The NASPP Blog

Category Archives: Global Stock Plans

June 30, 2016

Brexit and Your Stock Plans

Everyone else is talking about Brexit (the vote in the UK to leave the EU), why should the NASPP Blog be left out of the conversation? For today’s entry, I discuss what Brexit might mean for your stock plans.

Don’t Panic—Yet

The good news is that the vote is advisory, so it isn’t as if the UK has immediately exited the EU. They are still part of the EU for the short-term. The UK government and the EU have to come to an agreement about how the exit plan will work and various experts have indicated that this could take two years or more.

How Will Stock Plans Be Impacted?

By now, we are all too familiar with the EU Directives that impact stock compensation.  While the Directives are complicated enough, in and of themselves, if the UK leaves the EU, things could get a lot more complicated. The UK will have it’s own rules that may or may not be the same as the rules in the Directives. A recent alert by Baker & McKenzie summaries a number of areas in which stock compensation offered to employees in the UK could be affected.

  • Securities Laws: The EU Prospectus Directive (including both the filing requirement and exemptions) will no longer apply in the UK.  This could turn out to be better or worse than the way things are now: the UK could require companies offering stock compensation to file a prospectus (probably worse), could provide an exemption for stock plans (probably the same as now for many companies, depending on the requirements for exemption), or could recognize prospectuses filed in the EU (or even in countries outside of the EU, such as the United States) (the same or better).
  • Data Privacy: The EU Data Privacy Directive would also no longer apply in the UK. The EU has proposed new rules for this directive, so right now, we don’t know what the final rules will be for any countries in the EU, much less the UK.  But once the UK has left the EU, they can determine their own rules; maybe these rules would be similar to the rules that the EU adopts, maybe not.  One bit of good news is that Baker & McKenzie notes that “It would be surprising … if the UK would not consider consent to be a valid ground to collect, process and transfer personal data.” Since that is how most companies comply with the EU Data Privacy Directive for their stock plans, little may change here.
  • Discrimination:  There are a number of EU Directives that prohibit discrimination against specified groups of employees. Those Directives would also no longer apply in the UK, but the UK would be free to adopt its own rules on discrimination.  Baker & McKenzie notes that they do not expect to see substantial changes here.

Social Insurance, Too

An alert by EY notes that Brexit may also impact the social insurance obligations of mobile employees, their employers’ compliance obligations, and the benefits mobile employees are entitled to. Currently, the EU governs how social insurance applies when employees move between countries in the EU. Unless the UK comes to an agreement with the EU that the EU rules still apply to employees moving between the UK and other EU countries, individual agreements would have to be put in place between the EU and all the EU countries. Some of these agreements exist, but they haven’t been updated since the EU established its rules. Many have expired or don’t address how mobility works in today’s world. This could get ugly.

What About Companies that Don’t Have Stock Plan Participants in the UK?

For those companies, there shouldn’t be any direct impact to their stock plans (other than the impact of stock price volatility resulting from the economic uncertainty caused by Brexit). But, if you are a US-based company with a multi-national stock plan, chances are that you have stock plan participants in the UK. In the NASPP/PwC Global Equity Incentives Survey, the UK is second only to the US in terms of countries where respondents have employees and offer stock compensation.

More to Come

I’m sure there will be more implications to think about as the UK’s exit looms closer.  At this year’s NASPP Conference, our perennially popular session, “Around the World in 60 Minutes: Key International Updates” will most certainly have a lot to say about Brexit, as will the session “Making Sense of Europe.” Be sure to attend one or both of these sessions so you are up-to-date on how your stock plan participants in the UK will be affected.

– Barbara

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June 1, 2016

When Your Board Goes Global

A recent Baker & McKenzie blog (“What To Do When Your Board Goes Global,” available in the NASPP’s Global Stock Plans portal), focuses on an accelerating trend – that of company boards of directors becoming more and more globally diversified. “We are seeing an accelerating trend among U.S. companies to add non-U.S. residents to their Board of Directors. This makes sense: as more and more companies “go global” and expand in ever more countries, their Boards should reflect the global nature of the company.” While it may be a positive that companies are comprising their boards of more globally diverse members, there are things to know.

