Minimizing the Administrative
Nightmare of Global Equity Plans
Karen Needham – E*TRADE Financial Business Solutions Group
Joty Paparello – AOL Time Warner
This session will outline and explain the steps that should be taken when implementing an employee stock option plan (US based) or an
employee stock purchase plan (ESPP) to a non-US site. This is an interactive workshop where questions from the attendees are encouraged.
A dialogue will be provided that encourages questions and provide answers to many of the problems facing stock plan administrators in the
global market. The issues covered in the session include: how management should be engaged; what legal, accounting, and tax issues are
encountered; how do you handle funds disbursement; and how to handle employee education and notification of plans.
Karen Needham – E*TRADE Financial Business Solutions Group
Karen is a Certified Equity Professional (CEP) and has over 25 years of expertise in Employee Stock Option and Stock Purchase Plan
administration. Karen is a senior member of the Industry Education and Product Training department with E*TRADE Business Solutions
Group. In this position she coordinates and presents the product training for all Equity Edge modules for clients, as well as the Industry
Education seminars that are offered to all. Karen interfaces with all departments within E*TRADE providing advice and assistance in all
areas of equity compensation planning and design. Her vast experience as the administrator for multi-national plans is of value both to the
company and our clients.
Prior to joining E*TRADE Financial, Karen served as senior staff member for Shareholder Relations at one of the top 5 global
biotechnology companies. Karen began her career in equity compensation at Wang Laboratories, Inc., a New England-based computer
manufacturer, where she administered both the stock option and stock purchase plans on a worldwide basis for over 40,000 employees. She
was a founding member of the Equity Edge Client Advisory Board, and is a frequent speaker at Equity Edge User Group meetings, and
NASPP regional meetings and is a presenter at the Global Equity Organization 2002 conference.
Karen is a member of NASPP, the Global Equity Organization (GEO), and the National Center for Employee Ownership (NCEO) and serves
on two sub-committees for the Certified Equity Professional Institute of Santa Clara University.
Joty Paparello – AOL Time Warner
Joty is the Manager of International Stock Plan Administration for AOL Time Warner. Joty joined AOL in May, 1999 as a Stock
Analyst. Since the merger with Time Warner, they have taken on the administration for all of AOL Time Warner, which is approximately
90,000 optionees in 51 different countries. She is a member of the Share Data Advisory Board, Global Equity Organization, and NASPP.
Contact Info: Email Address:
Phone #: 703-265-1403
Fax#: 703-265-2401
Address: 22110 Pacific Boulevard, Dulles, VA 20166
Latin & South America
Administration Concerns
Securities Law
Company Law
Employment Law
Exchange Controls
Day-to-Day Administration
Securities Law
Usually requires some form of registration
and/or reporting
Are there securities law restrictions?
If so, what are they?
Company Law
Are there restrictions on assisting employees
in purchasing shares in employer or foreign
parent company?
Are there special reporting requirements for
company executives?
Is recharge in the best interest of the local
Employment Law
Taxation of Employee?
Income tax withholding & reporting
Social insurance?
How do you determine withholding rates?
What method should be used for collection?
withhold at a flat rate,
send total proceeds to foreign payroll for
require foreign payroll to collect from employee,
proration over future payroll periods, etc
How do you collect taxes on ESPP?
What to ask, When to ask
Prior to Granting Options
Can we grant options?
Ask before granting!!
What are the restrictions?
Are the restrictions on vesting? Pricing? Exercise?
Holding requirements?
Are payroll deductions allowed?
Can we take contributions for ESPP plans?
Are there restrictions on the percentages?
Currency Conversion (especially for ESPP)
when will it occur?
each payroll period
or at purchase date
ASK Early!
Before the Options are Granted
Taxation – Employer/Employee
Income tax withholding & reporting
Employee? Employer?
Will the employee be subject to additional taxes?
Grant ? Exercise? Sale?
Social Insurance - what are the limits?
Can you require employees to pay the company
Employee? Employer?
ASK Early!
Before the Options are Granted
Securities Law
Are there limits on shares that can be issued? By
company? By employee? Aggregation (with other
options or ESPP)?
Can employees hold foreign securities?
Exchange Controls
Can funds be sent into U.S.? Can employees receive funds
from U.S.?
Are there limitations on funds entering/leaving country?
Entitlement (Acquired Rights)
Many South American countries have strict rules and
regulations surrounding Entitlements.
This is the right to continue receiving options and
awards on a regular basis.
This could include calculation of earnings upon
retirement and/or termination!
Many problems can be avoided with proper language
in the employment contracts.
Data Privacy
It is strongly recommended that the company
obtain written consent from the employees
for the collection, use, and transfer of data
abroad before implementing the plan
Exchange Controls
Mexico and Brazil have very strict laws and
controls governing currency movement
Argentina, due to recent events, has tightened
exchange controls
Please check with your legal and accounting
advisors to ensure that you are complying
with the latest rules and regulations
Last But Not Least
Documents should be translated into local
Some countries require it!
All Countries want it!
Employees need it!
Translations should be done by a licensed, certified
agency in the country where the translation is

Minimizing the Administrative Nightmare of Global …