2015 Equity Compensation Year-End Checklist

Transcription

1 2015 Equity Compensation Year-End Checklist US Public Companies

2 2015 Equity Compensation Year-End Checklist US Public Companies At the end of your company s fiscal year, you will need to run several reports and internal processes to provide annual financial information to your internal stakeholders, Board of Directors, the SEC and your participants. Solium has developed this checklist to help you identify these processes. The exact steps and the order in which they ought to be completed will vary from company to company the following is a guideline only. Task Recommended target date Completion date Status 1 Contact payroll and finance departments to establish deadlines. 2 Prepare and distribute disposition surveys related to ISOs and tax-qualified ESPPs. Coordinate return of surveys to allow ample time to enter disposition information into the system before internal deadlines. 1 to 2 months prior to July and December Note: A disqualifying disposition survey requests information from participants pertaining to the sale of stock acquired through your company s 423 and ISO plans within the IRS holding period. 3 Prepare and send Officer and Director questionnaires for missing or delinquent transactions for proxy statement reporting and Form 5 purposes. Include a Statement of Holdings and their last filed Form 4 for each participant to assist them with completing the questionnaire. 4 Contact HR and payroll departments to ensure all new hires, leaves of absence and terminations have been accurately reported. 5 Contact your company s approved brokers (as applicable) to ensure all exercises, sales and dispositions have been properly reported. If not feasible, consider contacting the brokers of your Section 16 reporting officers to confirm all Form 5 reportable transactions have been completed.. Follow up daily until. 6 Verify payroll department has been notified of all employee 83 (b) elections. 7 Verify payroll department has been notified of all employee retirement eligibility tax events. 2

3 8 Enter all dispositions received from tax-qualified ESPP and ISO surveys. 9 Provide cost basis reports to brokers, transfer agents and participants. For further information about cost basis, please refer to the IRS website. 10 Prior to running reports, ensure the following are all up to date Participants Grants Exercises/releases Performance payouts Terminations Cancellations ESPP purchases/sales 11 Provide finance with reconciled fourth quarter and yearly stock grant reports. Note: You may want to run test reports one month prior to allow ample time to fix any data issues 12 Provide finance and payroll with ESPP and ISO disqualifying disposition reports for W-2, 1099 and tax credit purposes. 13 Social Security and Medicare Update Federal, State, and FICA (i.e. Social Security and Medicare) taxes to reflect changes to rates, yearly limits, rounding and other requirements. Check the Social Security website for the details on the 2016 requirements. For information regarding the Additional Medicare Tax, visit the IRS website. 14 If necessary, update local withholding and wage limits to reflect changes to rates, yearly limits or caps, as well as rounding and other requirements. 1 to 2 days prior to internal finance and payroll deadlines Early January (Much of this should be done throughout the year as transactions occur) Prior to running (period end) reports Run test one month prior to internal payroll and finance deadlines. Day of internal payroll and finance deadlines January 1 or 2 January 1 or 2, and throughout the year as necessary 3

4 15 If necessary, change tax codes and employee status for deceased employees to ensure they are properly reported for tax and reporting purposes. In addition, report special transactions to payroll such as those related to death and divorce. January 1 or 2 Note: Post-exercise rules differ for ISO, ESPP and NQOs. Wages from an NQO exercise must be reported on Form 1099-MISC but are not subject to tax withholding. FICA/FUTA withholding is required only if the exercise occurs in the same calendar year as the employee s death. ISO rules are more complex and your tax advisors should be consulted to determine the proper tax and reporting procedures. 16 Review and update the SEC transaction fee, if your January 1 or 2 vendor doesn t provide this for you. 17 Validate shares authorized for each plan. January 1 or 2 18 Review your insider trading policy and gather blackout information for the upcoming year from the finance or legal department. Determine if trading window(s) need to be created for Officers separately from other participants. Early January 19 Check internal controls and statements that are in place for compliance with the Sarbanes-Oxley Act of Include SSAE 16 (formerly SAS 70) audit reports as necessary. 20 Update shares allocated for plans with evergreen provisions (automatic yearly increases to plan allocations). 21 Generate and mail 6039 Statements for ISO exercises (Form 3921) and ESPP (Form 3922) shares that have been transferred during the past year. Both participants and the IRS require these forms. 22 If necessary, prepare Form 5s, distribute for insider review,and file with the SEC. 23 Communicate to employees regarding upcoming stock-based compensation expirations (typically in the next 3 to 6 months). 24 Request and reconcile tax payment selections made for restricted grants, if applicable. 25 Reconsider who has access to your equity compensation system, and the extent to which their permissions extend. For example, does finance need unlimited access or should their permissions be limited to certain reports? Early January Early January (prior to issuing grants in new year) No later than January 31 for participant statements. The IRS filing deadlines vary depending on delivery method (electronic or paper). February 14, or voluntarily on a Form 4 throughout the year. Ongoing Prior to upcoming lapses as appropriate throughout the year Annually, at a minimum, ideally, every quarter 4

5 26 Prepare and mail statements to participants. Include terminated participants who had transactions during the past year. 27 Other general items to consider as part of the process Review internal timeline for report production and distribution Report non-employee transactions for inclusion on 1099s Review equity compensation sections of 10Q and 10K Comply with any overseas reporting deadlines Report information for expatriates to expatriate coordinator Update EDGAR password expirations annually Review Powers of Attorney for Section 16 insiders Review Section 16 filings and insider holdings Review insider trading policy Remember to communicate as needed with Broker(s) Transfer agent Legal counsel Auditors No later than January 31 Shareworks brings all the elements of equity plan management together - in one place, in one database and in one fully integrated, cloud-based solution. We take the complexity out of equity management so you can control your plan, collaborate with teams, make more informed decisions and engage employees as never before. Whether it s preparing for or every day plan management, request a product demonstration and begin to see what the most powerful equity management software can do to simplify your world. Contact us to request a product tour today! solutions@solium.com 5

6 About Solium Since 1999, Solium (TSX: SUM) has been helping companies decomplexify their equity compensation plans. Our software, Solium Shareworks, brings all the key elements of equity compensation administration together in one powerful cloud-based solution. Now you can collaborate, share, comply, model, support decisions, create reports and control your plan more simply, securely and brilliantly. Solium has offices in the North America, UK & EMEA and Asia Pacific. The information provided here does not constitute professional advice. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; applications of the princples set out will depend on the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Solium Capital Inc. would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Solium Capital Inc. accepts no duty of care or liability for any loss occasioned to any person acting or refraining from acting as a result of any material in this publication. solutions@solium.com solium.com Solium Capital All rights reserved. Solium, Shareworks and the Solium logo are trademarks or registered trademarks of Solium Capital in the US and/or other countries.