Stock Purchase Plan Coverage
Recommendation, 2007 April 15
Editor:
Chuck Allen, HR-XML Consortium, Inc.
Kim Bartkus, HR-XML Consortium, Inc.
Contributors:
Members of Stock workgroup
Copyright © 2007 HR-XML Consortium, Inc..
Abstract
The document describes the StockPurchasePlanCoverage component of the HR-XML Consortium’s Benefits Enrollment schema. This component can be used to support the transmission of participant enrollment data for employee stock purchase plans (ESPP). The StockPurchasePlanCoverage feature of the HR-XML Enrollment schema can be used in concert with the HR-XML Consortium’s Employee Stock Plans Interface schemas to support a wide-range of data exchanges necessary in the administration of employee stock purchase plans.
Table of Contents
1.2.2 Items Outside of Design Scope
1.4 Common Employee Stock Plan Terminology
2 Process Flow – Employee Stock Purchase Plans
4 Implementation Considerations
5 Appendix A - Document Version History
6 Appendix B – Related Documents
7 Appendix C – Reference Examples
1 Overview
1.1 Objective
1.1.1 Business Reasons
To attract and retain employees, many employers offer employees the opportunity to purchase stock through an ESPP. A third-party administrator or broker often handles the administration of the programs and selling of stock. Because no e-business standards for ESPP programs have been available, expensive custom interfaces often are built between employer systems and those of the stock program – or alternatively, the transactions simply are handled via forms, faxes, phone calls, or similar manual means.
StockPurchasePlanCoverage was designed as a component of the HR-XML’s Consortium’s Benefits Enrollment schema. Including support for ESPP enrollments within the multi-purpose Benefits Enrollment schema offers HR and benefit enrollment solution providers programming and other efficiencies.
1.2 Design Requirements
StockPurchasePlanCoverage is a simple component containing basic information necessary to execute an ESPP enrollment with a plan administrator and to provide that administrator certain information necessary to administer an ESPP participant’s account.
StockPurchasePlanCoverage was specifically designed as a component of the HR-XML’s Consortium’s Benefits Enrollment schema. In addition to supporting ESPP enrollments, HR-XML’s enrollment schema supports:
- Tier-based coverage – such as medical, dental and vision;
- Spending accounts – more commonly known as flexible spending accounts (FSA); and
- Rate-based coverage – such as life, short term disability, and long term disability.
There are optional components within the Enrollment schema relating to these types of coverage that can be ignored for purposes of ESPP enrollments.
1.2.1 Scope
Broadly speaking, for any type of enrollment, information must be transmitted identifying the participant who is being enrolled as well as information about what program or benefit in which the person is enrolling. Enrollments also may need to transmit a variety of other specifics the plan administrator may need to know to execute the enrollment or administer the benefit.
In the context of an ESPP enrollment, an implementer of the HR-XML’s Benefits Enrollment schema would use the appropriate components available within the Organization/Subscriber/PersonInfo node of that schema to transmit the information about who is enrolling in the ESPP. The StockPurchasePlanCoverageType is available within the Organization/Subscriber/Coverage node of Enrollment schema to carry information identifying the plan in which the participant is enrolling as well as other details the plan administrator requires to administer the participant’s account. (e.g., the identify of a broker to which shares are transferred upon issuance).
1.2.2 Items Outside of Design Scope
- Additional restrictions such as restraining broker transfers or early stock sales.
- Ability to contribute based on a percentage of salary pieces. For example, 5% of base salary or 2% of base+bonus.
- Split percentages.
1.3 Definition of Roles
The roles related to the operation of employee stock purchase plans are:
Company: The organization responsible for sponsoring the employee stock plan and whose shares are offered through the plan. Each individual company’s plan has its own rules for the issuance and administration of stock options.
Administrator: The organization responsible for maintaining plan data, facilitating transactions, and enforcing plan rules. The role of the Administrator can be held by the Company, the Broker, or a third-party.
Participant: An individual, usually an employee of the Company but sometimes possibly an outside consultant, board member, independent contractor or a beneficiary - who stands to become an equity owner or otherwise benefit financially through plan participation.
