Mastering RSU Releases for Your Mobile Employees October 25, 2013

Transcription

1 Mastering RSU Releases for Your Mobile Employees October 25, 2013 Sheila Frierson, CEP VP, Regional Manager, Computershare Carrie Kovac, CEP, CPA Regional Vice President, Corporate Services, E*TRADE Corporate Services Erin Madison, CEP Sr. Manager, Shareholder Services, Broadcom Corporation Dan Moody Sr. Product Manager, E*TRADE Corporate Services Lisa Vitiello Murzic, CEP Sr. Manager, Stock Administration, Qualcomm Incorporated

2 Important Information from E*TRADE The E*TRADE FINANCIAL family of companies provides financial services that include trading, investing, related banking product and services to retail investors, and managing employee stock plans. Employee stock plan solutions are offered by E*TRADE Financial Corporate Services, Inc. Securities products and services offered by E*TRADE Securities LLC, Member FINRA/SIPC. E*TRADE Financial Corporate Services, Inc. and E*TRADE Securities are separate but affiliated companies. The laws, regulations and rulings addressed in this presentation and by the products, services and publications offered by E*TRADE Financial Corporate Services, Inc. are subject to various interpretation and frequent change. Product descriptions and instructions in this presentation are general in nature and are not intended to replace documentation and instructional materials distributed by E*TRADE Financial Corporate Services, Inc. E*TRADE Financial Corporate Services, Inc. and its affiliates do not provide legal, accounting or tax advice. Always consult your own legal, accounting and tax advisers.

3 Important Information from Broadcom, Qualcomm and Symantec The following information contained in this presentation does not necessarily represent the official views of Broadcom Corporation, Qualcomm Incorporated or Symantec Corporation with respect to any of the issues, products or services addressed. Moreover, this presentation and the views expressed by the individual presenters should not be relied on as legal, accounting, auditing, or tax advice. The outcome of any individual situation depends on the specific facts and circumstances in which the issue arises and on the interpretation of the relevant literature in effect at the time. Always consult your own legal, accounting and tax advisers.

4 Agenda A 30,000-Foot View Types of Mobile Employees Why are Mobile Employees Challenging Key Factors RSU Release Planning Where to Start Developing a Process/Checklist Involving the Right People Perform a Dry Run Tips and Tricks W8-BENs and W-9s Multiple Moves Complicated Countries Withholding and Reporting

5 A 30,000-Foot View

6 Types of Mobile Employees Business Traveler Expat Short-term Long-term Permanent transferee (country-to-country) Permanent transferee (state-to-state) Other

7 Why are Mobile Employees Challenging The global landscape is continually evolving and complex There is a need to assess your company s risk tolerance Potentially inconsistent terminology between departments The management of information can be decentralized Incomplete, inconsistent or erroneous data Timing issues Hard to get a seat at the table Identify exceptions or regions with unique practices Data may be manual or in a format not suited to end user s needs No specific mobile employee benefits program procedures in place Lack of communicating clearly with mobile employees and providing transparency with regard to their equity compensation Vendor compatibility and costs

8 Key Factors Taxes will be due (or at least reportable) in multiple countries Methods of Communication Maintenance of account information in database For example, move dates must be accurate for tax reports (pro-ration of taxable income) to be accurate Modifications of the release record may be manual or automated Transaction Update Import Capabilities No consistent policy, subject to interpretation across regions Rarely the right players are involved in all pieces (soup to nuts)

9 RSU Release Planning

10 Where to Start Have a kickoff meeting Create/update memos International Transfer Scenario memo employee memos auditor s memo Depending on the volume of transactions, decide if you will implement a limit on time and/or funds Work with Legal to update Tax Summaries Look at post-mortem notes from the prior release Review the country list New countries Regulation or reporting changes Generate and distribute a release calendar Assess staffing

11 Developing a Process/Checklist A must-do Ensures you won t forget critical issues, especially if you only have vesting quarterly or annually Helps to assign tasks The checklist should consist of: Confirming account information is accurate within equity system (taxes, address effective date is the transfer date) Grants are coded correctly (tax payment method, election profile, transfer code) W8-BENs are current Accounts are activated Grant Acknowledgement

12 Involving the Right People Payroll (U.S. and non-u.s.) When will your Payroll need the gain/taxes withheld information In the U.S. it will be relatively soon best to do an estimate, especially since it may take quite a bit of time to finish revising and reviewing all transferee releases Are there any one-off situations such as pseudo transferees where you need clarification Make sure all parties involved have proper expectations/instructions HR/Staffing Ensure you ve identified all mobile employees IT If you need information populated in your database, such as citizenship Tax Internal Provider Stock Plan Vendor/Broker Other

13 Perform a Dry Run Great place to use a test environment Helps to establish an estimated time-line This is essential to identify/catch problems before they happen Do one prior to each release to perfect your process If team members only help with transferees during releases, this is a good time for them to make sure they remember the process and ask any questions before processing the real release

