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© 2015 Chevron
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
© 2015 Chevron
The Reason We’re HereWhen 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.
© 2015 Chevron
Project Scope Employee payroll taxation for the following equity
payments: Stock OptionsNon-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
© 2015 Chevron
The Mobile Employee Taxation Project
Project Goals
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 standardized solution for non U.S. payrolls
Process the payroll data one time
© 2015 Chevron
Team Structure
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
Executive Sponsors VP Human Resources (HR) VP Finance
© 2015 Chevron
Project Plan by Major Work Stream2012 2013
Build InterfacesInitial Data Build & Tool Configuration
StabilizationUnit / Integration / User Acceptance Testing
As-Is
2014
Implementation
2015
Equity Taxation Tool
Selection
Support Organization Design
Start
Change Management Activities
EngageMorgan Stanley (SPA)
Master Data and Tax Position Effort
Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1
To-Be Design
© 2015 Chevron
Major Workstreams to be Discussed1. 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
© 2015 Chevron
1-Equity Tax Tool SelectionEvaluation Criteria
1-Quality of functionality; meets business and compliance requirements
2-Integration of tools with other applications and meets architecture requirements
3-Experience with similar implementations
4-Depth and breadth of tax and technical staff
5-Scalability and extensibility of tools and services
6-Demonstrated commitment to high service level; future commitment
7-Meets Chevron IP compliance; data privacy standards
8-User friendly; easy to use; meets usability standards
9-Total cost of ownership
10-Can meet timeline
11-Supplier past performance; ongoing viability
Selected KPMG’s Global Equity Tracker
(GET) Tool
10.7%
10.5%
8.4%
9.1%
9.0%9.5%
10.5%
7.6%
7.6%
7.6%
9.5%
© 2015 Chevron
2-Stock Plan Administration Design Changes
As-IsStock Plan Administration relies on data solely from
Chevron
To-BeStock 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
Tax withholding requires manual intervention and downstream payroll adjustments
© 2015 Chevron
3-Master Data Design
Movement
1Determine Participant
Work History Requirements and Analyze
Who Has Movement
2Identify and Resolve Gaps
in Work Location History
3Finalize the Participant
Master Data Design
SAP
No HRData JDE ~200 Employees
~100 Empl.
~2,900 Employees
Build
Validate
2% of participant work location history was not needed
Good work
location history (94%)
No work location history (4%)
*Evergreen refers to a continuing process as opposed to a one time event.
Develop evergreen* procedures for manual collection where needed
Develop the interfaces
Three Phases:
© 2015 Chevron
4-Develop Chevron's Tax PositionsChevron 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
Review positions with in-country
tax managers
Major factors for each Tax
Jurisdiction
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
© 2015 Chevron
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
© 2015 Chevron
The Final Equity Taxation Design (Animation)
Payroll
Equity Tax Statement
© 2015 Chevron
6-Testing Strategy
Testing Approach
Unit Testing: Equity Tax Calculations Unit
Testing: Web Call
For Transaction Modeling
Unit Testing: Chevron ERP
Integration Testing
End to End Testing
User Acceptance Testing
© 2015 Chevron
7-Change Management and Training201520142013
Preview Key CommunicationsImplementation
DRB DRB DRB DRB DRB
Finalize SAP Master Data
Finalize JDE Master Data
InitialComms
Go-Live FAQ Notify
FAQ & Project Updates
Participant Work Location Verification
FAQ & Project Updates
Participant Statement
Focus Group
Man
agem
ent
Par
tici
pan
tsIn
-Cou
ntr
y S
MEs
Legend:BIL: Business Integration Lead CBT: Computer-Based Training Comms: Communications DRB: Decision Review BoardFAQ: Frequently Asked Questions QRC: Quick Reference Card SME: Subject Matter Expert
Go-Live Notify & SupportTrainTargeted Functional
communications
Payroll Readiness
JDE Template Training
BIL Readiness
High Activity In-Country Workshops Enable Competency
Key Messages:• What’s
changing and why
• Examples• Timing• Contacts• Validation
of work history
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
InitialComms
© 2015 Chevron
New Equity Tax Statement Sample
Overview
Award Information
Work Location & Withholding Summary
Detailed Notes
Contact Information
Tax Statement Components:
© 2015 Chevron
8-Ongoing Support Structure Design2013
Implementation
Agreed to Functional
Ownership (HR) and Roles/
Responsibilities
Selected Additional Support Resource
Developed the Transition
Timeline (CVX, KPMG, MS)
Stabilization
Finalized the Stabilization
Plan and Resources
2014 2015
Researched Support
Requirements
Executed the Transition Plan
(CVX, KPMG, MS)
Identified Support Leader
Q4 Q1 Q2 Q3 Q4 Q1
© 2015 Chevron
Multi-Level Support Model
• Product issues (bugs)
• Complex issues • Consultation
• Messaging • Network• Server and DB issues
• Triage transactional issues • Reporting • Change and Release Mgmt.• Control issues
• Power user and participant inquiries• Procedure documentation• Training materials (computer-based
training, quick reference cards)
MS & KPMG Application Support / Services
Information Technology Technical Support
ERP Technology Support
NewSupport Organization
Online Help/Training
Types of Problems SolvedIncreasing
Complexity of Issues
• Participant inquiries via mailbox or phone
Business Level SupportCorporate HR and Finance
• System access• Interface issues
Chevron MS/KPMG
Online Help/Training
(MS only)
MS Service Delivery, KPMG Account Manager
MS & KPMG Service Desk
Technical Infrastructure Support
ERP Application Support
MS=Morgan Stanley DB=Database
© 2015 Chevron
Major Challenges and Lessons LearnedLooking Back
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
Challenges Maintaining the vision Integrated planning
between three companies Testing Maintaining standardization Global implementation
© 2015 Chevron
Thank YouEd Gibbons
Mike ReekersChevron
Nancy MesereauMorgan Stanley
Cody UlmerChevron
