Global Stock Compensation: Key Considerations and Resources

Many multinational companies offer equity compensation worldwide. However, to so, they must navigate diverse legal, tax, cultural, and administrative landscapes to ensure compliance and effectiveness. In this blog, I summarize key considerations for global equity and offer resources that can be used to research tax and legal compliance requirements.

Legal and Regulatory Compliance

Each country has its own securities, exchange control, labor, and data privacy laws that affect how equity can be offered and administered.

• Securities laws: Some jurisdictions require filings or approvals before offering stock to employees, while others may restrict foreign issuers entirely.
• Exchange controls: Some countries restrict or tax the movement of funds across borders, which can impact plan funding and settlement.
• Employment law: Equity awards must align with local employment practices; in some regions, courts may consider stock compensation part of regular wages, affecting termination or severance calculations.
• Data privacy: Compliance with regulations like GDPR in Europe is critical when transferring employee data across borders.

Taxation and Withholding

Tax treatment of stock awards varies widely by country and can influence both employee perception and company cost.

• Employee taxation: Timing of taxation (grant, vest, or sale) differs by award type and jurisdiction. Employers must understand when income is recognized to ensure proper withholding and reporting.
• Employer obligations: Companies may face withholding, social tax, and reporting requirements at the local level. Coordinating with global payroll providers is essential to stay compliant.
• Double taxation and treaties: Reviewing tax treaties can help mitigate double taxation for mobile employees. Establishing tax equalization or protection policies supports fairness and consistency.

Plan Design and Communication

A one-size-fits-all approach rarely works globally.

• Design flexibility: While many companies strive for consistent programs, local requirements may necessitate customization (e.g., cash-settled awards in countries that prohibit ownership of foreign securities).
• Currency and cultural considerations: Exchange rate fluctuations and local attitudes toward equity can influence participation. Tailoring communication and education materials to local languages and financial norms enhances understanding and engagement.
• Equity education: Employees outside the US may be less familiar with stock plans; clear, localized communication improves appreciation of the benefit and compliance outcomes.

Document Decisions

There are many decisions to be made in administering a stock plan. When non-US participants are involved, the number of decisions can grow exponentially. Develop a log to track decisions in a single source. This log can be organized in way that makes sense to the users – by country, by plan, by award type, or whatever makes the most sense for the organization.

Embrace Being the Expert

When it comes to global stock plans, the stock plan administrator often must become the in-house expert. This does not mean knowing each nuance of the laws in all countries where the company offers equity. It does mean being the go-to centralized source for administration, monitoring, and compliance associated with the company’s stock plans.

Ultimately, a global stock plan is not a DIY project; you will likely need to rely on outside experts in global equity to help you establish your compliance protocols. The resources described below serves as a practical starting point for understanding compliance for multinational equity programs so you are better prepared when you meet with your advisors.

Global Equity Plan Resources

Deloitte

Deloitte’s Global Share Plans portal is a valuable resource for companies navigating the tax and legal compliance requirements of employee share plans across multiple jurisdictions. Covering over 50 countries, the portal provides clear summaries on topics such as income tax points, tax withholding requirements, tax-favored plans, securities law issues, and exchange control considerations.

The interactive map makes it easy to filter and compare information by plan type and country, offering a user-friendly way to access Deloitte’s global tax and legal resources for the jurisdiction under review.

PwC

PwC’s Global Equity Dashboard is an interactive tool designed to assist companies in understanding the tax and legal compliance requirements of employee share plans across multiple jurisdictions. The dashboard provides summary information on topics such as income tax points, tax withholding requirements, tax-favored plans, securities law issues, and exchange control considerations.

It covers over 50 countries and offers an interactive map for users to filter and compare information by plan type and country. The user-friendly interface allows for easy navigation, and the ability to access global tax and legal resources for the country under review enhances its utility.

DLA Piper

DLA Piper’s Global Expansion Equity Guide offers a thorough and practical resource for companies managing equity compensation plans across multiple countries. The guide covers stock options, RSUs, and stock purchase rights and highlights key considerations, such as tax treatment, legal requirements, and regulatory obligations.

The interactive site is easy to use, and the option to download a PDF summary for the country under review adds convenience.

ShareReporter

ShareReporter offers a practical and accessible way for companies to navigate the complexities of international share plans. Its free plan, which requires registration, covers 40 countries and a variety of plan types, including options, RSUs, and cash plans, and provides useful information on tax, legal issues, filings, reporting obligations, and withholding rules.

The ability to filter by plan type and phase makes the tool especially user-friendly, and the reliance on a network of local law firm partners in over 90 countries adds credibility and depth to the compliance information.

Learn More

The following NASPP resources provide additional information about global equity programs.

• Trends in Global Equity Incentives: Prevalence and Practices
• Equity Awards Filing Chart with Deadlines for 20 Countries