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Global stock plan: How to design & operate?

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A global stock plan is any stock-based plan that operates for the benefit of employees in more than one location, normally over shares in the parent company of the relevant group.

Although globalizing a stock plan can be complex, having it planned carefully from the outset, together with a robust communication plan can see a lot of success. In this post, we’ll talk about:

  • Setting objectives for your global stock
  • Local customization or global consistency
  • Local plans’ benefits for employees
  • Digitizing the process
  • Operating it in their language and currency
  • Local laws and regulations
  • Customizing your comms plan for multiple countries

Set objectives for your global stock plan

Any employee equity plan should have a clear objective and that a considered strategy should be put in place to reach that goal. Here’re some common goals we’ve heard:

  • Attain employee engagement via employee ownership
  • Retain/attract talent in certain regions
  • Celebrate a company’s milestone
  • Unite all international employees
  • Be an integral part of your company’s international culture

Despite being fundamental, many employers don’t have one in place, resulting in an inefficient design and implementation process, and thus a low program participation rate.

Having objectives implemented allows you to pick the right equity awards, design proper vesting schedules, and plan your comms strategy. If you get them right, you’ll see lots of success.

In our recent webinar, Julie Shepherd, Director of Stock Plans at Sage, tells the story about how she launched a global employee scheme to a potential 13,000 people – all during a once-in-a-century pandemic – and still saw a record 20% of the entire workforce sign up.

Local customization vs Global consistency

It isn’t unusual that companies want to launch the same ownership plan in all jurisdictions but there’s a balance to be struck between global consistency and local differences when it comes to going global.

Here’re some key considerations for each jurisdiction during globalizing a stock plan.

  1. Any restrictions to offering particular awards in particular jurisdictions?
  2. Time required: e.g. Will it take too long for documentation filing in this country?
  3. Cost required: Is the admin, legal and accounting cost a concern?
  4. Is it lawful to offer participation in certain employee schemes in that location?
  5. Employee considerations: e.g tax benefits
  6. Competitor/market practice

So, if they’re a concern or don’t align with the company objectives for some regions, it’s not necessary to insist on global consistency. You can instead go for local customization by setting up a local sub-plan under your existing ‘’parent’’ plan with modifications like this example.

Contact local experts (or global experts with local knowledge) to ensure you are in line with local practices.

Think locally

Make use of the local scheme’s tax benefits:

As just discussed, going global is not necessary to stick with one single plan. We can utilize the local scheme’s tax benefits to achieve better participation results.

For example, you offer tax-advantaged ISOs to your employees in the US and decide to expand the same program to your employees in the UK subsidiaries as they work well in the US. You probably need to re-think it as the tax advantages of ISOs don’t likely apply to taxpayers outside the US. You can instead consider tax-advantaged UK employee share schemes, which are similar to ISO, to benefit your UK employees.

Consider local economy:

A program’s success is often associated with the economic outlook.

The less disposable income an employee has, the less likely it is that investing in stock plans will be a priority.

Gabbi Stopp, head of employee share ownership at industry body IFS Proshare.

Digitize the process

If you’re operating in multiple jurisdictions and in multiple languages, the level of stock plan complexity grows. Spreadsheets don’t scale with your business as your ownership plan grows.

You need a digital platform to keep the data accurate and administer all equity plans effectively. With thousands of employee datasets, multiple equity awards/plans and different vesting schedules, tax rules, regulations, and all the other moving elements in an employee stock plan, it will soon become out of control if you’re not using equity compensation software like ours at Global Shares. Speak with us today.

Around 75% of companies use an external provider for digitizing and administering their equity plans (with even more in North America) (Source: Global Equity Insights 2022)

Operate it in their language (and currency)

Stock plans are already new to lots of people. The language barrier and unfamiliar currency will make the learning curve steeper.

Our stock plan administration software features an employee portal that allows them to have 24/7 personalized access to their equity account for easy trading, tracking, and management. Not only is the portal in their language and currency, but our support team also serves them in the local language.

Understand local laws and regulations

The most important part to get right with your international employee equity plan is to understand the different laws and regulations in each jurisdiction. The cascading effect of these means you need to get the initial set-up correct, or else you will be hit with unforeseen problems. Some questions you want to find out are:

  • What regulatory consents or filings need to be completed locally?
  • By when do they need to be done?
  • Is it permissible under local exchange control regulations for employees to send the purchase money from their country?

Consult with experts (like here in Global Shares) who can guide you through that initial set-up and advise on what steps you need to take.

Customize your comms plan for multiple countries

If you’re operating across multiple countries, it’s almost certain that you are targeting a large base of employees to join the plan. In this case, make sure to customize your comms plan with the following components in mind.

global-stock-plan
4 Components of Global Stock Plan Communications

Cultural difference

When customizing it, be hyper-aware of cultural differences and how the messaging should be different. For example, the US has a strong culture of employee ownership (company executives prefer shares to cash), while in the UK, company executives prefer cash to shares.

You should reflect this in your communications strategy which can lead to a wider understanding of employee ownership. Learn more about why companies build employee ownership.

Relative values

It’s important to note the relative values that stock will have in each country and be sensitive to that fact. Depending on how your plan is designed, and the relevant taxes and regulations in different countries, one employee may be able to buy a new car with their stock options, while another might be able to put an extension on their house for ostensibly the same stocks.

Varied comms methods

Global implementations raise unique employee communication issues, so using a wide variety of communications (videos, emails, face-to-face meetings) is wise to get your message across.

Share stories

Including storytelling in your comms plan can have the two-fold effect of boosting employee ownership participation and connecting staff across the world ‘’as a corporate glue’.

To do this, simply share stories of people benefiting from the plan, and connect it with the work being done by the company. This will make those people not in the plan seriously consider joining and enable employees to connect with their counterparts halfway around the world from them.

Global Shares – Your global stock plan service provider

With over 15 years of experience, we know how to effectively operate a global stock plan for businesses of all sizes.

As a global stock plan service provider, not only do we provide the equity administration software, we provide a team of equity plan specialists and a corporate client manager to guide you through from gathering all data and administration to compliance and reporting. Our 24/5 support for participants is also available through a dedicated support desk.
So, we can help you and your global employees take full advantage of employee ownership.

Leverage our extensive expertise and global reach. Contact us today

Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.

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