select more than one answer.

9 Conference participation Conference participation remains a strong source for education. Conferences included specialized or localized events including general HR conferences 84% of participants attended at least one conference over the last year. 20% of respondents attended the GEO Conference *Respondents were allowed to select more than one answer.

10 Local events also play a role Local events attended were similar to the national conferences with NASPP chapter and GEO chapter meetings being in the top three. Interestingly, less people attended local meetings than the national conferences (63%). * Respondents were allowed to select more than one answer.

11 Other forms of education are less formal It is clear that stock plan professionals benefit from networking with other colleagues. Nearly 90% of respondents felt that networking provided them with continuing education, while only 39% felt that internal training was of use. The number participating in webcasts and reading of professional services newsletters remained about the same as last year at 85%.

12 Types of company plans administered Stock options remain the most prevalent at over 80%, but increases were seen in the percentage of respondents administering Restricted Stock Units (64% this year versus 57% last year) and Performance Share plans (57% this year versus 40% last year) Approximately half are administering a type of employee stock purchase plan, up slightly from 45% last year *Respondents were allowed to select more than one answer.

13 Stock plans still have an international nature Generally, companies are using the same administrator to handle plans in multiple countries (92%).

14 Stock plans are an international challenge In many cases, plans span the globe with 53% operating in at least 21 countries In 2009, that number was 21% About a fifth of companies operate in 5 countries or less

15 Stock plans are an international issue Most companies depend on their single administrator to support all of their plans. Only 8% of respondents hire more than one administrator based on the location of their plan.

16 Organizational home for stock administration A majority of stock plan professionals find themselves in the HR department, with 74% reporting HR as their home department. The next most popular department is Finance (including treasury, accounting and payroll) and Legal (including tax, corporate secretary).

17 Department census The size of the stock plan department ranged from none to 10 or more. The most common number was 2 employees supporting the plans with one person in the department the second most common.

18 Cost of the plan(s) On average, across all respondents (large and small), companies spent an average of $142,348 per year to support their stock plans (double from last year). The largest costs were allocated to paying service providers (administrators) and for professional fees. *In USD, not including salaries.

19 Impact of Issues on Responsibilities The most influential activity to impact the daily life of the stock plan administrator is government regulations and then working with auditors. This year, data quality and data privacy was not among the five most time consuming activities. We are pleased to see that internal politics continues to ranks low in terms of time-consuming activities. Rating Scale of 1 to 5 1 = little to no impact and 5 = significant impact

20 Utilization of time Work unrelated to stock administration took up 31% of people s time.

21 Commercial software licensing 40% of respondents utilize a commercially available software package. We did not include proprietary software owned by administrators (that are unable to be licensed by end users) in our questionnaire. Please note: this should not be considered a market-share survey. *Respondents were allowed to select more than one answer.

22 Little movement to new software platforms 12% of respondents (69 companies) had moved to a new software platform (either purchased or at an administrator). 7 companies who had made a switch reported that they were happy in making the move. Unfortunately the other 62 companies did not respond either yes or no.

23 Participant websites Almost 80% of respondents provide a website in support of their administrative services.

24 Outsourcing prevalence varies 61% of companies surveyed report outsourcing some or all of their stock plan administration programs (an increase from 56.8% in 2009). Larger companies appear more likely to outsource administration, although 36.7% of companies with 1000 employees or less outsource.

25 Types of plan outsourced Of the companies that reported outsourcing one or more plans: 90% identified Stock Options as a plan they outsource Over half identified Restricted Stock Units and Performance Plans The most popular plan to outsource (if you have one) is a SAR plan Of the more prevalent plans, 66% of all companies with a Stock Option plan outsource the administration *Respondents were allowed to select more than one answer.

26 History with Service Provider We found a wide range in terms of the length of the relationship with the providers. 31% have been using their providers between 6 and 10 years, which is a bump from 25% in 2007, and feel this may be explained in the rise of outsourcing over the past 10 years. 58% have what are considered long term relationships (i.e., more than 4 years) (similar to last year).

27 Additional services provided by outsourcing The trend for brokerage firms to provide outsourcing is supported with 90% of respondents reporting that their outsourcer provides brokerage services (similar to past years) 16% reported that their administrator also provides transfer agent/registrar services, a drop from 22% last year

28 Perceived value of outsourcing initiative The most important attribute an administrator can provide is accuracy. Reporting, by comparison, holds the least perceived value to survey participants. *Responses have been ranked from high to low, according to the value of the service provided.

29 Concerns remain about outsourcing Of companies not currently outsourcing stock plan administration services, 26% have considered doing so and 14% will be considering this in the next 12 months. The most common reason companies continue to state why they don t outsource is their fear of losing control of their data (65%). Cost also appears to be an issue, with 59%challenged by the cost. *Respondents were allowed to select more than one answer. Private companies were not included in this analysis.

30 Other interesting results 30% of companies provide communications materials in more than one language 38% of companies allow participants to use more than one broker 15% of companies have their outsource provider run their expensing reports 60% of respondents are not making any changes to their plans or administration as a result of the current economic environment 52% of companies have a 10b5-1 trading program and 63% have stock ownership requirements

31 For more information Carine Schneider Global Shares Kathi Myers Buck Consultants To purchase the final report, interested parties can visit The cost of the report is $175 for companies that did not participate in the survey. For questions, call (U.S.). Outside of the U.S. call A copy of the Executive Summary can be found on the Global Shares website,