Certified Equity Professional Institute

Transcription

1 9 th Annual CEP Symposium March 26, 2013 Certified Equity Professional Institute Straight Talk: Capturing, Calculating, and Creating Compelling Stats Josh Brose Fidelity Investments Wendy Jennings, CEP Riverbed Technology, Inc. Tom Paleka Arthur J. Gallagher & Co.

2 Reporting vs Analytics What s the Difference? Reporting translates data into information to show what is happening 1. What happened? When did it happen? 2. How many? How often? Where? 3. Where exactly is the problem? How do I find the answers? Analytics transforms data into insights to show why something is happening and what you can do about it 1. Why is it happening? What opportunities am I missing? 2. What if these trends continue? 3. What will happen next? How will it affect my business? 4. How do we do things better? -2-

3 This image cannot currently be displayed. Company Background: Arthur J. Gallagher & Co. Simple business model: we sell insurance and adjust claims, without underwriting risk We plan, design, and administer a full array of customized, cost-effective property/casualty insurance and risk management programs. We furnish a broad range of risk management services including claims and information management, risk control consulting and appraisals to help corporations and institutions reduce their cost of risk. We assist clients in all areas of their employee health/welfare and retirement plans, including plan design, funding and administration. Gallagher has operations in 17 countries and offers client-service capabilities in more than 100 countries around the world. Annual Revenue (2012) 2.7B Total Employees ~13,500 Employees Receiving Equity ~350 Stock delivered globally in 6 Countries % US Based 76% % Global (Non-US) 24% Equity Programs: Stock Option/SARs: Restricted Stock Units: Performance Plan: ESPP: Key Statistics Yes Yes Yes Yes -3-

4 Historical Perspective: Unique Issues Shareholder Vote equity authorization request is rejected by stockholders due to high dilution levels. Plans subsequently approved in 2009 and Equity Usage. In response to 2005 rejection, dramatic shift in total shares of equity granted and change in LTI strategy. Number of participants in equity plans reduced, and introduction of some new plans settled in cash but mimicking stock. Careful management of annual burn rate. # of shares 4,000 3,500 3,000 2,500 2,000 1,500 1, Equity Usage Vehicle Mix. Originally vanilla NQSOs and RSUs to performance based plans now big part of overall mix. In addition to corporate-level performance plans, some performance grants at individual level with moderate to high complexity. RSUs Options

5 Reporting Drivers Administrative How are our plans operationally performing? Participant experience Administrator performance Plan mechanics Global compliance Ad-Hoc/ Event Based Scorecards/ Management Reports How should we approach a situation? What are the impacts to our plans? Succession planning Specific employee retention What if? scenarios Event-driven equity treatment Are we accomplishing what we set out to do? Where do we put the next dollar of investment? Plan design, vehicle mix and equity usage metrics Overall employee retention and competitiveness Vehicle performance trends and return on expense Share authorizations -5-

6 This image cannot currently be displayed. Company Background: Riverbed Technology, Inc. Riverbed delivers performance for the globally connected enterprise. With Riverbed, enterprises can successfully and intelligently implement strategic initiatives such as virtualization, consolidation, cloud computing, and disaster recovery without fear of compromising performance. By giving enterprises the platform they need to understand, optimize and consolidate their IT, Riverbed helps enterprises to build a fast, fluid and dynamic IT architecture that aligns with the business needs of the organization. Additional information about Riverbed (NASDAQ: RVBD) is available at Key Statistics Annual Revenue (2012) 837M Total Employees 2,700 Employees Receiving Equity 2,700 Stock delivered globally in 38 Countries % US Based 77% % Global (Non-US) 23% Equity Programs: Stock Options: RSUs: Performance Plan: ESPP: Yes Yes Yes Yes -6-

7 Historical Perspective: Unique Issues Broad-Based Plans Stock Options for New Hires Equity Split Annual Focal Review RSUs Global ESPP 24 Month Offering Executive Performance-Based Plan Tender Offer Repricing in Online Total Rewards Launched New Hire Options Focal RSUs Challenge: Managing broad-based culture vs. global compliance -7-

