Setting Up Stock Purchase Plans

This chapter provides an overview of the stock purchase plan setup steps and discusses how to:

• Define stock purchase plan rules.

• Define offering and purchasing periods for stock purchase plans.

• Define stock purchases.

• Define processing messages and hold reasons.

Understanding Stock Purchase Plan Setup

This section lists prerequisites and provides an overview of stock purchase plan setup.

Prerequisites

Before you begin to set up your stock purchase plans:

• Review and decide how your stock administration application integrates with other HRMS applications. Specific steps you should take are:

  • Have your benefits administrator establish a stock purchase benefit plan ID. If you offer more than one stock purchase plan, for example a domestic plan and an international plan, define an individual benefit plan for each.

  • Have your benefits administrator establish a stock purchase savings plan.

  • If you use Payroll for North America, have your payroll administrator set up payroll for processing stock purchase contributions by setting up deductions.

• Define your stock administration business rules, then set up the tables that are common to, and used by, both stock purchase and stock option plans. Specific steps you should take are:

  • Establish the Section 423 rules using the Governing Body Rules - Stock Purchase Rules page.

  • Define Fair Market Values (FMV) using the FMV Method Table page.

  • Set up earning codes using the Stock Details - Stock Purchases page.

  • Set up the stock purchase plans and allocate funds using the Stock Plan Table - General page.

  • Define blackout periods using the Stock Blackout page.

  • Set up the stock exchange using the Stock Exchange Table - General page.

  • Set up the transfer agents and escrow agents using the Transfer/Escrow Agency - General page.

  • Set up the stock brokerages and stock branches using the Brokerage Table page, the Brokerage/Branch Table page, and the Stock Branch Table - General page.

  • Set up process groups to use for background processing with the Process Groups page.

  • Set up issuance instructions using the Issuance Instructions page.

  • Indicate your insiders using the Insider Data page.

  • Specify the daily prices using the Daily Prices Tracking page.

See Also

Stock Administration Integrations

Defining Stock Administration Business Rules

Stock Purchase Plan Setup

When you set up a stock purchase plan, you specify the basic building blocks that control how your plan works, including linking your stock purchase plan to an existing benefit plan, selecting fair market value methods, defining offering and purchase limits, defining purchase and contribution rules, and specifying disposition restrictions. Next, you define the rules specific to your offering and purchase periods, such as grant dates and purchase periods, and establish how contributions are deducted from payroll.

Depending on how your organization administers its stock purchase plans, the majority of this setup phase is a one-time event requiring periodic maintenance on your part.

To set up a stock purchase plan:

1. Define rules for the stock purchase plan.

   In this step, you link the stock purchase plan to a benefit plan, select the fair market value methods to use, specify limits for the offfering and purchase periods, and define rules for purchases, contributions, and dispositions.

2. Define the offering periods and the purchase periods for the stock purchase plan.

   Here, you define the range of dates in which a stock purchase offering is valid, the grant dates for an offering period, and the purchase period range of dates.

3. Define the reasons for holding a participant’s purchase.

4. Define stock purchase processing messages.

5. Define the details of the stock purchase, including the process groups, currency conversions, and other processing parameters.

Defining Stock Purchase Plan Rules

To define stock purchase plan rules, use the Stock Purchase Plan Rules (ST_ESPP_PLAN) component. This section discusses how to:

• Define basic rules for a stock purchase plan.

• Select FMV methods and nontrading day rules for a stock purchase plan.

• Define limits for a plan's offering period and purchasing period.

• Define purchasing rules for a stock purchase plan.

• Define contribution rules for a stock purchase plan.

• (Optional) Define the holding period for dispositions.

The Stock Purchase Plan Rules component defines the details of the stock purchase plan that can change over time. Use the effective-dated table to define plan level details for each stock purchase plan that you offer.

Generate the Stock Purchase Plan Rules report (STSU022) to view stock purchase plan rules information.

