Emily Cervino, CEP, Certified Equity Professional Institute
Dave Peterson, CCP, Hologic, Inc .
Matt Roberts, CEP, Fidelity Stock Plan Services
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
CEPI history
– Education and certification since 1989
– Research initiative introduced in 2007

Industry feedback reflects broad and basic need
– Internal controls
– Best practices
– Focus on administrative needs
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Research
– 2007: NQSOs
– 2008: Restricted Stock and Restricted Stock Units
– 2009: Global Stock Plans
– 2010: Performance Awards
– 2011: Employee Stock Purchase Plans
Certified Equity Professional Institute www.scu.edu/business/cepi /
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2011: GPS| Employee Stock Purchase Plans www.scu.edu/business/cepi/gps_project.cfm
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Strategic Issues
Plan Design
General Administration
Plan Enrollment
Contributions to the Plan
The Purchase
Tax Issues
Legal
Employee Communication
Financial Reporting
Certified Equity Professional Institute www.scu.edu/business/cepi /
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2011: GPS| Employee Stock Purchase Plans
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Broad-based, optional plan
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Allows regular purchase of shares, usually funded through payroll deductions (after tax)
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Possible discounts; employer match
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Section 423
 Potential favorable tax treatment
 Administratively more challenging (DDs and 6039)
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Non-Section 423
 More flexibility in design; easier accounting; simpler communication
 No opportunity for favorable tax treatment
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Guaranteed appreciation
– Right combination of offering period, discount and lookback
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Cash inflow
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Engaged employees
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Non-excessive
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Low compensation costs
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Company tax deduction
– Section 423 – upon disqualifying disposition
– Non Section 423 – upon purchase
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Hologic, Inc. (Nasdaq: HOLX)
– Leading provider for women’s healthcare products
– Headquartered in Bedford, MA and Marlborough, MA
– 5,000+ employees; $1.9B revenue; $5.4B mkt cap
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3,000+ US
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2,000+ in 20 countries
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Equity compensation at Hologic
– 50% of employees currently possess:
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RSUs and NQSO’s - executives level (annual and at-hire grants)
RSUs - below VP (annual grants)
Certified Equity Professional Institute www.scu.edu/business/cepi /
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Current:
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Compensatory Section 423 plan
– 5% discount on date of purchase, no lookback
– 12% of US population participates (international staff not eligible)
NEW:
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Compensatory Section 423 plan
– 15% discount; 6 month offering periods with lookback
– Shareholder approval expected March 6, 2012
– First offering begins July 1, 2012
– International eligibility / participation being evaluated (phased in approach)
Why:
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Strategic decision to overhaul benefits
– Elimination of profit sharing plan
– Enhance 401(k) and ESPP; more competitive
– Attract and retain employees
Certified Equity Professional Institute www.scu.edu/business/cepi /
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NASPP 2011 Domestic Stock Plan Administration Survey

