HR Performance Sites

April 8, 2009

Corporate Services: Where Human Resources and Wall Street Meet

by Matt Regan

Managing Partner and Director of Brokerage Services

WR Hambrecht + Co.

HR Performance Sites article & bio

Corporate Services, broadly defined, is the service offered by
registered brokerdealers that assists publicly traded companies with
affiliated shareholder transactions and other associated brokerage
functions. These services have become more important over the past
decade, as employee stock option (ESOP) and employee stock purchase
(ESPP) plans have become standard fare and an integral piece of the
compensation structure of most publicly traded companies. Human
resource departments have been forced to get themselves up to speed on
the intricacies of equity compensation, and have discovered that a
level of familiarity with retail brokerage services is now standard.

In the most effective companies, when an ESOP or ESPP is put in
place, a captive partner is chosen that will become integrated into the
record keeping and reporting functions that surround the exercise and
purchase of company stock. A level of expertise and technology is
required to handle these functions so that employees can efficiently
and accurately effect a cashless stock option exercise and comply with
both company rules and regulations as well as with federal and state
tax codes. As employees typically receive Incentive Stock Options
(ISOs) rather than Non-Qualified Stock Options (NSOs), a familiarity
with the reporting requirements is essential to passing along the
preferred tax treatment to the optionee.

Until recently, brokerage firms handed these responsibilities off to
traditional brokers who charged full commission rates to effect these
transactions. Originally, equity compensation was a benefit that only
the “C” level executives participated in, and the full service brokers
saw the business as a great entre to well-heeled clients. As the
employee stock option business matured, however, the business has
migrated towards a lower cost, turnkey solution, one that benefits a
company’s entire employee base, rather than one aimed at only highly
compensated executives. As stock plans have been become broadly
available as a standard form of compensation, the brokerage solution
has had to accommodate the business on a larger scale. The introduction
of scale to the business has moved the required function from the desk
of a full commission broker to a more standardized and streamlined
processing center that has access to employee grant information,
company blackout periods, vesting schedules and expiration dates,
online reporting

tools, and dedicated personnel that focus solely on this critical function.

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