Note. Before you define your plan rules, you must define a stock plan ID using the Stock Plan page and a stock plan in the Stock Plan Table component. You must also have the benefits administrator define a benefit plan ID.

Pages Used to Define Stock Purchase Plan Rules

Defining Basic Rules for a Stock Purchase Plan

Access the Stock Purchase Plan Rules - General page.

Benefit Plan	Select a benefit plan that matches the stock plan you selected. This is where you link the two plan codes.
Governing Body	The default is IRS.
Offering Type	If you select Fixed, the offering end date for all the participants is the same no matter when they enrolled in the offering. If you select Rolling, the offering end date is measured from the date on which the participants enroll with multiple offerings outstanding. For both offering types, the offering begin date of a subsequent offering can’t be earlier than the offering end date of the previous offering.
Participant Enrollment Rule	Select one of the following rules that governs when new participants enroll in a stock purchase plan: Enroll in Next Purchase Period: Enrolls the participant in the first purchase period for which the period begin date for the purchase period is greater than or equal to the coverage begin date, regardless of the offering. After you’ve identified the purchase period, the system assigns the offering of that purchase period and the first grant date before the purchase period begin date of the offering. Enroll in Next Offering: Enrolls the participant in the first offering period for which the period begin date for the offering period is greater than or equal to the coverage begin date. After you’ve identified the offering period, the system assigns the first purchase period within the offering and the first grant date within the offering period. Enroll in Current Offer/Pur Pd: Enrolls the participant in the current offering and purchase period. The system determines the current offering and purchase period by finding the first grant date greater than or equal to the coverage begin date. It assigns the offering based on the grant date and then the purchase period within the offering by selecting the first purchase period for which the purchase period begin date greater than or equal to the grant date. User Defined: Does not enroll participants. Use this to import enrollments, modify the update participants process, or manually enter the enrollments.
FAS 123 Compensatory Plan	Select if your plan is compensatory as defined by FAS 123.
Comments	Select to access the Plan Comments page, where you add comments.
Pro-Rate Purchase	Select to prorate purchases. If you select this, you can enter a prorate factor on the Stock Purchase - General page.
Concurrent Offerings	Select if your plan allows more than one active offering at a given time.
Interest Paid	Select if you pay interest on contributions. This field is informational only.
Quick Sales Allowed	Select to enable quick sales at the individual issuance level. This field is informational only.

Select FMV Methods and Nontrading Day Rules for a Stock Purchase Plan

Access the Stock Purchase Plan Rules - FMV Rules page.

You define which method to use for calculating the stock FMV. You may chose to use different methods for different types of transactions.

FMV Method

Define a method to determine the stock values at various points in the stock purchase process. You define the FMV methods using the FMV Method Table page. These methods supersede the FMV defined in the Stock Details component for these specific events.

Non-Trading Day Rules

The system accounts for all days in a calendar year. The days that are not market trading days must be identified as such. Therefore, define a method to account for these nontrading days. The methods below supersede the holiday and weekend FMV rules defined in the Stock Details component.

See Also

Defining Stock Details

Defining Limits for the Offering Period and Purchasing Period

Access the Stock Purchase Plan Rules - Limits page.

You define the offering and purchase period length as well as various share and value limits. The system defaults are the limits specified on the Governing Body Rules component, but you can make them more restrictive. If your purchase periods overlap different calendar years, check with your payroll administrator to make sure that your payroll system doesn’t deduct contributions over the limit.

Offering Period Limits

(Optional) You can make the offering period limits more restrictive than the purchase value limit defined on the Governing Body Rules - Stock Purchase Rules page. You cannot make the limits more permissive.

Purchase Period Limits

Use these fields to make the purchase period limits more restrictive than those defined on the Governing Body Rules - Stock Purchase Rules page. Field descriptions are the same as those for the offering period limits, except that they pertain to different periods of time.

Defining Purchasing Rules for a Stock Purchase Plan

Access the Stock Purchase Plan Rules - Purchase page.

