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NASPP – July 9, 2008
Stock Plan Administration:
Where do we go from here?
Michael Bendorf – Principal, Buck Consultants
Robin Silke – Manager, Global Shares
About the Survey
• In February, 2008, Global Shares and Buck conducted
their second annual survey of Stock Plan Administrators
• Responses from 325 companies from 11 countries
• 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 (2008 Buck Consultants Global
Long-Term Incentive Practices Survey)
Survey represents a diversity of organizations…
Organizational Status
Industry
9%
28%
31%
91%
Public
Private
17%
11%
13%
Revenue Range
10%
23%
28%
$10 bn +
$3 - $10 bn
18%
$1 - $3 bn
$100 - $1,000 mm
21%
Less than $100 mm
Technology
Manufacturing
Financial Services
Life Sciences
Other
…and people
Respondents by Title
11%
14%
Seni or Management
Dir ector
Manager/Sr . Manager
Adm inisrator
Anal yst/ Speciali st
Other
35%
20%
18%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
[ essential intelligence ]
The Results
Administrators came from various backgrounds
• Human Resources provides
the most common career
path for stock plan
professionals
• 16% of stock plan
administrators started their
careers specifically as stock
plan professionals
Path Followed into Current Position
6%
6%
9%
37%
16%
27%
Human Resources
Legal
Finance
Administration
Direct Entry
Other
Educational experience
• Almost 30% of respondents
have a graduate degree
• 91% of respondents have a
minimum of a 2 year college
degree
Educational Experience
9%
10%
29%
51%
Advanced Degree
Community College
Bachelors Degree
High School
Professional certifications are also common
• Almost half of survey respondents report having some
certification or other professional qualification
Prevalence of Certifications/Professional Qualifications
40%
25%
12%
8%
8%
Certified Equity CEP Exam LevelCEP Exam Level
Certified
Professional
II
I
Compensation
Professional
11%
6%
PHR/SPHR
Other
Certification
Professional
Qualification
Continuing Education
• Respondents take ongoing education seriously, with 96%
indicating they regularly participated in educational activities
• 79% participated in at least one annual conference in the past
year
–
–
–
–
–
NASPP - 72.7%
E*Trade - 28.2%
WorldatWork - 25.7%
CEP Symposium - 15.1%
GEO Annual Conference - 14.3%
• 55% also participated in at least one local chapter meeting
– NASPP - 81.0%
– E*Trade User Group - 26.8%
– GEO - 14.4%
Other forms of education are less formal
Other Sources of Continuing Education
87.7%
68.6%
63.7%
56.2%
35.1%
Inf ormal Netw orking
Internal Training
Legal Advisor
Consulting Advisor
New sletters
Accounting Advisor
Types of company plans administered
• Stock options are still the most popular, but more than
half of the respondents are responsible for administering
restricted stock plans.
• Additionally, more than half still administer a type of
purchase plan (which can include ESPP, SAYE, SIP, etc.)
Prevalence of Equity Plan Type
95%
54%
59%
54%
50%
41%
23%
Stock Options
SARs
Restricted Stock Restricted Stock PerformanceUnits
based Plans
Stock Purchase Outside Director
Plans
Plans
Stock plans still have an international nature
• 71% of respondents are responsible for plans operating in
multiple countries
– Technology - 91%
– Manufacturing - 86%
– Services & Life Sciences - 81%
• 35% operate plans in more than 15 countries
• Only 8% of companies with international plans use different
administrators outside of their home country
Organizational home for stock administration
• A majority of stock plan
professionals find themselves
in the HR department, with
over half reporting HR as
their home department
• The next most popular
department is Finance
(including treasury,
accounting and payroll) and
Legal (including corporate
secretary)
Responsibility for Admin Function
8%
11%
52%
29%
Human Resources Finance Legal
Other
Department census
• The size of the stock plan
department ranged from one
to 10 or more
• The most common number
was one employee
supporting the plans (52%)
with two-three persons in
the department the second
most common
Number of People in Admin Function
52%
One
22%
2 to 3
13%
4 to 5
6 to 10
10+
9%
4%
Cost of the plan(s)
• On average, across all
respondents (large and
small), companies spent an
average of $213,565 to
support their stock plans.