8 Reporting Drivers Administrative Ad-Hoc/ Event Based Scorecards/ Management Reports Be proactive - based on current climate Is management asking for it? They may ask for one thing but may mean another Can be a combination Upcoming merger either side Assumed stock plan impact Event pro-forma Share pool Funds for tax payment planning Tender offer repricing status Change in stock price volatility We re in the money or we re drowning Option expirations RSU vesting events sale to cover withhold shares Plan pro-forma future growth -8-

9 Reporting Drivers Administrative Foundational Ad-Hoc/ Event Based Customized Scorecards/ Management Reports Consultative Allow Plan Sponsors to see what is happening On-demand access to as-of reporting and transaction history Plan and operational trend and performance analysis Customize reports in terms of criteria, layout and visualization 24x7 access to the What, Where, and When Platform Tailored to a Plan Sponsor s Specific Needs Consulting Services Hypothetical Reporting Custom Reporting Modeling Provide Tools and Services to Answer What-If and Why Facilitate strategic discussions about equity plan design and effectiveness Visual Dashboard Benchmarking Answer Why Participant behavior Advanced Analytics Facilitate consultative plan design reviews -9-

10 Keeping Everything Running Smoothly Administrative Planned events Grant Acceptance Account activations Vesting events Tax reporting Indicative file maintenance Administrator performance Performance against SLAs Ticket management We tend to be very good at these, and they get the focus of our attention -10-

11 Transaction and Customizable Reporting Administrative Screenshots for illustrative purposes only. -11-

12 ESPP Reporting - Sidebar By nature very different Administrative Broad-based benefit different cycle, etc. Impact: Company tracking DD/QD shares and profits Employee Participation rates Churn Limit monitoring Contribution rates Share pool how long will it last? Eliminates surprises i.e. running out of shares -12-

