Today is the second day of our “2022 Proxy Disclosure Conference” – tomorrow is our “19th Annual Executive Compensation Conference.” Here’s more info:
– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Proxy Disclosure/Exec Comp” tab to see the agendas for each day, enter sessions, and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone. Here’s today’s agenda.
If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).
– How to View Archives & Transcripts: Members of TheCorporateCounsel.net or CompensationStandards.com who register for the Conferences will be able to access the conference archives on these sites using their existing login credentials beginning about a week after the event, and unedited transcripts will be available to these members on TheCorporateCounsel.net and CompensationStandards.com beginning about 2-3 weeks after the event. If you’ve registered for the conferences through CCRcorp but are not a member, we will send login information to access the conference footage and transcripts on TheCorporateCounsel.net or CompensationStandards.com.
If you registered for the conferences through NASPP, you will receive access to the video archives from NASPP.
– How to Earn CLE Online: We are applying for up to 15 hours of CLE credit for the Proxy Disclosure & Executive Compensation Conferences in applicable states – approvals of actual credit vary based on each state. Please read these “CLE FAQs” carefully to confirm that your jurisdiction allows CLE credit for online programs. You will need to respond to periodic prompts every 15-20 minutes during the conference to attest that you are present. After the conference, you will receive an email with a link. Please complete the link with your state license information. Our CLE provider will process CLE credits to your state bar and also send a CLE certificate to your attention within 30 days of the conference.
– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsor for the Proxy Disclosure & 19th Annual Executive Compensation Conference is Morrison Foerster, and our Silver Sponsor is Argyle, who also sponsored our 1st Annual Practical ESG Conference this week. Please visit their pages!
It is not too late to register for our Conferences today! You can sign up for today’s “2022 Proxy Disclosure Conference” and tomorrow’s “19th Annual Executive Compensation Disclosure Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. If you have missed any of the Conference, archives and transcripts will be available on-demand afterwards!
Last week, the Economic Policy Institute published an annual report on CEO pay – which shows that when it comes to total compensation, public company CEOs are leaving the rest of us in the dust, especially rank & file employees. As I’ve written before, most of this is because of equity awards (which are in theory designed to motivate executives to achieve strategic goals and don’t hit cash flows).
The researchers for this particular report used a “realized pay” measure that counts stock awards when vested and stock options when exercised, but the numbers would’ve been high if they looked at grant date fair value, too. They also excluded Elon Musk’s compensation as an outlier. Here are the key findings:
– Growth of CEO compensation (1978–2021). Using the realized compensation measure, compensation of the top CEOs increased 1,460.2% from 1978 to 2021 (adjusting for inflation). Top CEO compensation grew roughly 37% faster than stock market growth during this period and far eclipsed the slow 18.1% growth in a typical worker’s annual compensation. CEO granted compensation rose 1,050.2% from 1978 to 2021.
– Growth of CEO compensation during the pandemic (2019–2021). The dramatic increase in CEO compensation during the pandemic is remarkable. While millions lost jobs in the first year of the pandemic and suffered real wage declines due to inflation in the second year, CEOs’ realized compensation jumped 30.3% between 2019 and 2021. Typical worker compensation among those who remained employed rose 3.9% over the same time span.
– Changes in the CEO-to-worker compensation ratio (1965–2021). Using the realized compensation measure, the CEO-to-worker compensation ratio reached 399-to-1 in 2021, a new high. Before the pandemic, its previous peak was the 372-to-1 ratio in 2000. Both of these numbers stand in stark contrast to the 20-to-1 ratio in 1965. Most importantly, over the last two decades the ratio has been far higher than at any point in the 1960s, 1970s, 1980s, or early 1990s. Using the CEO granted compensation measure, the CEO-to-worker compensation ratio rose to 236-to-1 in 2021, significantly lower than its peak of 393-to-1 in 2000 but still many times higher than the 44-to-1 ratio of 1989 or the 15-to-1 ratio of 1965.