• Over half that amount went
to paying service providers
(administrators)
Share of Total Cost of Plan
3%
20%
56%
13%
8%
Service Providers
Systems/Technology
Training
Communications
Professional Fees
Cost of the plan(s)
•
•
Average cost per plan participant across all companies was $28.32
Evidence that economies of scale have tremendous impact on per
participant cost
Average Cost per Participant by Employee Population
$250
$200
Training
Professional Fees
$150
Systems
C ommunication
$100
Service Providers
$50
$0
50,000+
20-50,000
10-20,000
5-10,000
1-5,000
<1,000
Impact of Issues on Responsibilities
• The most influential activity to impact the daily life of the stock
plan administrator is management reporting, followed closely by
monitoring government regulations
• We are pleased to see that internal politics ranks low in terms of
time-consuming activities.
High Impact Activities
Low Impact Activities
1
Management Reporting
5
Changing Jobs
2
Government Regulations
4
Internal Investigations
3
Internal/External Auditors
3
Internal Politics
4
Participant Education
2
Budget Justification
5
Employee Satisfaction
1
Employee Turnover in Dept.
Utilization of time
• We were surprised to see that work unrelated to stock
administration took up 35% of people’s time. When asked what
that time was spent on, it related either to plan
design/participation selection or unrelated activities.
• Unfortunately, twice as much time is spent on reporting (22%)
than on training and communication (11%).
Commercial software licensing
• 58% of respondents utilize a commercially available software
package, regardless of whether they outsource or not.
• We did not include proprietary software owned by
administrators (that were unable to be licensed by end users) in
our questionnaire.
Most Popular Software Packages
77%
12%
Equity Edge
Transcentive
6%
6%
EASi
Other
Little movement to new software platforms
• 10% of respondents had moved to a new software
platform (either purchased or at an administrator)
• 15% were not convinced it had been a good idea,
although 85% felt it had been worth the effort
Participant websites
• Over 80% of respondents
provide a website in support
of their administrative
services
• Customized company
websites are most prevalent
in technology industries
• Broker-provided websites are
most prevalent in hospitality
and retail/wholesale
Source of Equity Participant Websites
19%
9%
51%
21%
Broker Website
Custom Website
Software Provider Website
No Website
Outsourcing prevalence varies
• 52% of companies surveyed report outsourcing some or
all of their stock plan administration programs
• Larger companies appear more likely to outsource
administration
Outsourcing Prevalence by Company Revenue
78.9%
68.2%
52.8%
43.7%
12.5%
$10 billion +
$3 - $10 billion
$1 - $3 billion
$100 million - $1 billion
< $100 million
Types of plan outsourced
• 17% of respondents have outsourced all their equity plans
• Larger plans (e.g., Stock Options, Purchase Plans) appear
to be outsourced more frequently than smaller plans
Percent of Equity Plan Types Outsourced
46%
32%
40%
46%
43%
32%
21%
Stock Options
SARs
Restricted StockRestricted Stock
Units
Performance- Stock Purchase Outside Director
based Plans
Plans
Plans
History with Service Provider
• We found a wide range in
terms of the length of the
relationship with the
providers
• We did find a bump in the
number of companies using
their providers between 2
and 10 years and feel this
may be explained in the rise
of outsourcing over the past
10 years
• 45% have what are
considered long term
relationships (i.e., more than
4 years)
Number of Years with
Current Service Provider
25%
One
30%
2 to 3
18%
4 to 5
22%
6 to 10
10+
5%
Additional services provided by outsourcing
• The trend for brokerage firms to provide outsourcing is
supported with 92% of respondents reporting that their
outsourcer provides brokerage services
• Only 11% reported that their administrator also provides
transfer agent/registrar services
Perceived value of outsourcing initiative
• The most important attribute an administrator can provide is
accuracy. Surprisingly, reporting was seen, by comparison, to
have the least value to survey participants.
Level of Satisfaction with Service Deliverables
Accuracy
Customer Service for Participants
Administration
Timeliness
Customer Service for Company
Reporting
Losing control of data is still a major issue
• Of companies not currently outsourcing stock plan
administration services, 1/3rd report considering doing so.
However the most common reason companies don’t is their fear
of losing control of their data. Pricing also appears to be an
issue, with 38% challenged by the cost.
Reasons for Not Outsourcing
59%
38%
36%
6%
Data Control
Price
Impact on Workload
Past Experience
13%
Other
NASPP – July 9, 2008
Stock Plan Administration:
Where do we go from here?
Michael Bendorf – Principal, Buck Consultants
Robin Silke – Manager, Global Shares