The Rise of Total Reward Statements Starting a few years ago, many companies embraced the use of Total Reward Statements (TRS) in which they tried to summarize all of the different compensation items paid to an employee in one statement, ostensibly to make it easier for an employee to see, at a glance, how much money they were actually making. A TRS usually includes base salary, bonus payments, commission payments and, of course, equity awards.…
There are a few countries that require special annual reports for share plan transactions (in addition to regular annual payroll reports). Australia and the UK are among these countries and are both on a fiscal year that differs from the calendar year. The UK tax year ended on April 5 and the Australian tax year will end on June 30. The UK Annual Share Plan Return (formerly known as Form 35, for tax-qualified awards, and Form…
Less than 18 months after the latest amendment to the regime for tax-qualified RSUs in France, another amendment became effective on December 30, 2016. This amendment is the third amendment to the regime in five years, meaning that companies may (in theory) have to administer tax-qualified RSUs that are subject to three different income tax and social tax regimes. The three different qualified RSU regimes are as follows: French-qualified RSUs granted after September 28, 2012…
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 2016. 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…
Many companies are considering changing their tax withholding practices after FASB modified the accounting rules for share-based awards (ASC 718). For most companies, the modified rules become mandatory for accounting periods starting after December 15, 2016, although companies are able to voluntarily implement the revised rules earlier.
The changes to ASC 718 were mainly intended to facilitate tax withholding for equity awards granted to employees outside the U.S., but have also raised questions for taxes withheld for U.S. executives.
Most equity plans include a governing law provision that provides that the plan and the awards granted under the plan are governed by the law of the jurisdiction in which the issuer is incorporated. In addition, we typically recommend that companies include a venue provision in their award agreements providing that any dispute related to the plan or awards has to be litigated in a forum chosen by the issuer. For US-based issuers, this will usually be a federal or state court in the United States, where courts are more likely to enforce the provisions of the award agreements (which typically favor the issuer). The hope is that, by including such governing law and venue provisions, companies can defeat lawsuits brought by award recipients outside the United States on the basis that foreign courts (which are more likely to apply employee-friendly local employment laws) do not have jurisdiction. It is questionable if this argument always works (in fact, a UK court recently ruled that UK courts had jurisdiction despite a Massachusetts governing law and venue provision in the award agreement), but such venue provisions may at least have a deterrent effect in some cases.
If we are looking at significant trends in 2013 affecting equity compensation programs, then the rise of foreign asset and account reporting obligations will have to be one of them. And Switzerland is to blame for it, sort of. For many years, wealthy individuals all around the globe, including in the US, have deposited millions of dollars in Swiss bank accounts, where local bank secrecy laws were thought to keep them hidden from the tax…
In the past several months, I have seen two companies (both large Fortune 100 companies in different industries) evaluate the merits of a choice program and it looks like both of these companies will move forward with such a program. In both cases, the companies will let employee choose what type of awards they should be granted during the annual grant cycle, e.g., 100% RSUs or 100% options or 50% options/50% RSUs, and so forth.…
We are at a time of year when many companies are making their annual grants so let’s discuss some best practices and “do’s and don’ts” regarding the preparation for annual grants. I am approaching these issues mainly from a legal perspective, so my comments below omit crucial steps that should not be forgotten, such as working with your accountants to determine the expense for the grants, working with your outside plan administrator to ensure documents…