– Changes in the composition of CEO compensation. The composition of CEO compensation is shifting away from the use of stock options and toward the use of stock awards. Vested stock awards and exercised stock options averaged $21.9 million in 2021 and accounted for 80.1% of the average realized CEO compensation.
– Changes in the CEO-to-top-0.1% compensation ratio. Over the last three decades, compensation grew far faster for CEOs than it did for other very highly paid workers (the top 0.1%, or those earning more than 99.9% of wage earners). CEO compensation in 2020 (the latest year for which data on top wage earners are available) was 6.88 times as high as wages of the top 0.1% of wage earners, a ratio 3.7 points greater than the 3.18-to-1 average CEO-to-top-0.1% ratio over the 1947–1979 period.
– Implications of the growth of CEO-to-top-0.1% compensation ratio. The fact that CEO compensation has grown far faster than the pay of the top 0.1% of wage earners indicates that CEO compensation growth does not simply reflect a competitive race for skills (the “market for talent”) that also increases the value of highly paid professionals more generally. Rather, the growing pay differential between CEOs and top 0.1% earners suggests the growth of substantial economic rents (income not related to a corresponding growth of productivity) in CEO compensation. CEO compensation, it appears, does not reflect the greater productivity of executives but the specific power of CEOs to extract concessions — a power that stems from dysfunctional systems of corporate governance in the United States. Because so much of CEOs’ income constitutes economic rent, there would be no adverse impact on the economy’s output or on employment if CEOs earned less or were taxed more.
Look, I very much support responsible pay and minimizing wage inequality. But I’m not completely sold on the implication that companies should use these particular conclusions as a basis to rein in CEO pay. That’s because other “highly paid professionals” may not be part of the specific CEO labor market that companies are trying to draw from for the top leadership spot, and boards seem to think that a high-performing CEO can make a real difference in company performance for shareholders and other stakeholders.
Unfortunately, when it comes to responsible pay practices, reports like this seem to contribute more to the trend of “shouting past each other” than they do of making a real difference, at least from the perspective of structuring executive pay. Yet, if the purpose of this report is to create an “outrage tool” that will lead to public policy and tax changes, maybe it’s doing the job – because the numbers are pretty eye-popping. The report recommends several policy changes that get proposed from time to time:
We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so. Such policies could include reinstating higher marginal income tax rates at the very top; setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation; using antitrust enforcement and regulation to restrain the excessive market power of firms—and by extension of CEOs; and allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
Companies that are able to keep pay ratio in check will be less at risk of significant adjustments or consequences if any of these changes come to pass – and have the added benefit of being considered responsible corporate citizens, with one less point that can be weaponized in a proxy contest. Visit our “Pay Ratio” Practice Area for more on this topic – including guidance on “pay ratio” taxes at the state level.
Today and tomorrow is our “2022 Proxy Disclosure Conference” – Friday is our “19th Annual Executive Compensation Conference.” Here are the agendas: 18 substantive panels over 3 days – including an interview with Renee Jones, the Director of the SEC’s Division of Corporation Finance. Here’s more info:
– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Proxy Disclosure/Exec Comp” tab to see the agendas for each day, enter sessions, and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone.
If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).
– How to View Archives & Transcripts: Members of TheCorporateCounsel.net or CompensationStandards.com who register for the Conferences will be able to access the conference archives on these sites using their existing login credentials beginning about a week after the event, and unedited transcripts will be available to these members on TheCorporateCounsel.net and CompensationStandards.com beginning about 2-3 weeks after the event. If you’ve registered for the conferences through CCRcorp but are not a member, we will send login information to access the conference footage and transcripts on TheCorporateCounsel.net or CompensationStandards.com.
If you registered for the conferences through NASPP, you will receive access to the video archives from NASPP.
