G5 - Workshop: Restricted Stock Releases for Public Companies - Solium
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G5 - Workshop: Restricted Stock Releases for Public Companies
May 24, 2019 9:30 – 10:45 a.m.
Diane Atteberry, CEP, Senior Relationship Manager, Core Market Joshua McCabe, Client Service Manager, US Public Core Market
Martha Scott, Product and Services Consultant Max McCoy, Client Service Manager, US Public Core Market
Solium Capital Inc. is a wholly owned subsidiary of Morgan Stanley
CPE Credits
Continuing Professional Education (CPE)
• Credits are available!
• You will receive one (1) CPE credit after attending this session.
• You must attend the entire session to be eligible.
• In order to earn the available credit(s) for this session, you must see the session
host before and after the session to get checked-in and out of the session.
• Electronic certificates will be emailed to you a few weeks after the conference
with the cumulative number of credits earned
Shareworks by Morgan Stanley is registered with the National Association of
State Boards of Accountancy (NASBA) as a sponsor of continuing
professional education on the National Registry of CPE Sponsors. Web site:
www.nasba.org
Agenda • Preview Learning Activities • Overview of the Release Cycle • Release-Related Reporting • Pre-Release Preparation • Learning Activities • Post-Release Activities: Admin + Participant • Tips and Recommendations • Questions
Learning Activities 1) Setting up a release event and election window 2) Preparing for an upcoming release/vesting 3) Processing a release in Shareworks
The Release Cycle • Requires coordination with your company, brokers, transfer agents, and the participant • Choices available to the participant for release and delivery methods are based on the your company’s plan document • When share units are vested, they are available per instruction from the your company
Release Methods • No taxes or fees withheld, receive all shares • Sell all shares, use proceeds to cover taxes and fees, receive balance as cash • Sell enough shares to cover taxes and fees, receive balance as shares • Pay for taxes and fees separately, receive all shares • Withhold shares to cover taxes, sell remaining shares, use proceeds to cover fees, receive balance as cash • Withhold shares to cover taxes, pay for fees separately, receive remaining shares
Delivery Methods • Cash delivery • ACH • Wire to bank account • Send funds to mailing address • Share delivery • Share Purchase and Holdings • DRS • Electronic share transfer
Pre-Release Preparation – For Participants • Review all internal communications pertaining to the vesting • Reminder of taxable event • Notifications from Shareworks • Login to Shareworks • Activate account • Accept online grant agreements • Enter brokerage and banking information • Make release elections • Release method to cover tax payment • Delivery method
Release-Related Reporting
• Payroll Pre-Release Report
• Main source of information for payroll teams
regarding full-value award releases
• Includes the following information:
• Participants
• Taxable compensation
• Employee groups
• Release methods
• Delivery methods
• Tax withholding
• Share amounts
• Release Election Report
• Previews elections made by participants for tax
payment and delivery methodsRelease-Related Reporting
• Payroll Release Report
• Final report used to report W2 information after
release is processed
• Transfer Agent Letter (Release)
• This report should be generated at the end of day
on the release date (after your release has been
processed)
• Direction letter for the transfer agent and broker
regarding the released sharesActivity #1 - Setting up Release Event and Election Window Let’s create a Release Event for a grant vesting in about a week. Grant: 5/31/2018 Grant Next, we need to set up an Election Window for this grant, so participants can elect their tax withholding and delivery methods. Once these items are created, we can move to Activity # 2.
Activity #2: Running a Pre-Release Report A release event and election window have been created for our grant. The grant vests next week, so we need to complete the preparation work to ensure a successful release. We’ve just loaded a YTD tax file, so it’s time to start our review. Grant: 5/31/2018 Grant Run the Pre-Release Report using an estimated Fair Market Value of $19.15 to verify your data. Let’s confirm the data for the upcoming release is correct.
Running a Pre-Release Report
• Focus on these report columns:
• Grant name, award type, grant date, release event reference number, release
reference number, release date, release price, sale price (if applicable), release
and delivery methods
• During the review, you should consider the following:
• Included participants
• Release and Delivery methods
• Taxable Compensation
• Taxes (Federal, State, Local, FICA, Medicare, etc.)
• Where are the shares going at vest?
• Are there terminated participants included?
• Do you have BOD’s who have taxes withheld?
• Are there insiders who will need Form 4’s filed?
• Employee Group carveouts?Running a Pre-Release Report Inform your CSM or make necessary changes within the platform if you have to change something Repeat until you are comfortable with the details in the report
Activity #3: Processing a Release This is a busy month, and there is a 2nd grant for which we need to process a release. Luckily, we spent the last week ensuring all pre-release data is correct (like in Activity #2), so we should be good to go! Grant: 5/24/2016 The market just closed and our Fair Market Value for this release is $20.19 Let’s process this release!
Other Ways to Process Releases
• Historical Releases
• Releases processed outside of Shareworks that
need to be recorded
• Entered manually or imported
• What impacts do you see if you process
historically vs. live?
• Reporting?
• Share / Money movement
• Deferred Share releases
• Note internal tracking of deferralsWhat Happens After You Process a Release? • Communication to Transfer Agent and Broker(s) • Treasury Letters and Reconciliation • Paying for taxes / fees separately • When do you expect those funds and how? • Sell order considerations • 144 Filers? • Section 16 Insiders? • Payroll Release Report • W2 reporting for payroll
Post-Release Activities - Participants
• Review release details in Shareworks
• Details of vesting / release are available in Shareworks and via participant
statement
• Gain details
• Tax details
• Share movement
• Solium holdings account
• If shares are sent to an outside broker, participants must notify their broker to pick
up the shares via DWAC
• Transact from holdings account
• Sell shares
• Transfer shares
• Be aware of any tax forms they’ll receive in the following Q1 for salesTips and Recommendations Prepare, Prepare, Prepare! Communicate the process clearly to your participants • Pre- and post-release actions • Participant Services Group readiness Let Shareworks do the heavy lifting • Understand the reports you need and why • We are here to help!
Tips and Recommendations Administrative Items • Work closely with your Client Service Manager • Communicate internally with your teams ahead of time • Who are your key players in the process? • Tax • Payroll • Finance • Legal • HR • Understand how Solium fits into your internal processes and timelines for processing
Tips and Recommendations
• What are the most common errors we see?
• Taxes!
• Election methods – late changes or default elections
• Demographic information
• Terminated employees
• Incorrect employee groups
• Late Form Filings
• Form 4’s
• Form 144’s for sales
• Delayed instruction to transfer agents or brokers
• Reconciliation issues
• Participants calling you instead of utilizing PSG (chat, email, phone)Questions?
Additional Resources
Need more?
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Contact Us Diane Atteberry, CEP Joshua McCabe Senior Relationship Manager Client Service Manager Shareworks by Morgan Stanley Shareworks by Morgan Stanley diane.atteberry@solium.com support@solium.com Martha Scott Max McCoy Project Specialist Client Service Manager Shareworks by Morgan Stanley Shareworks by Morgan Stanley martha.scott@solium.com support@solium.com
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