EUROPEANCHAPTER

As countries implement new regulations affecting global equity and executive compensation for 2026, multinational companies should review their equity plans and grant materials to ensure compliance with updated tax, securities, and employment laws. Key developments include the removal of certain reporting and forced-sale requirements in China, expanded securities exemptions in Japan, new pay transparency obligations in the European Union, updated SEC requirements in the Philippines, and clarified national insurance sourcing rules in the United Kingdom, along with broader global trends such as rising tax rates and limits on restrictive covenants. Proactive coordination among legal, tax, payroll, and equity teams is essential to manage compliance, reporting obligations, and strategic planning in the year ahead.

The UK Budget’s expansion of EMI share scheme eligibility will allow up to 8,250 additional businesses, including many scale-ups and founder-led companies, to offer tax-efficient employee share options, doubling the employee limit to 500 and increasing the assets cap to £120 million from April 2026. This move provides a powerful alternative to rising salaries, helping employers attract, retain, and engage talent by giving employees a stake in long-term business growth, which is linked to higher productivity and stronger retention. HR leaders must strategically design and communicate these schemes to ensure fairness, clarity, and maximum cultural and financial impact, making EMI a key tool in modern total reward strategies.

From 1 January 2026, Guernsey will tax share-based benefits at vesting or exercise rather than at grant, allowing a deferral of up to seven years and aligning taxation with when employees actually receive economic value. The taxable amount is still calculated based on the grant-date value, providing certainty for employees and employers, but accelerated taxation applies in cases of death, retirement, termination, or departure from Guernsey. This change makes Guernsey more competitive for attracting talent and innovative companies, particularly in tech and startups, and organizations should review existing share schemes in light of the updated Statement of Practice E43.

Rolling out a global share plan requires careful planning, significant coordination across internal teams, and collaboration with external advisors to navigate legal, tax, securities, payroll, and labour law complexities in multiple countries. Companies must ensure clear communication, tax-efficient design, compliance with local regulations, equal treatment of employees, and practical considerations such as document translation and payroll restrictions to avoid pitfalls. When executed thoughtfully, global share plans can provide real value to both the business and its employees while supporting long-term engagement and compliance.

Company sales typically trigger employee share awards, creating complexity across different plan types, tax treatments, and jurisdictions, so early planning is essential to avoid disrupting the transaction. Clear, timely communication with employees about how the sale affects their awards, timing, consideration, and tax implications is critical to maintaining engagement and ensuring a smooth transition. Global and regulatory nuances—especially for tax-advantaged plans and cross-border workforces—make structured, well-supported communication and advice key to successful exits.

Stellantis completed the 2025 edition of its “Shares to Win” employee share purchase plan on November 25, marking the third consecutive annual offering since 2023 and spanning 20 countries with over 235,000 eligible employees. The plan features a 20% share price discount and generous matching contributions, helping drive broad participation and reinforcing employee engagement and ownership. Since launch, employees have subscribed to 22 million shares, investing €209 million in total, and now collectively hold 2.8% of Stellantis’ share capital.

ESG metrics have become a mainstream component of executive compensation at public companies, with roughly three-quarters of S&P 500 firms now tying pay to environmental, social, or governance outcomes. Investor pressure, regulatory action, and workforce and consumer expectations are driving this shift, as companies are increasingly judged on how results are achieved, not just financial performance. While ESG-linked pay appears here to stay, compensation teams face the challenge of designing metrics that are material, measurable, auditable, and clearly aligned with business strategy to avoid greenwashing and maintain credibility.

Almost 1,000 Wickes employees will share a £14.1 million windfall from the company’s employee share save scheme, benefiting as the stock more than doubled in value over three years. Staff invested between £10 and £500 a month at a discounted price, with average savers more than doubling their investment and maximum savers potentially making over £22,000 in profit. The scheme rewards employees for their commitment, with many planning to use the payout for home improvements, holidays, and long-term investment.