– How to Earn CLE Online: We are applying for up to 15 hours of CLE credit for the Proxy Disclosure & Executive Compensation Conferences in applicable states – approvals of actual credit vary based on each state. Please read these “CLE FAQs” carefully to confirm that your jurisdiction allows CLE credit for online programs. You will need to respond to periodic prompts every 15-20 minutes during the conference to attest that you are present. After the conference, you will receive an email with a link. Please complete the link with your state license information. Our CLE provider will process CLE credits to your state bar and also send a CLE certificate to your attention within 30 days of the conference.
– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsor for the Proxy Disclosure & 19th Annual Executive Compensation Conference is Morrison Foerster, and our Silver Sponsor is Argyle, who also sponsored our 1st Annual Practical ESG Conference this week. Please visit their pages!
It is not too late to register for our Conferences today! You can sign up for today’s “2022 Proxy Disclosure Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. If you have missed any of the Conference, archives and transcripts will be available on-demand afterwards!
As You Sow, a well-known shareholder proponent that added a focus on executive compensation 8 years ago with its annual report on the “100 Most Overpaid CEOs”, recently published a new report that grades “pay for climate performance” – based on 2021 arrangements that were disclosed in 2022 proxy statements. It’s 38 pages and available for download on As You Sow‘s website. Here are some aspects that companies and executive compensation teams may find useful:
– Which companies are most at risk for questions about this?As You Sow analyzed the 2021 CEO compensation packages of the 47 U.S. companies included in the Climate Action 100+ (CA100+) Initiative. CA100+ is an investor-led initiative with $68 trillion in assets under management working to ensure that the world’s largest corporate GHG emitters take action to reduce emissions (see my Proxy Season Blogs on TheCorporateCounsel.net for “8 Fast Facts” about CA100+ and recentupdates). As You Sow says that the CA100+ companies are responsible for 80% of corporate emissions and, thus, incentivization for emissions reduction performance in these companies is particularly timely.
– What’s the “gold standard” according to As You Sow? For this report, companies were assessed on these factors:
1. Inclusion of a climate metric in the 2021 CEO pay package, with higher grades for incentives tied to emissions reductions and alignment with 1.5° C goals;
2. Inclusion of measurable climate metric and measurable pay;
3. Inclusion of climate metric in the long-term incentive plan; and
4. Climate metrics and compensation disclosures are transparent and measurable.
– How did everyone do? The highest grade was a “B” – earned by Xcel Energy for linking CEO pay to emissions reduction performance in the long-term incentive plan, with a measurable amount of pay related to achievement of reduction goals. 15 companies have some type of climate-related incentive tied to compensation. 89% of the assessed companies received “D” or “F” grades.
Here’s more detail about metrics disclosure:
In our survey, multiple companies include “reduce emissions” as a climate “metric” without specific targets for how much emissions reduction would be required to receive a bonus. Others use “progress towards” or “demonstrate leadership to” emissions reduction without disclosed target levels. Others point to milestones achieved without having initially set measurable targets. None of the above is adequate.
Backward looking milestone reflections in support of awards given are not equivalent to pre-determined metric targets. Compensation packages should include clear disclosure – ideally in chart form – that indicates the target levels set and details the threshold, target, and maximum performance required for payout. Clear information regarding prior year achievements, a baseline time period, and linking CEO pay directly to emission reduction targets in company climate transition plans can further clarify for investors whether the metrics set adequately drive climate-related progress. Some investors vote against CEO pay packages where future financial achievement is set below the actual achievement from the prior year and this practice could beneficially extend to climate metrics.
The report points to Marathon Petroleum as a good example of payout disclosure using an ESG scorecard. However, As You Sow awarded the company only a “C-” for its efforts.
As You Sow says the report is a “first step in assessing how effectively companies are currently linking GHG emissions reduction incentives to CEO pay.” So, they left some room for improvement with these grades. The report notes that 69% of S&P 500 companies say that they are including ESG metrics in compensation packages for 2022.