Purchase Price

Price Rounding Rules

The price rounding rules defined on the Stock Details - Common Rules page is the default. You can make them more restrictive.

Fractional Share Rules

These fields become available for entry if fractional shares are allowed at the stock detail level. The fractional share rules defined on the Stock Details - Common Rules page are the default. You can make them more restrictive. If fractional shares are not allowed, The Decimal Places field is 0 and the Rounding Rule field is Down.

Defining Contribution Rules for a Stock Purchase Plan

Access the Stock Purchase Plan Rules - Contributions page.

You define the contribution source, currency conversion, and what happens to residual contributions for a stock purchase plan. The system gathers the contributions in the local currency based on the participant’s pay group. It converts the contributions to the stock currency for the purchase, then back to the current local currency for refunds.

Contribution Source

Select Payroll for North America if you receive stock purchase contributions from Payroll for North America. If Payroll for North America is not installed, this option is not available. Select Manual Contributions if you receive stock purchase contributions from any other source. If you use Payroll for North America as your primary contribution source, you might also select Manual Contributions to allow for adjustments. This field determines what contributions are processed in the Gather Contributions process.

Currency Conversion

If you use the system to convert local currency to the currency defined at the stock ID level, select the currency conversion parameters for the Currency Conversion process.

Residual Contributions

After a stock purchase is processed and confirmed, some of the participants’ contributions may be left over. The balance may be less than the purchase price of the stock or the participant may have reached an offering period, or purchase period limit, which left more than the purchase price unused. Indicate a method of handling these residual contributions.

See Also

Setting Up and Working with Currencies

Defining Disposition Rules for a Stock Purchase Plan

Access the Stock Purchase Plan Rules - Dispositions page.

Defining Offering and Purchase Periods

To define offering and purchase periods, use the Offering/Purchase Periods (ST_OFFERING_PD) component. This section discusses how to:

• Define offering periods for a stock purchase plan.

• Define grant dates for an offering period.

• Define purchase periods for an offering.

After you define the rules for a stock purchase plan, set up the plan's offering period, grant dates, and purchase period begin and end dates. If you allow rolling plans, link the previous offering periods here.

Generate the Offering/Purchase Periods report (STSU023) to view offering and purchase period information.

Pages Used to Define Offering and Purchase Periods

Defining Offering Periods for a Stock Purchase Plan

Access the Offering/Purchase Periods - Offering Period page.

Offering ID	Enter a unique ID to associate with the offering.
Offering Status	Select Active if the offering is available for enrollment. Select Cancelled if the offering was cancelled before its expiration date. Select Expired if the offering has ended.
Status Date	Displays the date on which you made the offering status selection.
Period Begin Date	Enter the date on which the offering period begins. The date cannot be less than the earliest effective date of the stock plan ID. The current system date is the default. The period begin date determines the purchase period begin date, and in turn the grant date.
Period End Date	The system calculates a default offering period end date based on the period begin date and the offering period length months defined on the Stock Purchase Plan Rules - Limits page. You can enter a different date, but the system displays a warning if you do. You also receive a warning if you try to enter an offering period that exceeds the IRS limits defined at the governing body level if the stock purchase plan is an IRS 423 plan.
Previous Offering ID	Select a previous offering ID to link multiple offerings together in a sequence. You can use this field for rolling plans or if you want your participants to be automatically enrolled in another offering when the current offering expires. If you don’t specify a previous offering ID, then participants won’t be enrolled after the previous offering expires or is cancelled.

Defining Grant Dates for an Offering Period

Access the Offering/Purchase Periods - Grant Dates page.

Period Begin Date and Period End Date	The begin and end dates of the offering period.
Grant Date	Enter all valid grant dates within this offering period.

Defining Purchase Periods for an Offering

Access the Offering/Purchase Periods - Purchase Period page.

Defining Stock Purchases

To define stock purchases, use the Stock Purchase (ST_PURCHASE_TBL) component. This section discusses how to:

• Define the basic parameters of a purchase.