Areas of Key Consideration

  • Taxation can get complex. To ensure proper withholding occurs, companies need to verify the director’s tax status relative to the US. Are they a US citizen or permanent resident? Did they reside in the US for 183 or more days per year? These questions are essential in determining US tax withholding requirements. Additionally, companies will also need to assess and determine whether an exemption from US tax withholding exists based on a treaty with the director’s home country.
  • Even if there is no complex US withholding required beyond a flat rate of 30%, the director may be subject to withholding taxes in his/her home country. Canada is one such country where this is a distinct possibility.
  • Companies need to determine whether any income/tax reporting needs to occur at the US state level where the non-US director performed services.
  • Careful attention should be given to analyzing regulatory exemptions in the home country that may be available. While some exemptions may apply to employees, those same exemptions may or may not be available to non-employees, including non-employee directors. It’s important not to outright assume that if employees qualify for an exemption that non-US directors will qualify too.


The Baker & McKenzie blog suggests thoroughly vetting tax and regulatory requirements that apply to non-US directors in each jurisdiction, similar to the practices many companies undertake in vetting requirements that are applicable to employees. Additionally, such analysis should be ideally conducted on an annual basis to capture changes to tax and regulatory requirements, as well as board demographics.

For more detailed information on possible considerations and implications, view the entire blog – “What To Do When Your Board Goes Global.”





May 10, 2016

Trivia Time: Global Treatment of Cash Awards

A long-time staple of the NASPP’s Global Stock Plans portal has been Baker & McKenzie’s Matrix of International Considerations in 50 Countries. This year’s edition of the matrix, released in April 2016, now includes considerations for cash awards (phantom shares, net settled RSUs and other cash-settled equity awards). The considerations for cash settled awards vary by country, similar to other award types. In today’s blog, using the Martix as our guide, we’ll test your know-how related to treatment of cash awards.

Trivia Time!

The world is a big place, and with cash-settled awards gaining popularity in non-US jurisdictions, it’s time to deepen our expertise in this area. Take the trivia quizzes below to learn more about whether cash is king, or alternatively a can of worms. You can see the results from your peers in each poll, and the correct answers are listed at the bottom of this blog. Good luck!

#1 – Tax Basis

bike tracks

#2 – Timing of Taxation

find bike trails

#3 – SAFE Registration in China

feedback surveys

For more more country specific considerations in handling cash awards, view the entire Baker & McKenzie Matrix.




  1.  Belgium  2. Both France and Malaysia  3. Payment of cash settled awards from the local payroll

December 15, 2015

5 Things About Global Stock Plans and Technology

This past summer, the NASPP and Solium co-sponsored a quick survey on global stock plan administration. We asked companies about the technological challenges they experience when it comes to administering global stock plans, focusing on 12 primary challenges related to tax compliance, financial reporting, and other administrative matters. Close to 70% of respondents indicated that they struggle with four or more of the challenges identified and several noted that they struggle with nine or more of the challenges.

For today’s blog entry, I highlight five things I learned from the survey:

1. There are still a lot of manual processes out there.

Two-thirds of respondents say they spend too much time on manual processes.  This is a high-risk proposition: it is difficult to implement adequate controls over processes and calculations performed in a spreadsheet. This seems especially concerning given that the SEC is in the process of adopting rules requiring recovery of compensation for all material misstatements, even if due to inadvertent error (see “SEC Proposes Clawback Rules,” July 7, 2015). One incorrect calculation discovered too late could result in recoupment of bonuses and other incentive compensation paid to executive officers.

2. Tax compliance is a top concern for companies.

This really isn’t a surprise—let’s face it, tax laws outside the United States are a hot mess.  Every country does something different. Some countries change their laws every few years (I’m looking at you, Australia and France) and grandfather in old awards.  Some countries have different rules for social insurance taxes vs. income taxes. Add in mobile employees and, well, you have a lot of work for tax lawyers.