Payroll: The organization responsible for processing the payroll of the company
Broker: A company that buys or sells securities on behalf of the Participant or Company
1.4 Common Employee Stock Plan Terminology
Terms specific to a country will be identified accordingly.
Common Stock: Securities which represent an ownership interest in the Company.
ESPP: Employee Stock Purchase Plans. See terminology for Stock Purchase Plans.
Participant: A participant in the employee stock plan. Often referred to as an “optionee.”
Stock Purchase Plan: Stock purchase plans are plans whereby employees use their own funds to purchase employer stock at market price or a modest discount. Employees usually (but not always) receive unrestricted rights to the stock at the time of payment. In the US, these plans typically involve regular payroll deductions for employees electing to participate. These funds are used to purchase shares either on the open market (using a broker) or directly from the issuing company. The shares are held by the broker or other agent until withdrawn by the employee. These plans often include provisions for reinvestment of dividends in company stock.
2 Process Flow – Employee Stock Purchase Plans
Stock Purchase Setup
The diagram shows the interactions between the parties involved (Company, Payroll, Administrator, Participant and Broker) to set up an employee stock purchase plan (ESPP). The Enrolment block specifies a transaction using the StockPurchasePlanCoverage schema as a subset of the Enrollment schema. Details on the purchase and sale of stock may be found in the EmployeeStockPlansInterface specification. See Appendix B – Related Documents.
3 Schema Design
3.1 Schema Diagrams
Enrollment coverage information is available within the Subscriber and Dependent elements of the Enrollment schema. The first diagram shows where the Stock Purchase Plan Coverage information resides. For details on the Enrollment specification see Appendix B – Related Documents.
3.2 Schema Elements Explained
|
Elements and Attributes [Global types listed alphabetically in following table.] |
ContentModel* |
Definition |
|
/ |
- StockPurchasePlanCoverageType
- (1/1) |
A container of information pertaining to a participant's enrollment within an Employee Stock Purchase Plan (ESPP). |
|
/ StockPurchasePlanCoverage/ |
- xsd:string - S (1/1) |
A code that applies to the
individual records within a batch. |
|
/ StockPurchasePlanCoverage/ |
- LocalDateType - S (0/1) |
The date of the enrollment. |
|
/ StockPurchasePlanCoverage/ |
- EntityIdType - S (1/1) |
An identifier for the stock purchase plan elected by the participant. |
|
/ StockPurchasePlanCoverage/ |
StartDate - LocalDateType - S (1/1) |
A period of time in which an
offering is valid. |
|
/ StockPurchasePlanCoverage/
OfferingPeriod/ |
- LocalDateType - S (1/1) |
Contains the
(inclusive) date, period, or interval the event becomes active or begins. |
|
/ StockPurchasePlanCoverage/
OfferingPeriod/ |
- LocalDateType - S (1/1) |
Contains the (inclusive) date,
period, or interval the event becomes inactive or ends. |
|
/ StockPurchasePlanCoverage/ |
type - ShareIssuanceType
- |
Contains information on how shares are to be handled when issued. Allows the specification of broker with which the shares should be deposited as well as information about a person or organization in whose name the shares should be registered. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ |
- ShareIssuanceType - |
Further defines the associated
element in the context provided. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ |
Broker - OrganizationType
- S (0/1) |
Contains information identifying the Broker with which stock plan shares should be deposited upon issuance. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ BrokerInfo/ |
- OrganizationType - S (0/1) |
A firm or person that buys and sell shares for customers. [2] Context definition: This is the broker designated by a participant to receive shares when they are issued under the plan. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ BrokerInfo/ |
- EntityIdType - S (0/1) |
The number, code or other identifier assigned to an account. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ |
PersonInfo - [complexType] - C (1/*) |
Contains information on a person or organization in whose name the shares are registered. Shares typically would be registered in the name of the participant, but could be registered in joint tenancy with a spouse, for their child, with an alternate address. |
|
/ StockPurchasePlanCoverage/ ShareIssuance/
ShareRegistrationInfo/ |
PersonName - PersonNameType - S (1/1) |
Contains various data about a person. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ ShareRegistrationInfo/ PersonInfo/ |
- PersonNameType - S (1/1) |
The name of a person. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ ShareRegistrationInfo/ PersonInfo/ |
- PostalAddressType - S (0/1) |
A mailing address. Describes a postal address used for delivery of mail. The address may include the country code, postal code, a region, municipality, delivery address, and the recipient. See PostalAddress Recommendation for further information. |
|
/ StockPurchasePlanCoverage/
ShareIssuance/ ShareRegistrationInfo/ |
- EntityIdType - S (0/1) |
The number, code or other identifier assigned to an account. |
|
/ StockPurchasePlanCoverage/ |
MaximumPurchaseQuantity - xsd:decimal - S (0/1) |
Contains information on limits a stock plan may place on shares that may be purchased by a stock plan participant. |
|
/ StockPurchasePlanCoverage/
SharePurchaseRestrictions/ |
- xsd:decimal - S (0/1) |
A numerical limit on the quantity of items or services that can be purchased. |
|
/ StockPurchasePlanCoverage/
SharePurchaseRestrictions/ |
xsd:extension base: xsd:decimal |
A monetary limit on the amount of items or services that can be purchased. |
|
/ StockPurchasePlanCoverage/
SharePurchaseRestrictions/ MaximumPurchaseAmount/ |
- CurrencyCodeType - |
A three-letter code identifying the
currency of a monetary amount. |
|
/ StockPurchasePlanCoverage/ |
xsd:restriction base: xsd:decimal |
Specifies a contribution as a percentage of pay. The pay base to which the percentage is applied would be defined in the plan. |
|
/ StockPurchasePlanCoverage/ |
xsd:extension base: xsd:decimal |
Contains the monetary value of the contribution. |
|
/ StockPurchasePlanCoverage/
ContributionAmount/ |
- CurrencyCodeType - |
A three-letter code identifying
the currency of a monetary amount. |
|
/ StockPurchasePlanCoverage/ |
- UserAreaType - S (0/1) |
Allows the user to extend the specification in order to provide additional information that is not captured in the standard. |
|
Global
types |
ContentModel* |
Definition |
|
/ |
xsd:restriction base: xsd:string [Enumerations]: IssueCertificate, StockDeposit, SellOnDeposit |
Globally scoped data type. See element or attribute declaration for definition. |
|
/ |
- [Union]: BasicShareIssuanceTypes, xStringPatternExtensionType |
Globally scoped data type. See element or attribute declaration for definition. |
4 Implementation Considerations
4.1 Data Privacy
Human resources data, by its very nature, is personal data. The laws of many jurisdictions as well as codes of fair information practice require organizations to handle personal data in a way that protects individuals from loss of privacy.
The data exchange specifications developed by the HR-XML Consortium are designed to be useful across many jurisdictions and within a variety of business contexts. It is not feasible for the HR-XML Consortium to develop specific privacy guidance for every jurisdiction or business context in which the Consortium's specifications might be implemented. When implementing data exchanges using the HR-XML Consortium's data definitions (or, for that matter, using any other type of data exchange mechanism), organizations are advised to examine the privacy protections that may be required under applicable law and codes of fair information practice.
For information on protecting personal data, general references include: European Union Data Protection Directive (95/46/EC); the Association Computing Machinery Code of Ethics (1992); Canadian Standards Association Model Code for the Protection of Personal Information (1995 – PIPEDA); and U.S.-EU Safe Harbor Principles and FAQs (2000).