14 Tips and Tricks

15 W-8BENs and W-9s Start the process EARLY! Understand the timing/requirements under your stock vendor/broker It is more important to make sure accounts are activated, so shares can be sold to cover taxes, otherwise there will be a delay in the company receiving/paying those taxes Remember, it s the employee who is having backup withholding if no current W-8BEN is on file. Regarding W-8BENs; if you do not get a response from the employee, change who is contacting the employee by involving the manager and HR Expiration W-8BENs expire every three years W-9s do not expire

16 Multiple Moves Make sure you are only taxing for the countries where the employee was from grant through vest dates For example, if three grants are vesting maybe two were granted prior to their move and one after their move so the latter will not need to be modified You will need to remove tax rates that you may have in their account for a country where stock options were granted but not RSUs Don t miss providing taxable gain and taxes withheld information to all relevant countries

17 Complicated Countries China (due to SAFE) Germany, Italy & Spain (exemption) Belgium, Brazil & Macau (dividend equivalents only) Can t pay out cash in lieu of dividend equivalents in paycheck Canada, France, Ireland & Italy Tax rates are different for stock options and RSUs Remember tax rates are different for each Canadian province so you will need to change tax rates per province and not for the entire country Qualified Plan in France requires special processing Finland, India, Italy & Malaysia Countries with their own defined FMV Will need to process these separately and BEFORE you process the general release

18 More Complicated Countries Israel If employee moves from Israel and has Section 102 grants, then the value of any shares sold or traded to cover taxes in the country they moved to is taxable in Israel. Section 102 shares are taxable at sale, not vest If you have Section 102 grants and are using a trustee, make sure the impacted employee s accounts are marked with the correct broker Dividend equivalent issues (if applicable) May have more monthly non-us payroll spreadsheets to produce than anticipated If in countries with defined FMVs, verify how your plan/agreement states it will calculate payout of cash in lieu of fractional shares Even if no taxes are due in a certain country, you will still need to provide local Payroll with payment of cash in lieu of fractional shares

19 Withholding and Reporting Reporting When working with your vendor or equity software, make sure to keep detailed notes in the comments (if available) If employee moves multiple times, the comments should show the move history Withholding If you have multiple grants vesting on the same day, you may have one grant where you must tax between two countries and a second grant where an employee is taxed in one country, so keep a close watch If your from or to country has a tax rate that is different for RSUs than options, remember to not only pro-rate the gain but change the tax rate also

20 Questions and Contacts Sheila Frierson Computershare Carrie Kovac E*TRADE Corporate Services Dan Moody E*TRADE Corporate Services Lisa Vitiello Murzic Qualcomm Erin Madison Broadcom

21 THANK YOU!!!!

22 BONUS Section - Tips and Tricks

23 Developing a Checklist TIP/TRICK: Before each new release, take the last checklist and Save As so you have record of what was done for each prior release.

24 HR Department Involving the Right People TIP/TRICK: Don t be an island Stock Administration isn t the only department that needs to know about permanent transferees, so work together and get a pro-active process in place so all impacted departments know in advance of permanent transferees. TIP/TRICK: Make sure historical address changes are tracked as this will determine the allocated gain for each country. Code each award so an employee is flagged when they exercise an option. This will help in filtering reports to use for the RSU release. TIP/TRICK: Work closely with HR to obtain the mobile employees report. Arrange for it to run on a scheduled run (i.e. weekly or monthly). Maintenance TIP/TRICK: Need to scrub database for transferees, expats, etc. well in advance of a release date to ensure all manual employees are labeled correctly, that transfer dates are accurate (if not, tax accrual reports will be wrong), etc.

25 The Actual RSU Release TIPS/TRICKS Obtain country-defined FMVs Process the release for those countries first Exclude transferees that owe taxes in a country other than one with a defined FMV you will need to run a Tax Accrual report for their noncountry defined FMV country using your company s FMV If applicable, change the stock option tax rates to RSU rates in the equity software If done prior to importing daily exercises, remember to change back after the release is processed and before exercises are imported Save a soft copy of before confirmations of release in alpha order It is important to code the transfer at the grant level, not the account level as not all grants will be allocated to both countries. Only the grants received prior to the transfer date will be allocated.

26 The Actual RSU Release TIPS/TRICKS (continued) If you have employees moving into or out of a country with a defined FMV, you need to coordinate the timing of the release so you can pull the tax accrual reports in proper order For example, if moved from India to US, you will want to process the release in a sandbox so you can pull tax accrual information using MBV (and since know it at least a month in advance can process all Indian releases in advance). When dividing up country-to-country transferees (CTCs) for processing make sure (1) if the employee has multiple grants to be modified (so grants received before move) that they re not split between two people, and (2) if employee has grants vesting that were granted both before and after they moved, the same person processes ALL of them. Set up a process to be able to track all Mobile employees (Permanent International Transfer and Expatriate on Assignment). Create an excel spread sheet for easy reference. Update your equity system to track historical address and effective dates. Coding each award grants.