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Archive March 27, 2010

Dilution in the Palm of Your Hand? There’s Now an App for That!

Dilution Calculator for Your SmartPhone – iPhone, BlackBerry, Palm or Windows Mobile

I have stumbled upon a very useful, template-driven financial calculator, powerOne calculator, that allows you to program new templates and functions.  As a first test of it I wrote a dilution calculator (code below). Feel free to copy and use this code for noncommercial purposes-you may use it freely and distribute it on an unpaid basis so long as you provide proper attribution to me: “© 2010. Edward A. Hauder’s www.edwardhauder.com. All Rights Reserved.”

I created this with powerOne calculator for iPhone. But, there are versions for BlackBerry, Palm and Windows Mobile, available at: http://www.infinitysw.com/products

You should be able to copy and paste the code below into the powerOne calculator after it is loaded onto your phone.  I have not tried it on non-iPhones, so I’d welcome any feedback on those versions. But, once there, you’ll have a dilution function (or whatever you save it as) on your phone! (Yes, say it with me, we are equity plan geeks)

Here’s the template formula for dilution/dilution calculator:

“Shares Available for Grant” “” sag ::

“Granted and Outstanding Equity Awards” “” oea ::

“ESPP and ESOP Shares Available” “” eeshares ::

“Shares Requested” “” sr ::

“Common Shares Outstanding” “” cso ::

“Basic Dilution” “” bdilution:(sag+oea+sr)/cso% ::

“Fully-Diluted Dilution” “” fdilution:(sag+oea+sr)/(cso+sag+oea+sr)% ::

“Fidelity Dilution” “” fidelitydilution:(sag+oea+sr+eeshares)/(cso+sag+oea+sr+eeshares)%

© 2010. Edward A. Hauder’s www.edwardhauder.com. All Rights Reserved.

If you use the dilution calculator, please let me know what you think.  If there are things you like or don’t like, let me know…I just might re-program it. Also, if you have any suggestions on how it might be made better, please let me know.

I’m also working on another calculator for calculating Burn Rate – under both the RiskMetrics and traditional methodology which I hope to post in the next couple of weeks.

RMG’s GRId Locked

RiskMetrics recently announced that it will replace its Corporate Governance Quotient (CGQ) system with Governance Risk Indicators (GRId).  You can read more about this new system here: http://www.riskmetrics.com/grid-info

GRId launched March 17, 2010. RMG Proxy Research reports published during the second half of March 2010 will display the new GRId metrics. CGQ scores are now frozen and will completely go away by the end of June 2010. As with CGQ, corporate issuers will have an opportunity to review the data used by RMG in developing the company’s GRId assessment, and can also model out changes to determine potential impact under the GRId analysis.  Importantly, unlike CGQ, GRId is an absolute measure of a company’s risk indicators. For more information, corporate issuers can review the FAQs put together by RMG: http://www.riskmetrics.com/sites/default/files/FAQ-GRId-corporate.pdf

Here is a summary of several GRId related services that might benefit corporate issuers:

  • GRId Data VerificationAll covered companies will have access to a complimentary data verification tool enabling users to check the accuracy of their data, request changes to the data, and view GRId indicators which will be updated at this site on a monthly basis. All requests for data verification will be responded to via email within 72 hours. For more information, please access the following link: http://www.riskmetrics.com/data_verification
  • Governance Exchange – Governance Exchange combines research, analytics and engagement to deliver a comprehensive corporate governance solution to corporate issuers. Online discussion forums facilitate constructive dialogue on corporate governance issues between corporate executives, institutional investors and board directors, fostering improved engagement and enabling members to share and advance their own ideas and experiences. In addition, members have access to a diverse range of corporate governance viewpoints and critical information, including webcasts, white papers, surveys, and expert analysis. Corporate issuers also have integrated access to our core governance tools, GRId Analytics (see below), GRId Pre-Scoring (see below), Voting Analytics and Resource Center, resulting in a single online platform to support your corporate governance needs. You also have access to a dedicated team of corporate advisors that specialize in providing data, analytics and reports to executives and board members. For more information, please access the following link: http://www.riskmetrics.com/governance_exchange/issuers
  • GRId Analytics – Subscribers to GRId Analytics have access to new modeling and analytical tools relating to the new GRId methodology. These tools include what if analysis, peer comparisons, new tear sheet GRId reports, new customized reports showcasing your company’s corporate governance strengths, the ability to drill down into the database to identify trends, insights into peer practices, and a dedicated advisor. For more information, please access the following link: http://www.riskmetrics.com/benchmarking/GRId_analytics
  • GRId Pre-Scoring – Subscribers to Governance Exchange will have the ability to obtain unofficial GRId pre-scores. Official GRId scores will be produced on a rolling basis. If a company’s annual meeting is from April-May, their first official GRId score will be published on RiskMetrics Proxy Analysis for that shareholders meeting.  If the annual meeting is before April or after May, the first official pre-score will be available by June 30. Therefore, companies may want to see pre-scores in order to get a sense of where they may stand when their official score is released. This solution provides that capability.

If you are interested in any of the above tools and would like to receive a 10% discount on your purchase of them, please contact me at edward.hauder@exqty.com and I can provide you with information on how you can.

Exequity’s Quick-Take Study: Long-Term Incentive Trends: 2010 vs. 2009 CEO Long-Term Incentive Opportunity

After a general industry decline in long-term incentive (LTI) opportunity from 2008 to 2009, Exequity analyzed insider filings (Form 4) for the CEOs from Fortune 500 companies to gauge the percent change in LTI opportunity from 2009 to 2010. Overall, our study found that median LTI opportunity increased 8% relative to a 36% stock price increase over the prior year.

This Quick-Take Study presents the key findings from the analysis, including percent change in LTI opportunity relative to three stock price categories (greater than 60% increase, less than 60% increase and greater than 20% increase, and less than 20% increase), percent change in LTI opportunity by industry, and an in-the-money option analysis for 2009 stock option awards.

Link to study: http://www.exqty.com/Media/Publications/Exequity_LTI%20Trends_20100315.pdf

Another Week, Another Set of SEC Guidance

On Friday, March 12, 2010, the SEC Staff again updated the Regulation S-K Compliance & Disclosure Interpretations (C&DIs).

Here is a quick summary of the three new bits of clarification that the SEC Staff offers for the revised proxy disclosure rules:

  • Q. 119.25-NEIP award based on performance during 2010 granted in January 2010. After the end of the year, amounts payable are determined based on performance achieved and communicated to NEOs. After the end of the fiscal year, one executive decides not to receive any payment for the award. The SEC position is that the award would be included in both the GPBAT and SCT, even though the executive declined the award payment. Company should disclose the executive’s decision to not receive the award by either (1) adding a column next to NEIP in the SCT to report NEIP compensation declined, or (2) through a footnote to the SCT. Also, company should consider discussing in the CD&A the effect, if any, of the executive’s decision on how the company structures and implements compensation to reflect performance.
  • Q. 119.26-A company has a practice of granting discretionary bonuses to executives. Before the board takes action for 2010, an executive advises the board that she will not accept a bonus for 2010. The company does not have to report anything since the bonus was declined before it was granted, and therefore, no bonus was granted.
  • Q. 133.12-If a company has to disclose a consultant’s fees for “additional services” in an amount in excess of $120,000, there is no limitation on the types of services that are included in “additional services.” If a consultant also sells products to the company, then the revenues generated from such sales should be included in “aggregate fees for any additional services provided by the compensation consultant or its affiliates.”

Copyright © 2020 Edward A. Hauder. All right reserved