UNDERSTANDING EMPLOYEE COMPENSATION AND BENEFITS Presented by the Employment and Industrial...
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Transcript of UNDERSTANDING EMPLOYEE COMPENSATION AND BENEFITS Presented by the Employment and Industrial...
UNDERSTANDING EMPLOYEE COMPENSATION AND BENEFITS
Presented by the Employment and Industrial Relations Law Committee and the Taxes Committee
JOINT SESSION EMPLOYMENT AND INDUSTRIAL RELATIONS AND TAX COMMITTEES
“Understanding Employee Compensation and Benefits”
MODERATORSMarianne Granhøj, Kroman Reumert, [email protected]
Juan Bonilla, Cuatrecasas Gonçalves Pereira, [email protected]
SPEAKERSMercedes Balado Bevilaqua, MBB Abogados, [email protected]
Jack Bernstein, Aird & Berlis LLP, [email protected]
Avik Biswas, RDA Legal, [email protected]
Christopher Jordan, CMS, [email protected]
Daniel Ornstein, Proskauer Rose LLP, United [email protected]
Todd Solomon, McDermott Will and Emery, [email protected]
Elissa Romanin, Minter Ellison, [email protected]
CASE STUDY
MicrocreditUS
Mirocredit
Australia
Mirocredit
Argentina
Microcredit
Canada
Mirocredit India
Microcredit UK
Microcredit
Germany
Bonus
BonusBonusBonusBonusBonus Bonus
Executive Equity PlanAll-Employee Equity Plan
IPO?
CASE STUDY: BONUS PAYMENTS
Annual Bonus• Based on cash mediated and profitability
worldwide• No limits or caps• 3-4 times of base salary
Mobile Employees• Obligation to defer 50%• Payable in Restricted Shares: 3 year vesting• Good leaver and bad leaver provisions
Retention Bonus• ¼ paid 1 year after IPO• ¾ 3 years after IPO• Continuity of employment
RESTRICTIONS ON EXECUTIVE PAY: BONUS CAPS: EU / AMERICAN / ASIA-PACIFIC APPROACH
• CRD IV Directive
• UK Challenge
• US Position
• Canada Perspective
• Australia Approach
• South America
• Asia / India
• Deferrals: clawback and forfeiture provisions
• Extraterritorial effect of bonus restrictions
• Pensions as a way to by-pass bonus restrictions?
• Exchange control issues
• Potential inconsistencies with local contracts
RESTRICTIONS ON EXECUTIVE PAY: BONUS CAPS
• When is it a taxable event?• Is it possible to defer taxation?• How complex can be the “mobile” element?• What if the Mobile employee is terminated before the release date?
BONUS FOR MOBILE EMPLOYEES
2014 2015-2018
Bonus Period
Vesting Period for Restricted
Shares
Full Ownership
•50% Cash•50% Restricted Shares
Release of Restricted Shares
2019
• Is it compliant with bonus cap rules?
RETENTION BONUS FOR CERTAIN EXECUTIVES
2014 2015 2016-2020
Award of Retention Bonus
IPO
¼ Bonus
¼ Bonus
¼ Bonus
¼ Bonus
CASE STUDY
MicrocreditUS
Mirocredit
Australia
Mirocredit
Argentina
Microcredit
Canada
Mirocredit India
Microcredit UK
Microcredit
Germany
Bonus
BonusBonusBonusBonusBonus Bonus
Executive Equity PlanAll-Employee Equity Plan
IPO?
CASE STUDY: EXECUTIVE EQUITY PLAN
• 4 year vesting• Performance metrics• IPO: Accelerated Vesting
Restricted Awards
TAX
• Taxation events:
−Grant
−Vesting
−Release / Exercise
−Sale
Potential deferral of taxation
• Mobile employees
EMPLOYEE EQUITY
EXECUTIVE EQUITY PLAN (1)
2014 2014-2018 2018-2025
Vesting Periodof the Restricted Awards
Grant of Restricted Awards
Exercise Period
Conversion of Restricted Awards into Stock Options
• Taxation events• Employment implications
EMPLOYMENT IMPLICATIONS
• Grant of Holding Co vs. Grant of local subsidiary
• Income tax withholding implications
• Choice of law and enforceability: US law and arbitration
• Termination payments
• Continuation of awards upon termination
EMPLOYEE EQUITY
EXECUTIVE EQUITY PLAN (2)
2014 2015 2016
IPO
• Taxation events• Employment implications
Conversion of Restricted Awards into Stock Options
Opening of Sale Period
Full Ownership
Restricted Awards
EMPLOYMENT IMPLICATIONS
• Impact and enforcement of non-competes on equity compensation
• Works Council communications
• Leave of absence provisions
EMPLOYEE EQUITY
CASE STUDY: ALL-EMPLOYEE PLAN
Restricted Shares
• 4 year vesting
• Automatic release upon
vesting
ESPP
• 10% withholding
• 15% discount
• 3 month life cycle
Eligibility: 1 year of service
Retirement Provision: “Rule of 55”
FUTURE THOUGHTS ON COMP&BEN
• Public supervision vs. individual approach?
• Increased regulation: moving out from employee equity plans?
• Fast changing compensation structures: how to make them effective?
• 20% cap on bonuses: is it really effective for the country?
Any questions?Many thanks!
JOINT SESSION EMPLOYMENT AND INDUSTRIAL RELATIONS AND TAX COMMITTEES
“Understanding Employee Compensation and Benefits”
MODERATORSMarianne Granhøj, Kroman Reumert, [email protected]
Juan Bonilla, Cuatrecasas Gonçalves Pereira, [email protected]
SPEAKERSMercedes Balado Bevilaqua, MBB Abogados, [email protected]
Jack Bernstein, Aird & Berlis LLP, [email protected]
Avik Biswas, RDA Legal, [email protected]
Christopher Jordan, CMS, [email protected]
Daniel Ornstein, Proskauer Rose LLP, United [email protected]
Todd Solomon, McDermott Will and Emery, [email protected]
Elissa Romanin, Minter Ellison, [email protected]