13 Real Time Response to Unplanned Events Ad-Hoc/ Event Based Compensation and Wealth Summary Joanna Kerns Date of Hire: 8/1/1998 Title: Corporate Vice President Executive Team Member Since: 2012 Compensation and Benefits Long-Term Incentive Summary Cash Compensation Long Term Compensation Outstanding as of December 31, 2012 Units At At 40 At 50 Base Salary (at year end) 250, , , ,000 LTIP (Post 2007) Bonus Earned for Period (Cash) 150, , , ,000 Vested Outstanding Stock Options 6, , , ,900 Bonus Earned & Deferred to Future Years - 50, Unvested Outstanding Stock Options 18, , , ,950 Total Bonus Awarded 150, , , ,000 Unvested Restricted Shares 8, , , ,000 Total Cash Subtotal 400, , , ,000 Unvested Performance Units 3, , , ,450 Total LTIP 37,126 1,286,416 1,485,040 1,856,300 Long-Term Incentive Opportunity (Grant Value) Other Equity Awards Economic Value of Stock Option Grant 25,000 25,000 30,000 Vested Outstanding Stock Options 12, , , ,000 Economic Value of Restricted Stock Units 25,000 25,000 30, ,000 Unvested Outstanding Stock Options Economic Value of Perfomance Units at Target 50,000 50,000 60,000 Unvested Restricted Shares ESPP Company Contribution Unvested Restricted Stock Units in Age 62 Plan Economic Value of LTI Subtotal 100, , , ,000 Total Other Equity Awards 12, , , ,000 Unvested Dividends - 25,676 25,676 25,676 1,990,716 2,481,976 Total Value of Unvested/Unexercised Equity 49,126 1,727,892 Benefit Contributions Age 62 Plan Contributions 50,000 50,000 50,000 75,000 Other Equity Holdings Shares Held Outright Retirement Account Contributions 12,250 12,250 12,500 3, , , ,000 - Deferred Income Plan - Restoration 7,750 8,250 12,250 Shares Held Indirectly , ,000 Non-Taxable Benefit Contributions (Company only) 9,520 9,416 9,780 10,004 Total Value of Equity Held 3, ,880 2,118,716 2,641,976 Taxable Cost of Group Insurance, LT Disability 1,215 1,215 1,507 1,626 Total Potential Wealth Based on Equity 52,326 1,838,772 FICA/Medicare 9,715 10,389 10,996 Long-Term Incentive Value Realized Total Annual Benefit Contributions 90,450 91,520 97,033 86,630 Perquisites Auto, Club, Other 5,200 5,200 5,325 Stock Option Exercises (Value Realized) 78, ,756 Total Perquisite Value Subtotal 5,200 5,200 5,325 - Restricted Share Vesting (Value upon Vest) 31,556 24,755 52,948 41,657 37,654 62,006 Performance Unit Payments ,655 Total Annual Compensation and Benefits 595, , , ,630 Total Accumulated Wealth Summary Retirement Summary At At 40 At 50 Retirement Program Balances (end of year) Total Retirement Value 450, , , (k) 110, , ,658 Total Value of Equity Holdings 1,838,772 2,118,716 2,641,976 Supplemental Savings Qualified Plan Total Accumulated Wealth 2,289,516 2,569,460 3,092,720 Total Savings and Thrift 401(k) Plan 110, , ,658 - Supplemental Savings Deferred Income Plan 65,557 80,566 97,884 Compensation upon Termination Age 62 Plan - Cash 3,712 55, ,319 Accelerated Vest and Severance Age 62 Plan - RSUs 75,518 82,417 94,883 Compensation due employee if voluntary termination 564,933 Total Age 62 Plan 79, , ,202 - Compensation due employee if involuntary termination with cause 564,933 Accumulated Pension Value Compensation due employee if involuntary termination without cause 684,889 Total Retirement Value 255, , ,744 - Compensation due employee if terminated as result of Change in Control 888,649 We re forced to get good at these Screenshots for illustrative purposes only. -13-

14 Visual and Hypothetical Reporting Ad-Hoc/ Event Based Customized Screenshots for illustrative purposes only. -14-

15 Delivery of Tools to Support Decision Making Scorecards/ Management Reports This is often an afterthought since we don t have time to do them but can have the biggest impact -15-

16 Improve Plan Design and Performance Scorecards/ Management Reports Consultative Screenshots for illustrative purposes only. -16-

17 Making a Difference Elevate! Everyone wants to get a seat at the table People want more input with management before decisions are made This is how you, in your role, can add value back into your organization opens lines of communication with your management team before decisions are made. Credibility Trust Forward thinking Better use of company resources Employee moral You hear more since you are closer to the trenches -17-

18 How to Make this Happen What are the standard suite of reports/analytics that you need to satisfy management and to help you get a seat at the table? Identify gaps what custom needs do you have? Set a plan for filling those gaps: Improve your skills (Excel, Crystal Reports, OBIEE, etc) Build your own set of reports; or Get outside help (your record keeper, independent consultants, etc) Establish a roadmap and follow-through Generate a suite of management reports every month demonstrate your value! -18-

19 Conclusion: Stats Can Be Your Friend! Active reporting helps to identify problem issues before they get to crisis mode Proactive distribution of information leads to better conversations, and can drive the need for even more analysis (so be prepared!) Decision making tools get you a seat at the discussion, prior to decision Analytics can improve the relationship with your provider -19-

20 Thank You! Josh Brose Fidelity Investments Vice President, Product Process and Delivery Office: Wendy Jennings, CEP Riverbed Technology, Inc. Senior Director, Employee Shareholder Services Office: Tom Paleka Arthur J. Gallagher & Co. Vice President, Global Compensation Office: Riverbed Technology, Inc., Arthur J Gallagher & Co. and Fidelity Investments are not affiliated. Fidelity Stock Plan Services,, LLC