So all the key players are in place – you’ve got liaisons from the board, HR, accounting, your company’s CFO, and the plan administrator. Everybody understands what they need to do to make equity compensation one of the most valuable and versatile benefits for your employees.

And you’re acutely aware that there are so many moving parts. How do you manage all that information and activity? How can you ensure plan compliance on all levels? Just like any other activity, you need to have the right equipment for the job.

Evolving Regulations, Evolving Technology

There will be some of you administering your plans (or having your plans administered) on a spreadsheet. (Cover your ears while I scream.) As much as I personally love spreadsheets, it simply cannot meet all of the needs of your team and it will never be able to provide the level of financial analysis required by Internal Revenue Code ASC 718, nor will it ever meet your IT department’s data security requirements, or an auditor’s internal control requirements.

There are technology platforms designed especially for administering capitalization tables and equity compensation plans designed by industry experts that keep on top of ever-changing regulations, laws and requirements. And just like the firm that comes into your company and designs workstations that they will never work in for a job that they have never done (and I know you know what I’m talking about), sometimes those platforms simply don’t meet the needs of the people and functions they are installed to serve. Sounds familiar, right?

Essentials, Bells, Whistles…and a Cherry on the Top

In order to get a technology that serves your company’s needs, those needs must first be determined. Here are the first line questions for vetting possible solutions:

Does the program ensure compliance with the most important regulatory requirements? This would seem like an unnecessary question to ask but some platforms are designed by accountants, so they focus on accounting requirements, and some were designed for use by law firms so they focus on securities laws compliance. Make sure that the platform you choose meets all the basic compliance requirements applicable to your company.

What is my company’s timeline for having publicly traded stock? This is important because some programs are designed to easily plug in the functions unique to publicly traded company stock, like having a broker interface and generating narrative and tabular disclosures for SEC filings…and some are not. If your company is likely to go public or be acquired by a public company within the next two years, you’ll want to select a full spectrum platform in order to avoid the stress and expense of doing a data migration to a new technology right before the IPO.

Program or platform? The initial administration technology offered was computer-based and usually resided on the administrator’s desk. Then multi-person teams required the programs to reside on a company’s main server to provide multiple-user access. The rapid evolution of applicable laws and regulations quickly made these programs out of date. Best practice has inspired cloud-based technology which is accessible to any authorized user from any location at any time, is backed-up real time, and is continually updated as laws and regulations change.

Other important questions will include licensing fees and user fees, what reports each of your stakeholders need, whether a participant interface is available for award recipients, database audit trails. The “Private Company Equity Compensation Administration Toolkit” published by the National Center for Employee Ownership has a digital Technology Assessment Checklist that is a comprehensive worksheet to help you decide what features are essential for your company and which features would be the cherry on top.

Next month we’ll talk about working with outside administrators in Admin Super Powers.

Thanks for reading my Admin Super Powers blog series on stock and option plan administration. I’m coming to IAAP Summit 2016 in Hollywood, FL this July. It would be great to meet all of you! 

My company would like to know the equity plan administration needs and wants of conference participants. Please complete this 3-question survey to help me get a general idea. Your answers are very much appreciated. See you at the Learning Table sessions at IAAP Summit!

CLICK HERE TO TAKE THE SURVEY

Achaessa James has worked in equity compensation since 1999 in the legal, venture capital, and equity administration outsourcing fields. She is a senior Equity Compensation Consultant with Stock & Option Solutions where she supports clients with system implementations, data migrations, corporate governance audits, corporate transaction preparation, and special project design and implementation.   She is also the consulting Equity Compensation Product Manager for the National Center for Employee Ownership where she manages the highly regarded twice-yearly CEP Exam Prep Course, and serves as the NCEO’s subject matter expert on equity compensation.

Achaessa’s focus on privately held companies has earned her a deep expertise in pre-IPO and M&A equity planning and audits, and best practices in administration and technology. She speaks on these topics at industry conferences and in webcasts, and is a published author with books including “If I’d Only Known That!”, and “The Private Company Equity Compensation Administration Toolkit” as well as many newsletter articles in industry publications. You can connect with Achaessa on LinkedIn.