Employee Share Plans in Europe and the USA - Sorainen

More documents

Recommendations

Info

Employee Share Plans in Europe and the USAUnited States of America6.2 Incentive stock options: If the employee holds the shares received upon theexercise of the ISO for one year from the date he or she exercised such ISO andfor two years from the date he or she was granted such ISO (collectively, the“ISO Holding Period”), then the employee will not have any compensationincome upon exercise, but will recognise long-term capital gain (or long-termcapital loss) upon a subsequent sale of the shares. The amount of long-termcapital gain (or loss) recognised is equal to the difference between the amountrealised upon the sale of the shares and the purchase price for such shares (i.e.the exercise price of the ISO). The employer would not be entitled to a relatedcorporation tax deduction. (Special rules may apply in the case of non-cashexercises).If, however, the employee makes a disposition of the shares prior to theexpiration of the ISO Holding Period (a “disqualifying disposition”), the employeegenerally will recognise ordinary income, and the employer generally will beentitled to a corporation tax deduction, in each case equal to the excess of thefair market value of the shares on the date of exercise over the exercise price.Any excess of the amount realised upon such disposition over the fair marketvalue on the date the ISO Holding Period began will be long-term or short-termcapital gain depending on the holding period (as determined for purposes of thecapital gains rules) involved.7. Employee benefit trustsEmployee benefit trusts are not generally used for share-based schemes in theUSA. Any employee benefit trust for executives would generally need to be a“rabbi trust” and therefore subject to claims of general creditors of the employer.Non-U.S. trusts relating to arrangements not exempt from Section 409A couldcause immediate taxation (and penalties) upon vesting of an employee's interestpursuant to Section 409A.8. Data protection8.1 With respect to share plans and incentive compensation, there is nocomprehensive data protection law that covers all personal data. Instead, thereis a collection of various sector-specific federal and state laws that regulate onlycertain classes of data. 19to persons other than (A) a person with respect to whom such income is not subject to acomprehensive non-US income tax, and (B) a tax-exempt organisation.19Excluding the health care and background-check contexts, most employee information is not coveredunder these sector-specific laws.UK/1729295/03 213 September 2010
Employee Share Plans in Europe and the USAUnited States of America8.2 Notwithstanding the lack of specific data laws, it is recommended that planenrolment forms should include a written consent, whereby plan participantsshould expressly authorise the use and disclosure of their data for all purposesof the plan. In addition, plan administrators should comply with (i) any privacypolicy of a sponsor employer and (ii) document-retention laws that requireretaining tax-related information to be retained for certain periods.9. Employment law9.1 When an equity plan is amended or discontinued, a claim for breach of contractmay arise. Plan provisions should be drafted so as to (i) prevent leased and/ortemporary employees, and/or independent contractors from claiming rights underthe plan, and (ii) allow for unilateral termination or amendment of the plan, whichshould include an acknowledgment of such by the employee. Typically, suchtermination and amendment is subject to the caveat that the changes cannotnegatively affect a grant already made without the grantee’s agreement.9.2 Employers may not prohibit employees, either directly or indirectly, fromparticipating in the plan based on any prohibited grounds of discrimination. 209.3 Although not required by law, plan documents should be available in Englishunless the participant speaks the language in which the documents are written.Otherwise, the effectiveness of the terms or an obligation of employees that area matter of contract law may be in question.20Prohibited grounds of discrimination include race, colour, religion, sex, national origin, citizenship, age,disability, uniformed service or any other status protected by federal, state or local law.UK/1729295/03 214 September 2010
Page 1 and 2:
Employee Share Plansin Europe and t
Page 3 and 4:
Employee Share Plans in Europe and
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19:
Page 22 and 23:
Page 24 and 25:
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170: Employee Share Plans in Europe and
Page 219: Employee Share Plans in Europe and
show all

Employee Share Plans in Europe and the USA - Sorainen

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?