Understanding Business Rule Setup

Before you can use Stock Administration to administer your stock plans, you must define the fundamental business rules for your system, including the rules that are common to your stock option and stock purchase plans. This section provides an overview of the steps to follow to set up the stock administration business rules.

To define the basic stock administration business rules:

  1. Set up foundation tables.

    Usually set up only during system implementation, data in the foundation tables seldom changes.

    1. Specify the governing body for your stock plans and the governing body rules, including ISO Section 422 rules for stock option plans and Section 423 rules for stock purchase plans.

    2. Define the stock exchanges on which your stock trades, if applicable.

    3. Define the agencies that provide escrow or transfer agent services.

    4. Define the brokerage firms and branches that handle participants' transactions.

    5. Define the different fair market value (FMV) methods to use for stock transactions.

  2. Set up stock rules.

    Here, you create a profile for your stock and define various attributes, some of which you can override at the plan level or stock detail level.

    1. Define a unique stock ID for your stock and specify the currency, CUSIP number, and par value.

    2. Link the stock ID to escrow and transfer agents.

    3. Link the stock ID to brokerage branches.

    4. Link the stock ID to the stock exchanges on which it trades.

  3. Define stock details, including the FMV method, rules for handling fractional shares and non-trading days, default rules for stock option and stock purchase plans, and the earnings codes to use when sending tax and income information to Payroll for North America.

  4. Create agreements and legends to use on stock transaction documents.

  5. Define the blackout periods for the stock and designate the groups or individuals who are blocked from buying or selling stock during blackout periods.

  6. Define process groups to use for processing stock transactions and reporting.

  7. Allocate shares to the treasury, stock classes, and stock plans.