52% of companies offer ESPP
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Why ESPP?
– Promote employee stock ownership
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Plan features:
Most Common Discount
Most Common Offering
Lookback
Required Holding
Quick Sale
US participation 50% +
423 Plans
15%
6 months
62%
20%
5%
25%
Non 423 Plans
0% and 15 % tied
3 months
30%
15%
4%
13%
Certified Equity Professional Institute www.scu.edu/business/cepi /
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Compare to:
Option - $4.88/share (no guarantees)
Restricted stock - $10/share
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Longer offerings need to consider
– Lookback
– Reset
– Changes to contributions
– Financial reporting expense
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Lookback adds value only with an appreciating price; no value in flat or depreciating price.
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Cost can be managed by offering lookback without reset or contribution changes
Certified Equity Professional Institute www.scu.edu/business/cepi /
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Employees only
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Shareholder approval
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5% owners excluded
Separate offerings c an include variations in terms among corporate entities – particularly useful for non-
US employees.
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Non-discriminatory
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Equal rights and privileges
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Option price limitations
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Option period limitations
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Annual limit
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Non transferrable
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Plan parameters
– Read your Plan!
– Confirm changes for system/providers
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Eligibility
– Terminations/withdrawals
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Reconciling contributions
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Purchase Price
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Residual Contribution Amounts
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Non-US
– Eligible compensation
– Exchange rates
– Documentation
Certified Equity Professional Institute www.scu.edu/business/cepi /
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 §423 $25,000 limit
 Individual share limits
– Must specify individual share limits (per person, per offering)
– $25K limit not acceptable
– Doesn’t have to be “realistic”
 Beginning price limit
– Protects share reserves in declining market
Certified Equity Professional Institute www.scu.edu/business/cepi /
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 §423 limits the purchase of stock to no more than $25K each CY based on the
FMV at the time of grant.
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$25K limit increases by
$25K for each CY the option is outstanding
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If an employee has the right to purchase more than $25K in a CY, the purchase is disqualified and the entire offering may be in jeopardy.
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Understand and communicate qualifying vs. disqualifying
– Address in employee communications.
Certified Equity Professional Institute www.scu.edu/business/cepi /
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 §6039 requires Form 3922 for the first transfer of legal title of shares of stock purchased under a 423 plan
– nonqualified plans are exempt
 Depositing shares into individual brokerage accounts or an omnibus account is considered the "first transfer of legal title.”
– Post purchase restrictions do not impact
 Filed with IRS and sent to the employee or former employee
– Substitute form can aggregate transactions
– Nonresident aliens (no W-2) exempt
 Caution – Acquired companies can assume filing responsibility, but ultimate obligation belongs to acquiring company.
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Technology companies
– More likely to offer large discount than manufacturing or financial
– Heavily weighted towards longer offering periods
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85% of tech companies have offering periods of more than three months
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More than half of financial companies have short offering
– More satisfied with their plans
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None reported plans were “not worth it”
Nearly half call their ESPP “an excellent investment.”
Manufacturing least satisfied with their plans
*NCEO/CEPI 2009 ESPP survey www.nceo.org/main/misc.php/id/152/
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
Discounts
– Higher discount rates = twice as likely to be highly satisfied
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Lookbacks
– 46% of companies with lookbacks call their plan an “excellent use of corporate resources”
– 17% of companies without lookback call their plan an “excellent use of corporate resources”
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Offering Length
– Longer offering periods = greater satisfaction
– No companies with offering periods of 12 months or longer were dissatisfied
*NCEO/CEPI 2009 ESPP survey www.nceo.org/main/misc.php/id/152/
Certified Equity Professional Institute www.scu.edu/business/cepi /
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ESPPs as a percent of total compensation
All companies
Revenue under $100 million
Revenue $100 to $500 million
Revenue $500m to $1 billion
Revenue over $1 billion
Technology
Financial, Insur., RE
Manufacturing
Domestic
International
*NCEO/CEPI 2009 ESPP survey www.nceo.org/main/misc.php/id/152 /
Certified Equity Professional Institute www.scu.edu/business/cepi /
Count
202
35
52
29
83
76
39
33
46
156
Less than
0.5%
55%
57%
50%
59%
57%
38%
74%
67%
65%
52%
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0.5% to 1%
21%
26%
23%
14%
20%
25%
18%
6%
20%
22%
Over
1%
24%
17%
27%
28%
23%
37%
8%
27%
15%
26%

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Large companies (with over $1 billion in revenue )
– Less likely to have Section 423 plans
– Less likely to have a lookback feature
– Less likely to have an additional limit
– Offering period
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Less likely to have a 6 month period
More likely to have a 3 month period
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No differences
– Changes made to plans in past 12 months
– Changes expected in next 12 months
– Run rates similar
*NCEO/CEPI 2009 ESPP survey www.nceo.org/main/misc.php/id/152/
Certified Equity Professional Institute www.scu.edu/business/cepi /
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U.S. Employees
1,000 or
Fewer
75% % with lookback
% with 3- or 1-month offering periods
% with ESPP cost under 0.5% of compensation cost
% with hourly participation over 30%
% with managers participation over 30%
15%
47%
42%
62%
5,000 or
More
45%
45%
63%
16%
44%
*NCEO/CEPI 2009 ESPP survey www.nceo.org/main/misc.php/id/152 /
Certified Equity Professional Institute www.scu.edu/business/cepi /
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
ESPPs are a cost effective way to share equity on a broad basis.
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ESPPs deliver many of the “positive” attributes of other forms of equity*:
• Employee satisfaction with stock plans was the same for ESPP-only participants as for participants with RS/options - ~55% with high satisfaction
• Engagement - ESPP-only are only slightly less aware of the current stock price RS/options participants
• 86% vs. 92%
• ESPP-only respondents are more likely to check after each purchase period - 74% vs. 66%
• Just as likely to want future employers to offer a stock plan (~85%)
• Motivation - 50% of ESPP-only "work harder" vs. 61% of RS/options.
* Fidelity Stock Plan Services Participant Research, 2011
Certified Equity Professional Institute www.scu.edu/business/cepi /
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ecervino@scu.edu
www.scu.edu/business/cepi/
David.Peterson@hologic.com
Mathew.roberts@fmr.com
Certified Equity Professional Institute www.scu.edu/business/cepi /
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Certified Equity Professional Institute www.scu.edu/business/cepi /
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Certified Equity Professional Institute www.scu.edu/business/cepi /
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 Filed with IRS and sent to the employee or former employee
– Substitute form can aggregate transactions
– Nonresident aliens (no W-2) exempt
Certified Equity Professional Institute www.scu.edu/business/cepi /
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The information in this presentation is of a general nature and has been simplified for presentation to a large audience. It is not a complete discussion of all aspects the laws, rules, regulations, standards, and principles that govern equity compensation plans. The contents are neither designed nor intended to be relied upon, and should not be considered, as legal, tax or accounting advice. Your specific situation may involve circumstances that cause the laws, rules, regulations, standards and principles described herein to apply differently. You should consult your own advisors before deciding what, if any, course of action to take in your own particular situation.
Certified Equity Professional Institute www.scu.edu/business/cepi /
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