International share plans: how do you manage the project?

So, you want to launch an international share plan? How do you manage a project of that scale?

Last week we looked at the reasons why companies might want to launch an international share plan and the role of HR in that project. That is ‘International share plans ‘bring people together’ in Covid times’ and features an interview with share plans specialist Lynette Jacobs – that’s available for viewing on the Outlaw website if you’ve not seen it. We are coming back to this subject to consider the project-management side of things because, of course, it is not just a case of legal compliance across a number of jurisdictions, it’s about actually put the plan together and making it happen. As an HR team you can expect a lot of help and support with that because, as Lynette explained, it could take weeks, or months, to put this together depending on the number of countries involved and the different jurisdictions. 

As you would expect, we have a lot of experience working with clients on this so let’s hear more about it. Kate Dodsworth is a share plans specialist with expertise in the project management of international share plans. Kate joined me by video-link from her home in Harrogate to discuss it. I started by asking who, typically, would be involved in a project like this:

Kate Dodsworth: “So, there's a lot to this and there are a lot of different elements. It's not just one person, you're going to need involvement from your local and central HR teams, tax lawyers, your administrators, payroll, RemCo, the list is endless, I won't go through the whole list. Suffice to say that there will be a number of people involved.”

Joe Glavina: “So clearly this is a big project. It sounds like launching it could be a full-time job in itself.

Kate Dodsworth: “You’re right, it could potentially be a full-time job but at Pinsent Masons, not only do we have the lawyers who carry out the legal due diligence, but we have a dedicated project management team who will take care of all of that. So, they take it all off your desk and they get on with it alongside us, the lawyers, and we get the job done without any worry from your side.”

Joe Glavina: “Can I come onto the legal issues, Kate. So, depending on the jurisdiction, we’ll have securities laws, exchange controls, tax requirements etcetera. What are the main ones that HR need to bear in mind?”

Kate Dodsworth: “Yes, so you’re right, in our advice reports, in a legal DD review, we always cover the securities laws, exchange, tax, but for HR professionals, I guess, the interesting areas are the employment law side. So, certain jurisdictions require consultations to be undertaken with trade unions or work councils before launch of the share plan. Then we have employee communications. So, some jurisdictions require limitations or require specific language to be used in the documentation and it also needs to be looked at, whether for a certain jurisdiction the content of those employee communications need to be translated, that’s another key issue that is looked at. There are a number of areas, which we of course, advise accordingly, depending on the jurisdiction, and what is available to the employer depending on the share plan.”

Joe Glavina: “Are there any jurisdictions to avoid?”

Kate Dodsworth: “So we no longer have the kind of ‘no go’ jurisdictions, as it were, but there are, of course, some that are a lot more straightforward than others and, I guess, with the ones that are little bit trickier, they are more costly for the client so becomes more of a commercial decision for the company, how key is that jurisdiction to their business and would they prefer to implement an alternative, so the ‘cash phantom’ plan? I think it also needs to be borne in mind that you've got jurisdictions like, for example, the US where you have to look at federal and state securities laws, and then jurisdictions like Poland or, potentially, the Philippines where there are a number of filing obligations as well.”

Joe Glavina: “So let us assume the plan is launched successfully. Is that it? Job done?

Kate Dodsworth: “So, it isn't just at the launch of your share plan that the due diligence needs to be carried out, which is where a lot of employers or companies fall down. A review should be undertaken whenever further awards are made to check there haven't been any changes in the laws in that jurisdiction and then on maturity of an award, of course, vesting of an award. It’s important because this is when for a number of jurisdictions, a tax charge can arise. So, you need to plan ahead and, again, communicating with the participants is very important, updating the DD, being aware of any new reporting requirements and filings and having time to get on top of those and this would normally require input from your local employer company. Then, I guess, also if there was a corporate transaction, the share pan will need to be reviewed in light of that transaction to determine how the corporate transaction impacts the awards that have been made and, I guess, again it comes back to the communications with the participants so that they are aware of the position on that.”

To help clients see the full picture we will be hosting a webinar on this subject next week, on 19 May from 11am-12pm. It’s called ‘How to launch and operate your international share plans’. It covers both the legal issues which Lynette talked about last week and the project management side which Kate has just talked about, using a number of case studies to illustrate the points. It also covers how to go about communicating the share plan to your eligible employees. If you are interested in that you can sign up directly from the website. We’ve put a link to that in the transcript of this programme,

LINKS
- Link to Pinsent Masons’ international share plans webinar