The third ESPP Day, held in Boston, MA on May 16, 2019, was presented to a sold-out room of 50+ attendees. Industry experts shared their insights on topics ranging from ESPP Fundamentals to design considerations, expensing ESPPs, employee communications and more.
The last session of the day was a roundtable discussion. Facilitated by Robyn Shutak, Computershare's Equity Advisory Services Practice Leader, attendees posed and discussed several questions surrounding best practices of administrative and participant ESPP topics. Below is a roundup of that discussion.
ESPP Day Boston – Roundtable Roundup
Blackouts within ESPP defined window periods
There was a discussion about whether blackout windows for insiders ever caused companies to change grant or purchase dates for ESPPs. Although blackout periods can affect when employees can sell or transfer ESPP shares, we have not seen any clients make changes to their enrollment, contribution, or purchase dates. From a legal perspective, our understanding is that the purchase of shares under an ESPP is not likely to pose any risk of an insider trading or 10b5-1 concern under US laws, at least where the shares are acquired from the issuer and not on the open market. As a disclaimer, all plan rules are subject to legal interpretation by your own internal counsel. For more information, check out the quick survey published by the National Association of Stock plan Professionals (NASPP) in 2013 on ESPP Administrative Best Practices. Question number seven addresses scheduled purchase dates and blackout period.
Implementation Timeline
The question was asked what is the typical timeframe that we see for an implementation. As a rule of thumb, once the start of the contribution period is defined, you should count back three to four months for a full implementation. There are several factors that can affect the length of an implementation—company culture and overall resources being the biggest factors from the client side. It was noted that you can start to discuss implementation prior to receiving either board or shareholder approval for the plan.
Foreign Currency exchange rates
For ESPPs with international participants, when does the currency conversion occur? The consensus was that the best option was to convert the currency only once at the time of purchase. This is generally easier to administer and explain to employees rather than converting local currency deductions into US dollars, either at every pay period or, on a monthly basis.