In welcome news, Delaware recently amended its General Corporation Law (DGCL) to increase flexibility for delegating share award granting authority. The amendments became effective on August 1, 2022. The changes expand the elements of granting share awards that a board of directors may delegate, including, and most notably, the authority to determine the terms and conditions of the awards. If a board of directors wants to take advantage of the increased flexibility provided by the…
The question of mid-offering period changes to employee stock purchase plans (ESPPs) has been coming up with unusual frequency, in some cases due to stock price volatility causing an earlier-than-expected shortage of shares and in others due to companies desiring to quickly make their plans more competitive in the ongoing battle for talent. Impact of a Modification of a Section 423 ESPP Option But a mid-offering change to the terms of a Code[1] Section 423…
With the introduction of a new Health and Social Care (“HSC”) Levy in the United Kingdom on April 6, 2022, we wanted to take a few minutes to revisit a unique aspect of granting equity awards to employees in the UK: the ability to shift the employer’s responsibility for paying National Insurance contributions (“NICs”) on equity award income to the employees who receive the awards. This may be particularly important for companies that are already…
Vietnam is becoming an increasingly important market for talent, and we have witnessed growing demand for the offering of share-based awards to employees in Vietnam in recent years. Due to currency control restrictions imposed by the State Bank of Vietnam (SBV), including the requirement that each plan be registered with the SBV, it has traditionally been challenging to implement a share plan in Vietnam. Since the adoption of Circular 10 in 2016, the SBV registration…
On February 10, 2022, the Australian Parliament passed legislation which eliminates termination of employment as a taxable event for Employee Share Scheme (ESS) awards that qualify for tax deferral (i.e., stock options, restricted stock, restricted stock units (RSUs), or an employee stock purchase plan offered to employees). ESS awards that qualify for tax deferral are subject to taxation when an âESS Deferred Taxing Pointâ occurs. Currently, an employeeâs termination of employment is one of the…
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In the last four weeks, the world has witnessed the widespread devastation and growing humanitarian crisis in the Ukraine caused by the Russian invasion. At the same time, multinational businesses have made significant decisions regarding the continuation of business in Russia and the Ukraine and regarding how best to protect their local employees. One aspect of those decisions relates to the operation of equity compensation plans in light of sanctions enacted in response to the…
The Baker McKenzie global pensions team is delighted to announce the launch of the Global Pensions Heatmap. The heatmap sets out key information and principal pension issues that companies should be aware of in over 40 jurisdictions across the world and provides a snapshot of Baker McKenzieâs international transactional pensions presence and expertise. Organisations are able to identify the type, complexity and transaction requirements of pensions funds across multiple jurisdictions all in one place by…
One of the most important issues that arises in any M&A transaction from a compensation perspective is the treatment of stock options, restricted stock, restricted stock units (RSUs) or other compensatory equity awards, whether vested or unvested, held by executives and other employees in the transaction. Below is a high-level summary of key issues to consider in managing equity awards in the transaction.1 Scope of Outstanding Equity Awards. The first step to determining the treatment…
In an apparent follow-up to its General Legal Advice Memorandum dated May 18, 2020 (GLAM 2020-004), the IRS has issued an internal procedural update that (1) extends the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (âRSUsâ) and stock appreciation rights (âSARsâ) and (2) shortens the waiverâs deposit period by one day to align with current SEC securities open-market transaction settlement rules. The internal…