A Chevron Case Study: A Global Mobile Employee Taxation Project from Design to Delivery

Transcription

1 A Chevron Case Study: A Global Mobile Employee Taxation Project from Design to Delivery Ed Gibbons, Principal, KPMG Nancy Mesereau, Vice President, Morgan Stanley Mike Reekers, Project Manager, Chevron Cody Ulmer, Design Architect, Chevron

2 The Reason We re Here When an employee works in more than one state or country over the life of an equity award, the employee may be subject to income reporting and tax withholding in each location. This is referred to as a trailing tax liability.

3 Project Scope Employee payroll taxation for the following equity payments: Stock Options Non-Deferred Performance Shares Restricted Stock Units Stock Appreciation Rights Configuration of global tax positions Automated interface of payroll instructions/calculations for U.S. home payroll Interface data between new solution, human resources and payroll systems, and existing third party tools

4 The Mobile Employee Taxation Project Project Goals: A comprehensive solution to streamline and automate the equity taxation process for income reporting and tax withholding Ensure a favorable participant experience Minimal or no manual intervention Automate the U.S. payroll process and develop a Project standardized Goals solution for non U.S. payrolls Process the payroll data one time

5 Team Structure Executive Sponsors VP Human Resources (HR) VP Finance Decision Review Board A blend of Finance, Tax, HR, and Information Technology (IT) decision makers Project Team (Full Time) A blend of Finance, Payroll, Tax, HR, IT, Change Management, and Training subject matter experts Implementation Partners: KPMG Morgan Stanley

6 Project Plan by Major Work Stream Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Start As-Is Equity Taxation Tool Selection Engage Morgan Stanley (SPA) To-Be Design Master Data and Tax Position Effort Initial Data Build & Tool Configuration Build Interfaces Implementation Unit / Integration / User Acceptance Testing Stabilization Support Organization Design Change Management Activities

7 Major Workstreams to be Discussed 1. Equity Tax Tool Selection 2. Stock Plan Administration Design Changes 3. Master Data Design 4. Develop Chevron s Tax Positions 5. Major Process Redesign 6. Testing Strategy 7. Change Management and Training 8. Ongoing Support Structure Design

8 1-Equity Tax Tool Selection Evaluation Criteria 11-Supplier past performance; ongoing viability 9.5% 10.7% 1-Quality of functionality; meets business and compliance requirements 10-Can meet timeline 9-Total cost of ownership 8-User friendly; easy to use; meets usability standards 7.6% 7.6% 7.6% 10.5% 8.4% 2-Integration of tools with other applications and meets architecture requirements 3-Experience with similar implementations Selected KPMG s Global Equity Tracker (GET) Tool 7-Meets Chevron IP compliance; data privacy standards 10.5% 9.5% 6-Demonstrated commitment to high service level; future commitment 9.0% 9.1% 5-Scalability and extensibility of tools and services 4-Depth and breadth of tax and technical staff

9 2-Stock Plan Administration Design Changes As-Is Stock Plan Administration relies on data solely from Chevron Tax withholding requires manual intervention and downstream payroll adjustments To-Be Stock Plan Administration redesigns their processes Morgan Stanley, Chevron and KPMG partner in redesigning process (see work stream 5) New messaging, build new batch interfaces & controls, etc. Create real-time web call to allow participants to model transactions

10 3-Master Data Design Three Phases: 1 Determine Participant Work History Requirements and Analyze Who Has Movement 2 Identify and Resolve Gaps in Work Location History 3 Finalize the Participant Master Data Design No HR Data JDE ~200 Employees Validate ~100 Empl. SAP ~2,900 Employees Good work location history (94%) Build No work location history (4%) Develop evergreen* procedures for manual collection where needed Develop the interfaces 2% of participant work location history was not needed *Evergreen refers to a continuing process as opposed to a one time event.

11 4-Develop Chevron's Tax Positions Chevron and KPMG Joint Effort Local tax laws Resident/Non Resident Status Time in Jurisdiction Employee Employment Status Type of Equity Payment Tax Treaties or Protocols Cost Distribution Approach Major factors for each Tax Jurisdiction Review positions with incountry tax managers KPMG Global Equity Tracker (GET) Configuration The GET tax engine includes equity tax calculations for: 146 countries All U.S. states Certain U.S. localities All Canadian provinces

12 5-Major Process Redesign Seven major processes redesigned: 1. Real Time Modeling 2. Master Data Interfaces 3. Pay Agent Changes 4. Accounting and Payroll Processes 5. New Participant Statements 6. Payroll File Standardization for All Non-U.S. Countries 7. U.S. Payroll Automation

13 The Final Equity Taxation Design (Animation) Equity Tax Statement Payroll

14 6-Testing Strategy User Acceptance Testing End to End Testing Unit Testing: Equity Tax Calculations Testing Approach Unit Testing: Web Call For Transaction Modeling Unit Testing: Chevron ERP Integration Testing

15 7-Change Management and Training Management Participants In-Country SMEs NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB Initial Comms Initial Comms Preview Key Communications Implementation DRB DRB DRB DRB DRB FAQ & Project Updates Finalize SAP Master Data Finalize JDE Master Data Participant Work Location Verification High Activity In-Country Workshops JDE Template Training Payroll Readiness Targeted Functional communications Participant Statement Focus Group FAQ & Project Updates Enable Competency BIL Readiness Go-Live FAQ Notify Go-Live Notify & Support Legend: BIL: Business Integration Lead CBT: Computer-Based Training Comms: Communications DRB: Decision Review Board FAQ: Frequently Asked Questions QRC: Quick Reference Card SME: Subject Matter Expert Train Key Messages: What s changing and why Examples Timing Contacts Validation of work history

16 New Equity Tax Statement Sample Tax Statement Components: Overview Award Information Work Location & Withholding Summary Detailed Notes Contact Information

17 8-Ongoing Support Structure Design Q4 Q1 Q2 Q3 Q4 Q1 Researched Support Requirements Agreed to Functional Ownership (HR) and Roles/ Responsibilities Identified Support Leader Developed the Transition Timeline (CVX, KPMG, MS) Finalized the Stabilization Plan and Resources Selected Additional Support Resource Executed the Transition Plan (CVX, KPMG, MS) Stabilization Implementation

18 Multi-Level Support Model Increasing Complexity of Issues Chevron Online Help/ Training New Support Organization Types of Problems Solved Power user and participant inquiries Procedure documentation Training materials (computer-based training, quick reference cards) Participant inquiries via mailbox or phone MS/KPMG Online Help/ Training (MS only) Business Level Support Corporate HR and Finance Triage transactional issues Reporting Change and Release Mgmt. Control issues MS Service Delivery, KPMG Account Manager ERP Technology Support Information Technology Technical Support ERP Application Support System access Interface issues Messaging Network Server and DB issues Product issues (bugs) Complex issues Consultation MS & KPMG Service Desk Technical Infrastructure Support MS & KPMG Application Support / Services MS=Morgan Stanley DB=Database

19 Major Challenges and Lessons Learned Looking Back Challenges Maintaining the vision Integrated planning between three companies Testing Maintaining standardization Global implementation Lessons Learned: Executive management support Understand your as-is landscape before developing the high level vision Actively work the integrated plan Develop a detailed test strategy Look for ways to simplify standardized processes (be flexible) Make sure to involve the stakeholders Include a stabilization period

20 Thank You Ed Gibbons KPMG Nancy Mesereau Morgan Stanley Mike Reekers Chevron Cody Ulmer Chevron