Visit our “Sustainability Metrics” Practice Area for guidance on establishing and disclosing these arrangements, and tune in to our “1st Annual Practical ESG Conference” today for practical info on carbon accounting and other data control issues that can make or break a company’s ability to incorporate ESG metrics into compensation plans.
Thanks to everyone who has registered for our annual fall conferences, which kick off today with our “1st Annual Practical ESG Conference.” That’s followed on Wednesday & Thursday by our “2022 Proxy Disclosure Conference,” and we cap off the week on Friday with our “19th Annual Executive Compensation Conference.” Here’s the agenda for today’s conference – we have 7 substantive panels, including a recently added panel on “SEC Climate Rules: How to Jumpstart Your Disclosures.” Here’s more info:
– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Practical ESG Agenda” tab to enter sessions and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone.
If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).
– How to View Archives & Transcripts: Conference attendees will be able to access the archives of the “1st Annual Practical ESG Conference” on PracticalESG.com via a special link that we will email to conference attendees about a week after the event. Unedited transcripts also will be available via that link, beginning about 2-3 weeks after the event.
– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsors for the 1st Annual Practical ESG Conference are Aon and Orrick. Our Silver Sponsors are Argyle, who is also sponsoring our Proxy Disclosure & Executive Compensation Conferences, and Ecolumix. Our Bronze Sponsor is Elm Consulting. Please check them all out!
It is not too late to register for our Conferences today. You can sign up for today’s “1st Annual Practical ESG Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. You can still sign up online for our “2022 Proxy Disclosure Conference” & “19th Annual Executive Compensation Disclosure Conference” (with the “Conference” drop-down, and the “PDEC” options) – or you can register via email or phone. Remember, you can also still bundle the conferences together to get a discounted rate!
The IPO market has been incredibly slow this year – but it will come back, eventually. And when it does, the high-volume 2021 market will be a good reference point for planning equity grants that are made just prior to a company’s public debut. This Pay Governance memo provides guidance on practices & considerations. Here’s an excerpt of a few key findings:
Prevalence & Timing of IPO Grants
– Out of 368 companies that went public in 2021, 62% granted equity awards around the timing of their IPO.
– Among the companies that granted IPO awards, 46% made a grant at IPO, while 33% made a grant within three months of their IPO and 21% did both (granted awards at IPO and within three months of their IPO).
– In order to provide two perspectives on the size of IPO equity award pools, we analyzed the award pool as a percentage of Fully Diluted Shares Outstanding (FDSO) and as a percentage of the Total Share Reserve.
Type of LTI IPO Grants
– The most common type of equity award granted by companies in connection with an IPO is a stock option.
– At-IPO award types varied considerably by industry, with Pharma, Biotech, and Life Sciences companies overwhelmingly granting stock options and Financial Services companies mainly granting full value shares (e.g., restricted stock/units).
– Other industry sectors granted a mix of stock options and full value shares.
– When reviewing the equity mix of vehicles At-IPO with and without Pharma, Biotech, and Life Science companies, there is a significant decline in the use of stock options.
– For example, the prevalence of granting At-IPO awards are 46% stock options, 20% full value shares, and 35% for both stock options and full value shares when all industries are included.
– However, when Pharma, Biotech, and Life Science companies are excluded, the prevalence of only granting stock options drops to 25% and granting a mix of stock options and full value awards increases to 46%.
– In our experience, while there has been some recent movement on this, the traditional approach among Pharma, Biotech, and Life Science companies is to maintain an all-stock-option grant strategy up until there is progress toward commercialization (e.g., after clinical progress/FDA success and commercial prep has begun) when stock price volatility and growth trajectory has somewhat stabilized.
With the stock market’s nose dive this year, many options that were granted in 2021 are now underwater. This 5-page Holland & Knight memo provides 4 alternatives to address out-of-the-money options – and highlights the major issues that should be vetted when considering a repricing. Here’s an excerpt that lays out those considerations (also see this blog I shared a few months ago):
Accounting. Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 – Stock Compensation, an accounting charge may be incurred based on the approach taken.