3. Regulatory compliance is also a challenge.

56% of respondents cite keeping up with regulatory changes as a top challenge and 45% cite regulatory requirements in other countries.  Regulatory compliance goes beyond tax laws to include things like securities laws, data privacy (a hot topic these days, see “Data Privacy Upheaval,” December 3, 2015), labor laws, currency restrictions and a host of other issues. It’s hard to stay on top of it all.

4. It’s the participants that suffer.

Ultimately, in the struggle to administer a global stock plan, something has to give and that something is usually the participant.  Only 50% of respondents offer a qualified plan in countries where they could; the hurdle of regulatory compliance gets in the way. And 75% of respondents said that they would focus more on employee education if they could just spend less time on basic administration.

5. Expectations are low.

When we asked companies what is on their wish list for their administrative system, I was surprised at how low some items ranked (it was a “check all that apply” question, I thought everyone would want just about everything).  For example, despite the fact that 71% of respondents reported tax-compliance for mobile employees as a top challenge, only 64% wanted a system that could calculate tax liabilities for mobile participants.  It left us wondering if companies need to dream bigger for their administrative platforms.

Check out the White Paper and Survey

If you haven’t had a chance to read it yet, check out the white paper on the survey results and download the full results from the Solium website.

– Barbara


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December 3, 2015

Data Privacy Upheaval

If you are a company with employees in the European Union (EU) or European Economic Area (EEA), you’ve likely long been aware of the stringent data privacy requirements surrounding the transmission and protection of data for those residing in that region of the world. To facilitate compliance with certain aspects of data privacy requirements, some companies relied (in all or part) upon the EU-US Safe Harbor Privacy Program (“Safe Harbor program”), which allowed for transfers of personal data for EU/EEA residents to US companies registered under the program.  On October 6, 2015, the European Court of Justice ruled the Safe Harbor program invalid. What is the impact of this ruling on data transfers relative to stock plans? I’ll explore this question today’s blog.

Much of the information I have on this topic comes from two Baker & McKenzie sources (“New Data Privacy Turmoil?” and “Impact of CJEU US/EU Safe Harbor Program Judgment on Equity Plans“) – both available in the NASPP’s Global Stock Plans portal. Let’s now get to the heart of the matter.

How Would This Potentially Affect Stock Plans?

If your company is a US based company, it’s likely that most or all of your stock plan data is housed in the US. This means that if your plan includes participants in the EU/EEA, their data needs to be sent to the US to be recorded and maintained in the stock plan recordkeeping system. That recordkeeping system could be maintained in-house, or externally via a third party, who also likely maintains data within the US. Additionally, there may be a need to transfer participant data to other third parties who support the company’s stock plans beyond recordkeeping services.

According to the Baker & McKenzie client alert,

“The impact of the ruling on the personal data collection /processing / transfer activities of US multinationals in the context of offering of equity compensation programs to European employees depends upon whether the company had relied on Safe Harbor in this context – or, instead, relied on  an alternative method for managing data privacy considerations (e.g., relying on express consent obtained from participants, either through acceptance  of its equity award agreements or provided as part of the local new hire on-boarding process). If alternative methods have been relied upon, the ruling is unlikely to have any impact on the equity program. If the company relied on Safe Harbor, it will likely need to start relying on an  alternative method.”

The transfer of data provided to brokers is unaffected by this ruling, because financial institutions were never eligible to register under the Safe Harbor program, and as a result, it was never possible to rely on that program to transfer employee data to a broker. Companies had to find an alternate, permissible means of transferring data to brokers. Considering the now-invalidated Safe Harbor program, that is good news for data transfers to brokers or financial institutions, because they were never covered under the program and should remain unaffected by the ruling.

Is Our Stock Plan Affected?

If you have no stock plan participants in the EU/EEA, then this ruling does not affect your stock plans. This only applies to the data of those residing in that region of the world.

