11th Annual CEP and Silicon Valley NASPP Symposium March 24, Copyright 2015 CEP Institute 1

Transcription

1 Agenda Plan summary and participation rate comparison Managing eligible participants Administrative Challenges of a Global ESPP Scott Barrall, CEP, Deloitte Tax LLP Veena Bhatia, CEP, Gilead Sciences, Inc. Trish Boepple, Global Shares Jule Torre, Applied Materials, Inc. Registration requirements Non-payroll deductions Foreign currency restrictions Foreign exchange rates Agenda cont. Works councils Taxes at purchase Local filing requirements Plan Structure Brokers limitations Plan controls of local entities Plan communications Mobile employees (how to handle transfers of participants during a Purchase Period) Applied Materials, Inc. ESPP Overview Features Length of Offering Period Frequency of purchases Lookback purchase price? ESPP 6 Months Every 6 months Yes 85% (15% discount) of the lower of these FMVs: Purchase price definition a) Offering Period start date b) Purchase date Purchase dates Last business day of February and August Contribution Election Any whole percentage from 1% to 15% Employee Contribution Limit 15% of your base pay up to $6,500 USD per Offering Period Purchase Value / Share Limit per Offering Period Per IRS $25K limit, 1,000 shares Open Enrollment Dates Every February and August Ability to make changes to your contribution percentage Distribution Election (Keep (retain) or QuickSale) You may decrease your contribution percentage or withdraw from the Plan anytime * Automatically keep (retain) or sell shares on day of purchase *Any changes made during Open Enrollment takes effect the first day of the next Offering Period, including withdrawals Copyright 2015 CEP Institute 1

2 Gilead Sciences, Inc. ESPP Overview Features Length of Offering Period Frequency of purchases Lookback purchase price? ESPP 24 Months Every 6 months Yes 85% (15% discount) of the lower of these FMVs: Purchase price definition a) Offering Period start date b) Purchase date Purchase dates February 15 and August 15 Contribution Election Any whole percentage from 1% to 15% Employee Contribution Limit 15% of your compensation, subject to the IRS $25K limit Purchase Value / Share Limit per Offering Period Per IRS $25K limit, 10,000 shares Open Enrollment Dates Continuous Ability to make changes to your contribution percentage Distribution Election (Keep (retain) or QuickSale) You may increase or decrease your contribution percentage, or suspend contributions temporarily or withdraw from the Plan anytime * Not applicable *Any changes take effect on a quarterly basis on February 16, May 16, August 16, November 16. Applied Materials and Gilead ESPP Participation Rates ESPP Participation Rates U.S. Non-U.S. Applied Materials Global Average 75% 68% 72% Gilead 93% 76% 87% Managing Eligible Participants Plan eligibility vs. country requirements Discrimination (EU, UK) Part-timers Consultants (non-employees) Administrative challenges 423 Plan for U.S. International Plan Challenge getting HR data to exclude part-timers Challenge identifying legal employees who are not recorded in systems as such Registration Requirements United States: Form S8 Relatively easy, but there are requirements Financial Reports that shareholders receive Plan info in FAQ format Europe: Prospectus EU standards, but potentially different requirements by country Philippines: Annual filings Share registration Japan: Forms 6, 7 and 8 Corporate structure exemption: grants to employees of parent and 1 st and 2 nd tier wholly-owned subsidiaries # of Offerees and Offer Value determine whether exempt and which required filings Australia Malaysia Copyright 2015 CEP Institute 2

3 Non-payroll Deductions / Contributions not into General Corporate Funds Non-Payroll Deductions Hong Kong and Singapore Local approval may be obtained from authorities to use payroll deductions Collected & handled locally Checks Wires Funds not allowed or not advisable to be co-mingled with corporate funds Australia Belgium Japan Korea (advisable) Taiwan (advisable) Foreign Currency Restrictions Brazil Go through Brazilian bank Plan document, enrollment agreement After purchase Employee list with contribution amounts China: SAFE registration process requirements Argentina, Russia, South Africa May need local support Should get local advice Foreign Exchange Rates Foreign Exchange Rate Policy What rate to use: internally-set rate, daily spot, average for period When to convert Treatment of residual contributions: Refund Roll-over contributions maintained in local currency or in USD Works Councils Dependent on company relationship with work council Offering Plan Changing Plan (especially participant take-aways) Discontinuing Plan Copyright 2015 CEP Institute 3

4 Taxes at Purchase Recharges can impact payroll reporting, withholding and social tax liabilities Different taxable value at purchase Italy: Normal Value India: Category I Merchant Banker value Malaysia: Average of Hi and Low daily trade values Germany: Lowest quoted value on relevant exchange Deduct from payroll Will net cash pay received cover the tax withholding amount? Withhold shares to cover taxes Company must have the cash Must withhold minimum statutory taxes required Sell to cover Local Tax Filing Requirements Tax Forms U.S. Qualified 423 ESPP Form 3922 Australia ESS and Employer Annual Report Japan Annual Statement Form 9(3) Annual Plan Summary Forms Ireland RSS1 UK Form 42 Annual W-2 Equivalents in Places with no periodic payroll reporting Hong Kong Form 56B Portugal Modelo 19 Singapore Form IR8A and Appendix 8B Plan Structure Single plan with separate offerings U.S. Plan and separate International plan that mirrors U.S. 423 Plan Appendix to enrollment agreement that covers country specific requirements May have one plan with country sub-plans Covers specific country requirements Brokers Limitations and Policies Does not facilitate sell to cover Not licensed to cover people in certain countries Data refresh policies Copyright 2015 CEP Institute 4

5 Plan Controls of Local Entities Audits (internal or external) Proper participants Proper deductions Enrollment amount Changes to contributions Eligible earnings Proper refunds Local filings Plan Communications Paper Sometimes paper is required! Tax Forms, with simple English explanation On-line Always good to be available 24/7 Also helps where paper is required Translations Required in Denmark, and advisable in other countries Will usually help participation rate Broker may provide website translation Videos Helps employees understand/appreciate the program Mobile Employees Administrative Challenges of a Global ESPP Transfer contributions to new country upon move Maintain contributions in separate countries, aggregate at purchase date Refund contributions to employee and allow them to contribute to new country Requires good communications among all parties No simple solution! Copyright 2015 CEP Institute 5

6 Questions Scott Barrall, CEP Senior Tax Manager Deloitte Tax LLP (408) Veena Bhatia, CEP Senior Manager Gilead Sciences, Inc. (650) Trish Boepple SVP Global Client Solutions Global Shares (408) Jule Torre Global Stock Programs Manager Applied Materials (408) Copyright 2015 CEP Institute 6