Section 409A. New options must be structured so that they are either exempt from or compliant with Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A).
Recognition of Ordinary Income. Depending on the approach taken, option holders may lose their ability to control the timing of a taxable event.
Incentive Stock Options. Option repricings involving incentive stock options (ISOs) raise certain tax issues. First, if an option is repriced, the adjustment will be considered a new option and will give rise to a new grant date for purposes of the ISO holding periods set forth in Section 422 of the Internal Revenue Code. Second, Section 422(d) of the Code provides that ISOs will be treated as non-qualified stock options (NQSOs) to the extent that the aggregate fair market value of the stock with respect to which ISOs are exercisable for the first time during any calendar year exceeds $100,000. In a repricing, if the exercisability of the prior option is carried over to the new option, the new option may cause the aggregate ISOs vesting in that year to exceed the $100,000 limitation.
Shareholder Approval. Whether shareholder approval is required depends on the approach taken and the terms of the equity plan document. See also the below regarding shareholder considerations.
Tender Offer. The SEC has taken the position that a stock option repricing in the form of an exchange program that allows employees to surrender existing, out-of-the-money options for new, lower-priced options involves individual investment decisions and, therefore, constitutes an issuer tender offer. As a result, these exchange programs are subject to Rule 13e-4, the issuer tender offer rule, which, among other things, requires the filing of a Schedule TO with the SEC and the dissemination to option holders of the disclosure documents specified by the rule. In addition, the issuer must also comply with Regulation 14E, which places restrictions on the conduct of tender offers and requires all tender offers to remain open for at least 20 business days. These requirements will add significant costs and time delays to the process of conducting these exchange programs.
However, the SEC issued an exemptive order for issuer exchange offers that are conducted for compensatory purposes, which generally eliminates the following tender offer requirements:
– the “all holders” rule, which requires that the tender offer is open to all holders of the share class subject to the offer, and
– the “best price” rule, which requires that all holders in a tender offer be paid the same price.
In order to qualify for this exemption, the exchange offer must meet the following four conditions:
– the issuer is eligible to use Form S-8, the options subject to the exchange offer were issued under an employee benefit plan, and the new options offered in the exchange will be issued under such a plan
– the exchange offer is conducted for compensatory purposes
– the issuer discloses in the offer to purchase the essential features and significance of the exchange offer
– except as exempted by the order, the issuer complies with all requirements of Rule 13e-4
If the repricing is only offered to a small number of executives, however, the repricing is unlikely to be considered a tender offer.
The memo goes on to summarize proxy disclosure issues and the shareholder backlash that repricings usually create. Proceed with caution!
With more large companies failing or coming in below 70% support on their say-on-pay vote this year, compensation committee members who are facing reelection will need to demonstrate responsiveness via fall engagements – and resulting actions – all of which will need to be described in 2023 proxy statements. This ISS Corporate Solutions blog emphasizes the importance of those efforts, with these key takeaways:
– Median support for say-on-pay proposals fell to an all-time low in 2022
– A total of 136 companies in the Russell 3000 Index received less than 70 percent support for their say on pay proposals in 2021
– Companies with the highest levels of responsiveness to investor concerns saw the biggest gains in investor support in 2022 over 2021
– Corporates with more moderate levels of responsiveness also saw investor support rise compared with 2021
– In some cases, companies with a high level of engagement still saw say-on-pay support fall in 2022, while others with low responsiveness saw a gain
ISS and Glass Lewis have the position that boards need to be responsive to say-on-pay votes that receive less than 70% and 80% support, respectively This means that your goal isn’t to just receive a majority vote on your nonbinding say-on-pay—you need to do better than that. If a company receives a low vote and isn’t sufficiently responsive, ISS and Glass Lewis may recommend against reelection of the compensation committee members — or the entire board — the following year. Increasingly, low say-on-pay support can also be a red flag to activists who closely monitor shareholder dissatisfaction at potential targets.
