Transcript No Slide Title

Global Equity Compensation Forum
Issues for Companies with a Mid-Size to Large Employee Base
Cisco Systems
A Case Study
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Stock Admin Department
Organization Chart
Dennis Powell
VP and Corporate Controller
Si White
Director, Employee Services
Levent Arabaci
Senior Manager
Jean Chun
Manager
ESPP, Daily Trx
Denise Luis
Stock Administrator
Daily Trades, Section 16
Mai Ho
Temp
Employee Communication
Roxanne Povio
Stock Administrator
International SO & ESPP
Mike Hom
Contractor
Special Projects
Kathy Zwern
Stock Administrator
Acquisitions
John Lam
Stock Administrator
Acquisitions
Jean Wong
Program Manager
Acquisitions
Colleen Ladesma
Stock Administrator
Data Analysis, System Maint.
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Option Grant Activity
International
90,000
20
80,000
New Grants
SA Staff
70,000
60,000
15
50,000
10
40,000
30,000
5
20,000
10,000
Domestic
•All Employees Eligible (38,000 Current)
0 •75% Domestic 25% International
95
96
97
98
99
00
01
•71 International Countries
•All New Hires Receive Grant
•Annual Grant Program
•Promotional Grant Program
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Option Exercise Activity
SDS/Cash
20 Cash*
45,000
40,000
Exercises
SA Staff
35,000
30,000
15
SDS
25,000
Exercise Type
10
20,000
15,000
5
10,000
CSR
5,000
-
0
95
96
97
98
99
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01
Web
Order Instructions
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Acquisition Activity
30
20
25
Acquisitions
SA Staff
20
15
15
10
10
5
5
-
0
93
94
95
96
97
98
99
00
01
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ESPP Enrollment Activity
Not Enrolled 18%
U.S. 78%
Intl 22%
51 Countries
Enrolled 81%
Participation Rate
Geographic Location
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Cisco’s International
Dynamics
Cisco:
• Has employees in 70+ countries
• Offers grants to all full-time employees, with 25+
specialized grant agreements
• Offers ESPP to all full-time employees, with 10
specialized enrollment agreements in all countries
except China, Russia, Ukraine, and Vietnam
• Withholds flat tax and more complicated date and
vesting template driven withholding for 10
countries
• Withholds varying levels of taxes for 450+
International Assignees
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International Challenges
• Belgium:
- 65%, or 2 out of 3 employees in Belgium declined their
Ongoing Grant in 2000
- 60-day acceptance window poses automation challenges
- Dexia loan facility
• China:
- Bonus Rights type program
- Like to begin offer ESPP Bonus program
• France:
- Tracking nightmare
- New tracking and broker facility
• Israel:
- Special broker facilities in place now
- What we hope to accomplish in the future
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International Challenges
• Netherlands:
- Three different tax schemes – grant, vest and exercise
• Russia:
- New tax regime and how we hope to use it
• UK & Scotland
- Approved Plan Scheme grants given to all our employees up
to the maximum allowable in 2000
- All Approved Scheme grants are priced at $50 and are
underwater – what do we do now?
• IA’s:
- Hypo tax and how we withhold
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Systems
Stock Administration Department
SABRINA
• Stock Option Exercises
• Restricted Stock
issuances
• Repurchases
GOAL
• Electronic Acceptance
and Confirmation of
Stock Option Agreement
• On-Line Grant Agreement
GAP
• Automated Stock Options
grant feed between People
Soft and Equity Edge
• Automated recon between
two systems
SPA
• Reporting
• Enrollment
• Disposition
• Contribution
• Controls over grant initiation
Web Reporting
GREEN
Interfaces
• Immediate access
• Stock Option Expiration
• Payroll
• World wide reporting
capability to Finance
managers
• 30 Days
• Brokers
• 15 Days
• People Soft
• 5 Days
• Oracle GL
• Daily Thereafter
• Between SA Systems
• Employee Stock Option and
ESPP information
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Systems
SABRINA (Options)
SPA (ESPP)
• Withholds tax at
exercise in complex
situations based on
programmed
requirements
• Combines contribution
and distribution
information for 50+
countries into one file
• Withholds hypo tax for
IA’s from E&Y file
• Automated journal
entries for subs we
withhold for
• Converts all local
currency into USD
using period end G/L
rates
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SABRINA
(Stock Admin Broker Interface Agent)
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SPA
(Stock Purchase Agent)
Impact on Productivity:
2001 Benchmarking
4,500
4,000
(ESPP Account Per SA EE)
•
Web Based reporting for enrollments, withdrawals and changes,
contributions, refunds, and purchase data.
•
Reports available on line 24/7 on a real time basis.
2,000
1,500
1,000
•
Automated journal entries.
•
Notification of transfers for employees.
500
-
•
Automatic feed of contributions into SA systems.
•
ESPP purchase will be as simple as pushing the purchase button
•
A true end to end solution (Enrollment, Contribution, Purchase,
Disposition, Reporting).
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3,500
3,000
2,500
Oracle
Stock Admin Web-site
• Initial ESPP Enrollment
• Changes to Enrollment
Payroll Dept
• ESPP Summary Reports
Stock Admin
Equity Edge
• Maintain participant record
• Proc Contribution File
Employees
• Proc Transfer Agent File
• Proc Tax Dept File
Stock Purcha se
Agent (SPA)
Payroll Dept
• Proc Enrollment Files
• Create Contribution File
• Identify Residual Refunds
• Identify Multiple Contributions
Payroll Dept
On-line Brokerage Account
Peoplesoft
$
Broker
Transfers, LOA,
& Terminations
Accounting
Broker
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Internet-Based Stock Administration
Three year productivity gain = 263%
Cisco Employee Connection
View ESPP Purchases / Dispositions
View Stock Option Information
On-line Trading w/Preferred Brokers
On-line S.O. Agreements/ Acceptance
Brokers
On-line ESPP Sales by Purchase Lot
View Stock Option Confirmations
Employees
On-Line ESPP Disposition Reports
SABRINA
New Stock Administration Web-Site
Financial Reporting on the Web
Fin Mgrs
E-Mail Notifications to Employees
Confirming Exercise of Options
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On-Line Stock Admin
Stock Admin Portal
•Grant and exercise info.
•ESPP purchase and
sale info.
•OnLine Trading
Stock Admin
Self Service FAQ's
OnLine Brokerage
Salomon Smith Barney
UBS Paine Webber
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