GEO Conference 2003
Dublin, Ireland

Workshop Descriptions

• Keynote
• Workshop Series I
• Workshop Series II
• Workshop Series III
• General Session I

• Workshop Series IV
• General Session II

• General Session III
• Workshop Series V
• Workshop Series VI
• Workshop Series VII

Monday, 7 April 2003

Keynote

Workshop Series I

The world's largest companies continue to utilize the benefits of global share plans. But what are their objectives and what obstacles do they encounter? Could companies improve the way they design and implement their global share plans to deliver extended benefits? Could governments worldwide take positive action to ease the implementation process for multinational companies? The workshop will also discuss the European Commission's recent initiative to lay the foundations for a more sympathetic environment for global share plans within Europe. We will discuss some of the transnational barriers in Europe, and in particular the double taxation traps, and discuss what the European Commission may do to address these issues. Additionally, we will discuss the impact of the recent accounting proposals relating to equity compensation.

This session will be a high level debate on the future for executive incentives, taking into account: latest accounting issues, volatile stock markets, latest research on use of incentives and grant levels, and latest corporate governance issues around disclosure and transparency. This session will cover perspectives from the US, UK, Europe, and Asia.

1. Tax effective share plans in Ireland
2. Unapproved arrangements
3. Recent legislative changes
   
   

Description: Employee stock purchase plans are probably more popular in France than in any other part of Europe and increasingly French multinationals have been extending their plans globally. Over the last few years, companies in France have been developing innovative share plans in conjunction with leading banks which offer participants two major attractions: (1) the opportunity to buy shares at a discount (the "classic" plan) or to buy at a discount and receive a leveraged return together with a guarantee on the invested amount (the "leveraged" plan) and (2) the availability of significant tax advantages.

These plans are not limited to French employees. Recent experience has shown that they can also be launched successfully globally and by non-French companies (Dexia, a Belgian company, is an example). This session will explain how the plans work, why companies have set them up and what are the key legal and tax issues which need to be considered both within France and internationally.

This session will focus on the impact of data privacy laws on global HR and benefits. Multinational companies that use employee data for the most basic human resource functions face potential challenges presented by local data privacy laws, including the European Union Data Privacy Directive. We will discuss the expansion of data privacy law from the European Union throughout the world, as well as new developments affecting global HR and benefits. We will examine some of the compliance alternatives that multinational companies can use in connection with the collection, use, processing and transfer of employee data.

Workshop Series II

In Canada, stock-based compensation strategies have been a popular, tax-effective method for motivating and retaining key employees for decades. Throughout the 1990s, stock option plans were the most prevalent form of stock-based compensation. But after the Enron collapse, plummeting share prices and rising criticism of these plans have caused many Canadian companies to re-think their stock-based compensation plans and related accounting procedures.

This session will review the current state of stock-based compensation in Canada, including an overview of the tax treatment of such plans, an analysis of the potentially adverse effects of proposed changes to the accounting treatment of such plans (i.e., the expensing of the value of stock options), and a forecast of the future of stock option plans and executive remuneration in Canada, particularly in light of current corporate governance initiatives. The presenters will also outline the regulatory framework in Canada for the various types of employee share ownership plans, including a review the corporate steps and regulatory approvals required to set up such plans under current securities and corporate legislation, and stock exchange regulations.

This session will present the findings of the last four annual studies of sponsor satisfaction with outsourced administration of stock plans. The major areas of satifaction and dissatisfaction will be discussed along with trends information. In addition, the major issues confronting plan sponsors will be presented.

The session will conclude with a discussion of the implications of the research for plan sponsors and administrators. For plan sponsors, this applies primarily to the outsourcing process as well as the ongoing management of the administrator. For administrators, this clarifies expectations as well as areas of differentiation among vendors.

This session will cover such issues as corporate governance-transparency in operating schemes, the right level of executive incentives post- Enron, the new UK requirements for remuneration reports, the effect of the Sarbanes-Oxley Act in the US, and institutional shareholders views. Additionally, we will consider how and whether share plans can address the growing accountability crisis in light of recent corporate scandals. We will work through ideas such as breach of trust (history & development), outline of methods type and systems, finance engineering, senior executives crimes, and whether this is a US phenomena or an international concern.

Current session description - This session will cover how corporate issuers can use a corporate nominee facility for their share plan participants and employees. We will cover the following areas: what is a corporate nominee, why such a facility is desirable/required, how the facility is structured and the parties involved, shareholder issues faced by the corporate nominee and how they are dealt with, and the benefits to participants, employees and the company.

Workshop Series III

This session will raise key considerations in selecting either in-house software and outsource of plan administration. Considerations that should be addressed include: how to manage cultural differences, how to manage time zones, administering to meet business objectives in US, UK, Canada, Australia, South Africa, and Ireland. In addition, features – benefits/cons – key questions should be covered during this session.

