GEO INSIGHTS

Morgan Stanley at Work has launched a new digital experience for financial benefits participants, featuring a public-facing website designed to enhance the pre-login experience. The site aims to improve accessibility and understanding of employee benefits through intuitive navigation, educational content, and support options, including a "hand raise" feature for connecting with Financial Advisors. This launch follows the completion of Morgan Stanley's back-office integration of E*TRADE and Solium, and it provides a unified entry point for participants to access a wide range of financial services, including equity compensation and retirement plans.

On July 23, 2024, Abacus Property Group issued new unquoted equity securities, including security acquisition rights, long-term incentive (LTI) rights, and short-term incentive (STI) deferral rights. These securities, totaling 9,307 security acquisition rights, 215,839 LTI rights, and 19,157 STI deferral rights, are part of an employee incentive scheme. The securities are not intended to be listed on the ASX.

Societe Generale successfully completed its 2024 Global Employee Share Ownership Programme, raising EUR 186,907,707.84 and issuing 9,055,606 new shares subscribed by approximately 46,000 current and retired employees across 35 countries. The bank's share capital now stands at EUR 1,015,044,435.00, comprising 812,035,548 shares, with a minimal impact on the CET 1 ratio of around 4 basis points, effective by the end of Q3 2024. The program, the 31st of its kind, is part of Societe Generale's long-term commitment to employee involvement and sustainable value creation.

Employee-share schemes are an effective tool for attracting talent, boosting productivity, and improving employee retention, with 81% of UK companies reporting positive impacts. However, they come with risks, particularly around tax complexities and misalignment with company goals, requiring careful design, implementation, and communication. Additionally, the broader challenges of inequality, such as gender disparities and the financial accessibility of these schemes, need to be addressed to maximize employee participation and impact.

Revolut is in discussions with Greenoaks to sell around $500 million of employee-owned shares, aiming to boost its valuation to $45 billion ahead of a potential IPO. The sale would allow early employees to cash out their holdings, a common practice when startups go public. This move also positions Revolut advantageously despite the uncertain IPO climate due to recent higher interest rates.

Stewart’s Shops, a northeastern chain of ice cream shops found at gas stations, offers a unique benefits package allowing employees to own a third of the company through an Employee Stock Ownership Plan (ESOP). This program has resulted in more than 175 employees becoming millionaires, as they receive dividends based on the company's success, which are entirely funded by the company. Stewart’s system, resembling a form of socialism, enables employees, referred to as "Partners," to have a vested interest in the company's success, leading to substantial financial gains and long-term stability for both the employees and the company.

Swiggy has announced its fifth ESOP liquidity program, allowing employees to receive up to $65 million for their stock options. This marks the company's fifth liquidity event since 2018, cumulatively enabling over Rs 1000 crore of ESOP liquidity and benefiting more than 3,200 employees. The program aligns with Swiggy's commitment to rewarding employees and comes as the company approaches its 10th anniversary, amidst similar moves by its competitor Zomato.

Starting from June 25, 2024, changes from Budget 2024 will alter the capital gains inclusion rate and the employee stock option deduction rate. The stock option deduction and capital gains tax exemption will decrease from 1/2 to 1/3 of the taxable amount if an individual's annual combined limit of CAD 250,000 is exceeded. Taxpayers can decide how to allocate the preferential tax treatment between stock option income and capital gains beyond the combined limit.