• Select process groups for a stock purchase.

• Define contribution parameters for a stock purchase.

• Define the currency parameters for a stock purchase.

• View the status of stock purchases and process groups.

The next step in the stock purchase setup process is to define a unique purchase ID. Using the Stock Purchase component, relate the purchase ID with the stock, stock plan, offering, and purchase periods used by the stock purchase process. Specify purchase details, such as process groups included in the purchase, payroll contribution parameters, and currency conversation details. Throughout the purchase process, you can view the processing status of the purchase.

Note. Before you define stock purchases, you must define an offering ID and purchase period end dates in the Offering/Purchase Periods component.

Pages Used to Define Stock Purchases

Defining the Basic Parameters of a Purchase

Access the Stock Purchase - General page.

Confirmed	The system selects this check box when this purchase ID has been confirmed.
Comment	Click to access the Purchase Table Comments page, where you add comments about the purchase.
Purchase Type	Select the type of purchase that you want to process: Standard Purchase or Anti Dilution Purchase.
Prorate Factor	If you selected Pro Rate Purchase on the Stock Purchase Plan Rules - General page, enter the prorate factor.

Selecting Process Groups for a Stock Purchase

Access the Stock Purchase - Process Groups page.

Process Group

Select the process groups to include in this processing. Process Groups are defined in the Process Group component.

See Also

Defining Process Groups

Defining Contribution Parameters for a Stock Purchase

Access the Stock Purchase - Contributions page.

Payroll for North America

Pay Calendar Overrides

When deductions for a pay period fall outside the range of the purchase period begin and end dates, you might need to include or exclude a pay calendar. For example, if you selected Check Date as the date type for the purchase on September 30, 1998, then processed a bonus run with a check date of July 2, 1998, the bonus run is not included in the purchase period contributions. However, the bonus is for the period ending September 30, 1998, and should be included in the contributions for the current purchase period. To include the bonus contributions in the current purchase period, you must enter a pay calendar override specifying the company, pay group, pay period end date, and on-cycle or off-cycle, and select Include. This overrides the date, and includes the deductions for the pay calendar selected in the current purchase period.

You can also specify a beginning and ending page number for the pay calendar. This enables you to select a range of employees to include or exclude in the purchase period contributions. This feature is useful for off-cycle checks because you assign the page number.

Defining the Currency Parameters for a Stock Purchase

Access the Stock Purchase - Currency page.

Currency Code	Displays the currency code associated with the stock ID.
Refresh	Click to run the Convert Contributions process. The system determines the exchange rates for each currency contribution that exists in the gathered contributions. A batch process refreshes the data on the page.
From Currency Code	Displays the contribution source currency code.
Market Rate	Displays the calculated exchange rate for the market rate index, rate type, and currency specified.
Exchange Rate Override	To use a different rate than the Convert Currencies process, enter an override rate here. The default is zero.
Market Rate Index	Displays the index used in the Convert Currencies process. This is specified on the Stock Purchase Plan Rule - Contribution page.
Rate Type	Displays the rate type used in the Convert Currencies process. This is specified on the Stock Purchase Plan Rule - Contribution page.

Viewing the Status of Stock Purchases and Process Groups

Access the Stock Purchase - Status page.

Purchase Status

The system displays the status of the purchase process. If a process has been run, the check box is selected displaying the date and time it was processed.

Process Group Status

Defining Processing Messages and Hold Reasons

To define processing messages and hold reasons, use the Processing Messages (ST_ESPP_MSG_TBL) and Hold Reasons (ST_HOLD_REASON_TBL) component.

This section lists:

• Delivered processing messages.

• Pages for defining processing messages and hold reasons.

Generate the Hold Reason Table report (STSU027) to view information for hold reasons.

Delivered Processing Messages

The processing messages delivered with Stock Administration are:

Pages Used to Define Processing Messages and Hold Reasons