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Should I be administering my own stock plan?

We have a small but growing company. We have an option plan and it takes some time to administer monthly. Not a ton of time, but it's growing. Is there a "best time" to start looking for outside stock plan administration?


Patricia Boepple
Title: SVP Global Client Operations
Company: Global Shares
(SVP Global Client Operations, Global Shares) |

Stock Plans are a complicated area, subject to many rules and regulations and an area full of risk. Questions you should ask yourself:

1) Are you complying with SOX; do you have appropriate controls in place?

2) What technology are you using to manage your stock plan data?
a. Is your data secure?
b. Can it handle your reporting requirements for ASC 718 and the tax reporting requirements for your company and participants?
c. Are you familiar with all the rules and regulations pertaining to stock plans, and do you have the resources to remain current with the constant changes in this area?

3) Are your employees getting the most out of your stock plans?
a. Do they have access to their own stock plan data?
b. Do they have an easy way to access information on your stock plans?
c. Do they understand the value of their stock awards?

Usually the sooner you start looking for an outside stock plan administrator, the better. If you outsource the administration to the right provider, you will have the benefit of experts in this field.

Keith Taylor
Title: CFO
Company: Lyris, Inc.
(CFO, Lyris, Inc.) |

Choose a group such as Global Shares*, a SAS70 Type 2 ready report Administrator that uses EASi and other top web-enabled applications that reduce your time to close, valuation analysis, reduce audit fees, improve employee relations, and on and on, and cost effectively, especially if you're growing and have any complexity on the horizon (i.e., international growth, special stock types such as RSUs, etc.)

Full disclosure -- I have used EASi, eProsper, and Equity Edge inhouse, but in the past 4+ years have hired Global Shares at Magellan Navigation (very complex international issues), Exigen Capital (for all of our portfolio companies, from 10 to 500 employees), and now at Lyris.

Achaessa James
Title: Product Manager
Company: National Center for Employee Ownership
(Product Manager, National Center for Employee Ownership) |

Trish and Keith are both right on in their assessments (disclaimer - I know them both) and I can only add that no matter whether you choose to use an outsourcing service or an independent consultant, the person(s) administering your equity compensation plan should be a CEP - Certified Equity Professional - through the Certified Equity Professional Institute, Leavey School of Business, Santa Clara University. This is the only recognized professional certification for equity compensation administrators and when you consider that equity comp administrators need to understand the implications of securities laws, tax regulations, accounting practice, and myriad other analytical and technical aspects of this highly regulated industry, you'll understand why that level of education and expertise is key to keeping your plan compliant and your company out of harm's way.

The National Center for Employee Ownership is publishing a book entitled "If I'd Only Known That!" in July which is a compilation of horror stories depicting what happened when plans were mismanaged. I suggest you read that book before you decide to DIY.


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