5 Appendix A - Document Version History
|
Date |
Description |
|
2003-11-13 |
Initial draft |
|
2004-03-24 |
Changed MinimumPurchaseQuantity to decimal. Updated doc based on workgroup feedback. |
|
2004-04-28 |
Renamed Name to PersonName and Person to PersonInfo (changed to multiple occurrence). Made ShareIssuanceType extensible. Removed MinimumPurchaseQuantity/Amount. Updated doc based on workgroup feedback. |
|
2006-Feb-28 |
Approved by Consortium |
|
2007-Apr-15 |
Approved by Consortium |
6 Appendix B – Related Documents
|
Reference |
Link |
|
|
StockPurchasePlanCoverage schema |
http://ns.hr-xml.org/2_5/HR-XML-2_5/Stock/StockPurchasePlanCoverage.xsd |
|
|
Enrollment Specification |
http://ns.hr-xml.org/2_5/HR-XML-2_5/Enrollment/Enrollment.html |
|
|
Employee Stock Plans Interface Specification |
http://ns.hr-xml.org/2_5/HR-XML-2_5/Stock/EmployeeStockPlansInterface.html |
|
|
|
|
|
7 Appendix C – Reference Examples
Company A offers an ESPP. Eligible employees are those
employed more than 20 hours per week and having been employed more than 6
months.
The plan operates 6 month offering periods with the price set as the lower of
the share price at the beginning or end of the offering period, less a 15%
discount.
Enrollment is permitted in the 30 days prior to the start of an offering
period. Employees can elect to contribute between 1% and 10% (whole percentages
only) of their cash compensation. Participants are permitted to withdraw from
the plan and receive a refund of contributions during the offering period and
may change their contribution election for subsequent offering periods.
Participation in the plan will continue until the employee withdraws from the
plan or terminates employment.
Contributions are limited to USD 21,250 per year, or USD 10,625 per offering
period. In addition, no more than 5,000 shares can be purchased in an offering
period.
John is a full time employee and has worked for Company A for 6 years. He
elects to participate and contribute at 8%.
The following example includes the stock plan coverage within an enrollment transaction.
<Enrollment xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns="http://ns.hr-xml.org/2007-04-15" xsi:schemaLocation="http://ns.hr-xml.org Enrollment.xsd" creationDate="2003-11-28T10:24:27-01:00" transactionType="Change" originatorId="COA" originatorName="CompanyA" recipientId="FI" recipientName="Fidelity Investments">
<Organization organizationId="01234" organizationName="CompanyA">
<BenefitsAdministrativeAffiliate>
<OrganizationName>Acme Online Benefits Services</OrganizationName>
<EntityRole>Third Party Administrator</EntityRole>
<AccountNumber>123456</AccountNumber>
<ContactInformation>
<Use>business</Use>
<Location>office</Location>
<Telephone>
<FormattedNumber>602 457 1233</FormattedNumber>
</Telephone>
<PostalAddress>
<CountryCode>US</CountryCode>
<PostalCode>92037</PostalCode>
<Region>CA</Region>
<Municipality>La Jolla</Municipality>
<DeliveryAddress>
<AddressLine>5 La Jolla Boulevard </AddressLine>
</DeliveryAddress>
</PostalAddress>
</ContactInformation>
</BenefitsAdministrativeAffiliate>
<Subscriber>
<SubscriberType>
<SubscriberTypeCode>Employment</SubscriberTypeCode>
<StartDate>2004-01-01</StartDate>
</SubscriberType>
<Person>
<IdentificationCode>
<IdValue name="Employee Number">522-412-112</IdValue>
</IdentificationCode>
<PersonName>
<FormattedName>John Adams</FormattedName>
</PersonName>
<Gender>1</Gender>
<DateOfBirth>1983-10-28</DateOfBirth>
<ContactInformation>
<Use>business</Use>
<Location>office</Location>
<Telephone>
<FormattedNumber>902 124 4566</FormattedNumber>
</Telephone>
<PostalAddress>
<CountryCode>US</CountryCode>
<PostalCode>90123</PostalCode>
<Region>CA</Region>
<Municipality>La Jolla</Municipality>
<DeliveryAddress>
<AddressLine>521</AddressLine>
<StreetName> Orange Street</StreetName>
<BuildingNumber>134</BuildingNumber>
<Unit>5B</Unit>
</DeliveryAddress>
<Recipient>
<PersonName>
<FormattedName>John Adams</FormattedName>
</PersonName>
</Recipient>
</