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Never a Dull Moment in France…

By 4 Mins Read

Just when we thought French-qualified awards were headed for extinction due to the ever decreasing tax benefits, there is change in the air!

In November, a draft law was presented (the “Loi Macron”) which proposes a number of changes to the requirements and tax treatment of French-qualified RSUs, most of them favorable. The draft law does not propose any changes for French-qualified options.

As currently drafted, the law provides the following:

    • Minimum vesting period reduced from two years to one year from the grant date;
    • Holding period after vesting (currently minimum of two years for RSUs that vest within four years of grant date) is optional, but shares cannot be sold for a minimum period of two years from the grant date (effectively requiring a minimum one-year holding period for RSUs that vest on the first anniversary of the grant date);
    • Employer social tax liability moved to vesting and due at a rate of 20% on the value of the shares issued at vesting (currently 30% on the value of the shares subject to the RSUs at grant – no reimbursement if RSUs forfeited prior to vesting); and
    • Gain at vesting taxed as capital gain (currently taxed as salary income).

‘Tis the Season for Filings

By 1 Min Read

It is almost the end of the calendar year, and in addition to wrapping up gifts and holiday parties, it is time for multinational companies to consider the necessary tax and regulatory filings for global stock plans triggered by the close of 2014. As you consider the steps your company may need to take to start the new year right, please see our Global Equity Services Year-End / Annual Equity Awards Filing Chart, which contains…

Changes Afoot in Australia

By 5 Mins Read

October has been an important month for equity awards in Australia.

New Tax Rules

First, the Australian Government announced on October 14, 2014 that it would revise the tax rules applying to employee share plans.  The legislation still needs to be written and will most likely be effective only for grants made on or after July 1, 2015, but it seems clear that the taxable event for stock options will revert back to exercise (as it was the case for options granted before July 1, 2009).

This is great news for companies that had stopped granting options to employees in Australia after tax rules effective July 1, 2009 provided for tax at the time the awards were no longer subject to a substantial risk of forfeiture (typically at vesting). Apparently, the Australian Government finally realized its mistake after many companies aggressively lobbied for changes and pointed out that, by not being able to grant options, they were not able to compete with companies in other countries that are able to use stock options to incentivize employees.

The 411 on Retirement Provisions and Equity Awards

By 5 Mins Read

It has been common practice in certain industries to provide favorable equity award treatment to employees who terminate due to retirement.  Often, retirement is defined with reference to reaching a certain age, or a certain age plus a certain number of years of service with the company (e.g., 55 years and 10 years of service).  Employees who meet the definition of retirement will be allowed to continue to vest in awards after termination, have vesting of their awards be accelerated, or be allowed a longer post-termination exercisability period (for options).

As traditional retirement plans become less common, more and more companies are considering these provisions in order to provide additional benefits to employees who are nearing, or have reached, retirement.

With respect to U.S. employees, it is well understood that allowing retirement-eligible employees to continue to vest in awards after termination can cause accounting and tax issues (i.e., compliance with Section 409A as well as an accelerated social security tax liability).

For non-U.S. employees, the same accounting considerations apply, but in addition, companies also need to consider age discrimination concerns and changes to the taxable event of awards.

New UK Share Plan Registration Requirements

By 1 Min Read

I recently moderated a webinar during which my UK colleagues and representatives from Her Majesty’s Revenue and Customs (“HMRC”) explained the new share plan registration requirements in the UK.  These requirements apply to any company offering a share plan (whether tax-qualified or not) to employees in the UK.  The registration has to be completed by July 6, 2015, but for practical reasons, should be completed well in advance of this date. During our webinar, the…

Boots on the Ground – Employment Considerations for Companies Expanding Abroad

By 1 Min Read

I recently co-authored an article with my partner Susan Eandi in Bloomberg BNA’s Corporate Counsel Weekly.  In the article, we discuss the different employment and compensation considerations when entering new jurisdictions. Topics addressed include how to engage workers in each jurisdiction and the integrated analysis of the employment, tax and corporate consequences of a direct hire versus an indirect hire or contractor for a U.S. company. To read the full article, click here.

Equity Awards and Data Privacy

By 4 Mins Read

An issue that is often neglected when implementing an equity plan on a global basis is the compliance with global privacy regulations. Legislation intended to protect an individual’s right to privacy has existed for many years in the European Union (introduced by an EU Directive in 1995), but data privacy has not been a hot topic in most other countries (including in the U.S.). In the last several years, there has been a flurry of new data privacy laws around the world, especially in Asia Pacific, no doubt brought on by the proliferation of global internet use and the concern about data privacy on the internet.

These laws also affect companies offering global equity incentive plans, as well as their service providers. Typically, data privacy laws restrict the collection, processing and transfer of personal data, which is defined as information which can be used to identify a person. In addition, many data privacy laws require that databases in which personal information is stored be registered with local data privacy authorities.

To Transfer or Not to Transfer

By 5 Mins Read

As I work with companies expanding into the UK, one issue that comes up regularly is whether to transfer the employer social taxes due on equity income (known as employer National Insurance Contributions or NICs) to employees. Employer NICs are due on equity income if the taxable event occurs at a time when there is a market for the company’s shares (typically, when the shares are publicly traded). If due, employer NICs are payable at a rate of currently 13.8% and are uncapped (meaning they are due no matter how much income the employee realizes). This distinguishes the UK from many other countries (e.g., the US or Germany) where social taxes are also due but only up to a certain threshold (or income ceiling). Often the employee has already reached this threshold with her regular salary such that no social taxes are due on equity income.

Because employer NICs in the UK are uncapped, if a company makes significant equity grants to employees in the UK, the employer NICs liability can be crushing. But the UK again distinguishes itself from virtually all countries by allowing the employer to transfer the employer NICs due on income realized from most equity awards to the employee.

Waiting for ASIC

By 5 Mins Read

As most of you are painfully aware, in late 2012/early 2013, the Australian Securities and Investment Commission (ASIC) concluded that restricted stock units (RSUs) should no longer be considered as nil-priced stock options, with the effect that most exemptions from the prospectus disclosure requirement no longer were available for RSUs. This meant that, in most cases, the grant of RSUs to employees in Australia would trigger a prospectus filing obligation, which would be extremely onerous…

ESPP in China…Should You Dare?

By 6 Mins Read

One question that I have encountered almost weekly in the last year is whether companies should offer their ESPP in China.  The companies that ask this question usually have already registered their equity incentive plan(s) with the China State Administration of Exchange (SAFE) and are granting options and/or RSUs to employees in China.  Typically, they have held off on registering the ESPP due to administrative concerns and the fact that a SAFE registration used to…