In this lively session, we will explore how Smith & Nephew plc, a UK multinational, extended its all-employee sharesave option plan to 17 overseas jurisdictions last year. It will appeal to the audience at large, looking at the project from the perspective of both the client and the co-ordinating adviser. There will be audience interaction throughout the seminar.

In this global project, good administration, co-ordination, project management skills and enthusiasm are brought into play from day one. We will stress how all parties (including country co-ordinators, local lawyers, translators and even the local authorities) are essential ingredients in the recipe for success.

Given careful and thorough planning, a big project should proceed in a flawless manner. In this 'warts and all' session, we will explode this as a common myth. There are numerous traps for the unwary (and the wary!). Technical legal and practical obstacles lay in wait for us at various stages, some of which clustered around the project launch date. We will share our experience of the hurdles we faced as this project developed in unusual and exciting ways! This is a must for companies looking to extend their share plan internationally, the legal advisers, the administrators and the bankers.

Description: Regardless of an up or down market the primary question remains --- how do we set stock option grant guidelines? The purpose of this presentation is to revisit the common methods of allocation and suggest some less-used approaches that both control dilution and provided grants having the appropriate perceived value to the employees.

From our research we will provide an indication of the most used methodologies and provide an analysis of the pros and cons of each method, particularly considering the high volatility in the stock market in recent years. Common methods reviewed will include Market/Dollar Based and others. Less used approaches will also be evaluated to determine if they may have merit for broader application.

We will also analyze other approaches used, such as percentage of the CEO grant, dollar valuation based on perceived value, valuation based on publicly traded options adjusted for the timeframe and liquidity limits inherent in stock options, and set number of shares by level. Finally, we will analyze the merits of very broad-based option plans versus granting options to a more select group of employees, and attempt to answer the questions surrounding these issues.

This session will analyze both the forms and the effectiveness of performance based equity compensation awards. The mechanics and prevalence (i.e., frequency of use and use trends) of the various forms of this type of compensation will be discussed. The compensation forms include LTIPS, performance shares and units, and accelerated or contingent option and share vesting. The analysis will address the effectiveness of these compensation tools from an individual and firm level, and will incorporate empirical research that Camelback Equity Consulting is conducting on this topic.

This session will specifically integrate data and research from Roedl & Partner on the use of Stock Options and the trends seen in other performance plans in Germany. The German focus creates an opportunity to discuss and consider key issues in using new and innovative performance criteria with stock plans of all types.

General Session I

This presentation will cover Hot Topics both in Europe and Worldwide relating to legal and tax issues that are relevant to the implementation of global share plans. In particular it will focus on those countries which seek to tax options before exercise and latest techniques for dealing with this, for example in Belgium, any recent European directives which seek to harmonize procedures within Europe and recent developments around the world which are causing problems for clients together with possible solutions to those problems.

Tuesday, 8 April 2003

Workshop Series IV

This will be an interactive session focusing on 'organic' communication as the critical vehicle for articulating the links between plan design and business strategy. Additionally, the effective role and responsibilities of administrators should play in that communication strategy. Session should include experience with clients in worldwide communication strategies, discuss the impact of the current economic and political climate on how share plans should be communicated, the balance of ‘global’ vs. local communication and administrative approaches, and raise key administrative issues, techniques, and procedures for both US, UK, and European companies.

This session will walk through a case study on the implementation by a US MNC of a program to cross-charge the costs of awarding shares to employees in over 40 countries. The session will look at the reasons for implementing a global stock recharge program, the various cross-charging vehicles that were considered and the practical implications for the company, its stock plan participants and the administration system. This session will specifically look at the roles of the various departments/stakeholders within the company and the interplay with the external advisor and vendor to ensure successful implementation.

General Session II

View From the Inside - A Panel Discussion on the Future and Direction of Equity Compensation

Wednesday, 9 April 2003

General Session III

Workshop Series V

This session will discuss the Michelin Global Share Plan which was recently launched to 108,000 employees in 17 different countries including France, USA & the UK. This session will discuss how we adapted the Global plan to the UK SIP legislation, whilst still retaining a similar benefit structure to the rest of the world and fitting the UK administration processes into the wider global arrangements and how this challenge was met successfully. This case study has attracted a lot of interest from non-UK quoted companies in a similar situation and may be a template for others to follow.

Is employee risk a bad thing? Is practice changing since Enron? This session will examine and compare the inherent and tax-related risks of participating in common typed of share plan utilised by multinationals. It will explore the employer's obligations in relation to these issues, covering communication,financial education,diversification. Practical examples will be used to encourage debate. The very nature of equity-linked compensation plans creates a serious financial dilemma for the employee - in particular the executive. The retention value of these plans quickly creates high-risk equity positions for an executive; in some cases, leaving their current employer is the clearest path to reducing exposure. This session will discuss, in the context of case study, how the employer/employee/service provider all share in the "fiduciary" responsibility to offer diversification and other opportunities to their plan participants. Particular points covered will be strategies,issues and plan structures that seek to address this problem across a variety of tax/regulatory jurisdictions.