This blog from As You Sow gives examples of companies that have been able to successfully course-correct and regain shareholder support. Here’s an excerpt:
The company with perhaps the best disclosure of the change it made, and the extent of its outreach, was Marathon Petroleum. A chart in the proxy statement lists significant changes made in several governance, annual bonus and long term bonus. The company, which had been a bit of a governance laggard, is moving toward adopting several best practices including annual votes on directors and separating the chair and CEO. Compensation changes included:
· Updated compensation reference group (or peer group) to reflect the fact that the company is smaller after the sale of its Speedway business
· Eliminated discretionary component of annual bonus, increasing the weighting of financial performance and adding an ESG metric with quantitative goals tied to greenhouse gas emissions intensity and diversity, equity & inclusion
· Reduced the types of equity awards granted from five to three and discontinued the use of stock options
· Increased alignment with shareholders by denominating performance share units in shares of MPC common stock (previously denominated in dollars)
The blog goes on to note:
Of course, as can be seen in the votes and in the information above, the component of engagement that matters the most isn’t the percentage of investors called, but the actions that flow from engagement.
Join us next week at our virtual “Proxy Disclosure & 19th Annual Executive Compensation Conferences” – where we’ll be discussing what proxy advisors and investors expect to see when it comes to responsiveness. There is still time to register! Here’s the agenda – 18 essential sessions over the course of three days. Sign up online (with the “Conference” drop-down, and the “PDEC” options), email sales@ccrcorp.com, or call 1-800-737-1271. Bundle your registration with our “1st Annual Practical ESG Conference” and get a discounted rate!
One of the most significant aspects of the SEC’s new pay vs. performance disclosure rules – in terms of the effort that will be required – is that companies will need to calculate changes in equity award fair values every year, from grant until vesting. This Willis Towers Watson memo lays out several new & unexpected challenges that this requirement will create:
– The number of valuations required each year to be prepared by internal or external valuation resources will significantly increase.
– In-flight valuation of stock option awards will be required to reflect changes in assumptions that consider current fiscal year economic conditions and how much the options are in or out-of-the-money.
– In-flight valuation of relative total shareholder return (RTSR) awards will be required to reflect changes in assumptions that consider current fiscal year economic conditions and actual TSR performance for the company and peers to date.
– Other market-condition awards (e.g., stock price hurdle vesting) will face similar challenges.
– Companies will be required to disclose changes in valuation assumptions between the grant date and the PVP measurement date.
– For non-market-condition awards (e.g., awards subject to conditions tied to financial or non-financial goals), while complex valuation models will not be required, internal alignment will be needed on updated probability achievement factors and a shared understanding around the disclosure of this information in a new way.
The memo includes a chart that shows the calculation methodology based on the various combinations of grant timing (during the covered fiscal year or during a prior fiscal year) and vesting (outstanding and unvested at end of covered fiscal year, vested during the fiscal year, or failed to meet applicable vesting conditions during the covered fiscal year). It also walks through specific implications and examples for stock options, relative TSR awards, and other types of grants.
For a hypothetical company that grants stock options with 4-year graded vesting and relative TSR units with a 3-year performance period, the memo shows that a whopping 44 valuations will be required in the 2023 proxy statement! Wow. The memo concludes:
Given the significant number of valuations that potentially need to be prepared, we strongly suggest starting to figure out who will be able to perform these analyses and how they will be done, as soon as possible. A finite amount of time will be available to perform these calculations after year-end and at a time when the valuation resources are already busy working on other things, including valuations of new grants for the current year. Valuations for prior measurement dates should be prepared now to reduce the burden after year-end. These earlier valuations will also allow companies to establish processes to prepare the valuations at year-end.