For companies that do have stock plan participants in the EU/EEA, the answer to that question is “it depends.” It depends on how the company was complying with data transfer requirements prior to the ruling, as described above. If your company relied on the Safe Harbor program in any capacity, then an alternate method for transferring that data will need to be used.

If your company has no participants in the EU/EEA, but decides to offer equity in that region in the future, it’s important to know that the Safe Harbor program will not be available as a means of compliance with data transfer requirements.

What’s Next?

This ruling has created a wave of turmoil, and not just for equity plans. It’s likely other company functions such as Human Resources are impacted, too. Baker & McKenzie’s suggestion is that “Companies should review their practices with regard to data privacy, including in the context of operating their equity compensation programs. Even if the ruling does not have any direct impact on the equity program, data privacy requirements around the  globe are tightening and a regular review of your company’s approach to data privacy is highly recommended.”

There is also talk of a Safe Harbor 2.0, with no telling on a timeline or potential for success of such an initiative. It’s important that companies recognize the implication of this ruling beyond the immediate affect on employee data transfers. The action of invalidating the entire EU/US Safe Harbor program seems to suggest that the EU has broader concerns about the US’s ability to protect the data of their residents, and it’s possible that other methods of complying with data transfers may follow in being evaluated for efficacy of protecting privacy. Expect the topic of data privacy to be a hot one for 2016.

Speaking of global hot topics, you can find out “5 Things I Learned About Global Compliance and Communication,” in the latest episode of our popular Equity Expert podcast series.



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September 22, 2015

Top Trends in Global Stock Plans

We recently posted the executive summary to the NASPP and PwC 2015 Global Equity Incentives Survey and, later today, we will be presenting highlights of the results in our webcast, “Top Trends in Equity Plans for International Employees.”  For today’s blog entry, I highlight five findings that I think are significant:

Globalization Continues:  Back when we did the 2012 survey, 20% of respondents said they expected to increase global participation in their stock plan and this trend held steady in 2015, with 19% again expecting to increase participation.  In addition 77% of respondents said they expect global participation to remain the same.  That leaves only a very small percentage of companies that expect to pull back their global stock plans.

Compliance Reviews Are More Routine:  The percentage of respondents who said they conduct annual compliance reviews of their global stock plans increased to 43%, up from 34% in 2012.  At the same time, respondents conducting only sporadic reviews dropped to 40%, down from 45%.  It can be risky to wait until you hear about a regulatory change to conduct a compliance review; annual reviews help ensure that you know when the laws impacting your global stock plan have changed.

UK Takes the Lead in Challenging Tax Compliance:  We asked respondents to indicate which countries they found to be challenging in terms of tax compliance. The UK was first, with 46% of the votes, up from 36%  (third place) in 2012.  China, however, is hanging in there at second place with 42% of the votes (China was in first place in 2012). France dropped to third place, with 26% of the votes (down from second place and 38% of the votes in 2012).

Mobility Compliance Up:  The percentage of respondents tracking mobile employees continues to increase:  87% of respondents track formal assignees (up from 80% in 2012), 62% of respondents track mobile employees who aren’t part of an assignee program (up from 60% in 2012), and a surprising 27% track business travelers (up from 18% in 2012). But the tools for tracking mobile employees still leave something to be desired: 36% of respondents track this in an Excel spreadsheet, up from 29% in 2012.  About another third (32%) outsource tracking to a consultant or TPA. The final third use a hodge podge of methods.

Participant Understanding Looks Like a Mountain Rather Than a Bell Curve: Only 34% of respondents felt that their global participants understand a good deal or completely understand their stock plan benefits. That leaves a two-thirds majority for whom participant understanding is at best, somewhat or partial. Global stock plans are a very expensive employee benefit, both in terms of the P&L and administrative cost.  It seems a little crazy to invest resources like this in a plan and not also invest in the education to make sure participants understand it.

Be sure to tune in to the webcast later today to learn more highlights from the survey.

– Barbara

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