New accounting standards are likely to require the value of options to be charged against earnings, and some leading global corporations have voluntarily chosen to account in this way already. This session explores what new opportunities this will create for developing incentive plans that are more closely targeted to the corporation's business needs, through using tools such as performance-related options, indexed options, performance stock and phantom stock.

After options are expensed companies will have to react to and deal with a new environment. This sesssion will focus on what companies should do. ISSUES COVERED --- Assess impact of potential charge on earnings; Review pay philosophy and mix of elements of pay; Consider introducing performance targets for stock options; Consider relative worth of options to cash compensation; Examine tax implications of compensation being used to buy stock which is held while capital gains accrue; Review stock awards instead of stock option grants. Additionally, this session should cover technical issues in what the 'true' value are of options, how other valuation models may be used, etc.

2002 Session description - Summary --- Companies are investing effort and energy by extending their option plans globally. This session will look at ways to build efficiencies, from improving the grant award process, maximizing plan designs and improving tax planning techniques. In short the session will cover the following topics: (1) Plan awards: Adjusting the awards to adopt a global and transparent strategy, using an index to level the size of global option grants, taking into consideration elements such as benchmarking, company specific salary levels, after-tax benefits, local cost of living, etc. (2) Plan designs: Maximizing value delivered to employees by looking at tax preferred treatment afforded to some plans in jurisdictions such as Belgium, France, Italy, the Netherlands and the UK. (3) Minimizing social tax costs: One main concern of clients is high social tax costs imposed in European countries; we will be looking at innovative ways to minimize the employer's social tax costs. (4) Effective Plan Administration: We will look at the important issues to be considered in order to ensure proper and effective administration of a global plan (5) Securing a corporate tax deduction in foreign countries: This is another way to bring value to the table and look at ways to minimize the foreign tax costs while look into repatriating earnings tax free in the US.

Workshop Series VI

The speakers will examine the prevailing and evolving trends in the use of stock as part of the total compensation package in:North America, Europe and Asia.The session will compare and contrast the composition of the total pay package by geographical location, including a description of relelvant market practices and the impact of key regulatory/tax developments. The speakers will also comment on changes in employees' perception of the "value" of stock vis a vis cash and other package components.

2002 Session description - Summary --- Companies are investing effort and energy by extending their option plans globally. This session will look at ways to build efficiencies, from improving the grant award process, maximizing plan designs and improving tax planning techniques. In short the session will cover the following topics: (1) Plan awards: Adjusting the awards to adopt a global and transparent strategy, using an index to level the size of global option grants, taking into consideration elements such as benchmarking, company specific salary levels, after-tax benefits, local cost of living, etc. (2) Plan designs: Maximizing value delivered to employees by looking at tax preferred treatment afforded to some plans in jurisdictions such as Belgium, France, Italy, the Netherlands and the UK. (3) Minimizing social tax costs: One main concern of clients is high social tax costs imposed in European countries; we will be looking at innovative ways to minimize the employer's social tax costs. (4) Effective Plan Administration: We will look at the important issues to be considered in order to ensure proper and effective administration of a global plan (5) Securing a corporate tax deduction in foreign countries: This is another way to bring value to the table and look at ways to minimize the foreign tax costs while look into repatriating earnings tax free in the US.

Workshop Series VII

Session summary from 2001--- What is an expatriate?, The challenges of expatriates with options (withholding and reporting requirements, paying tax in multiple jurisdictions, potential of duplicate tax, and additional administrative requirements), How are expatriates taxed?, Reducing the potential for double taxation, Treatment of expatriates in France, Germany, UK and US, How do you minimize the cost of tax equalization?, administrative requirements, A practical roadmap of what to do next

Review of global issues affecting liability and risks in operating global share plans, looking at: - Liability arisng on termination of employment, local law sometimes overrides what the plan rules say: we will be identifying some of the key issues and the local variations which give rise to the risks., - Trend toward class actions, particularly against poor administration, delayed sale executions: identifying the risks and recommending solutions., - Whether exclusion of liability clauses work: brief review of gloabl legal issues affecting that clause, - Providing "financial advice", what risks are involved, and how to reduce them.

Case study on the treatment of existing stock options under the merger agreement including: 1) Highlight of the tax and regulatory issues resulting from Hewlett-Packard's assumption of all Compaq Computer Corporation stock option plans in approximately 56 countries., 2) Focus on specific issues in 12 primary countries where the assumption of the equity plans created significant issues requiring negotiations with the respective tax and regulatory authorities in order to avoid negative treatment to the optionees., 3) Discussion around the human resource and employee communication issues relating to the assumption of options in the merger.