NORTH AMERICA CHAPTER

Room & Board, a Minneapolis-based furniture retailer, has transitioned to a 100% Employee Stock Ownership Plan (ESOP), granting their 1,100 employees a financial stake in the company, reinforcing its commitment to American craftsmanship and staff well-being. Founded in 1980, Room & Board's success, with annual sales exceeding half a billion dollars, is attributed to its dedication to quality craftsmanship and exceptional service, alongside a focus on staff welfare. The decision to become 100% employee-owned aligns with the company's values of respect, transparency, and collaboration, demonstrating its commitment to preserving its culture while fostering a more sustainable and inclusive future.

Boeing's CEO Dave Calhoun and former Executive Vice President Stan Deal, despite announcing their departures amid scrutiny over manufacturing flaws, stand to collect a combined $45 million in compensation. They won't likely face internal clawback policies since they weren't fired due to quality management issues. However, shareholders are expected to approve a proposal tying executive compensation to safety improvements, as Boeing faces intense scrutiny following incidents like a door panel detaching from a 737 Max 9 jet. The company's compensation structure is being retooled, and leadership changes are expected to address concerns and improve performance.

Imagine getting a job offer from your dream company, but they refuse to disclose the currency of your salary—this is how the startup equity compensation market often operates. Employers offer stock options or RSUs without revealing the total number of company shares, leaving employees uncertain about their actual ownership stake. Current regulations do not require startups to provide comprehensive valuation information, leading to an overestimation of equity grants and undermining the high-tech labor market's competitiveness.

In January 2024, a Delaware Court rescinded Tesla's 2018 option grant to Elon Musk, valued at $56 billion, due to breaches of fiduciary duty in awarding the grant. Now, Tesla seeks shareholder ratification of the grant to reinstate it, addressing disclosure deficiencies and procedural issues highlighted by the court. However, the legal strategy faces uncertainty, with potential challenges and implications for shareholder approval under Delaware law.

EY's 2024 Mobility Reimagined survey reveals that only 25% of employers have fully developed mobility functions, despite 64% of employees expressing a higher likelihood of staying after long-term global assignments. Companies face increasing cross-border risks, with 71% of respondents noting heightened challenges, including tax/regulatory and data privacy risks, highlighting the need for robust policies and integration of mobility functions to attract and retain top talent and ensure business resilience.

The Menke Group facilitated AV Construction's transition to becoming 100% employee-owned through an Employee Stock Ownership Plan (ESOP), allowing employees to benefit from company ownership and ensuring a strong succession plan. ESOPs, which incentivize and reward employee productivity, offer advantages to both employees and company owners seeking to maintain independence and community presence. With ESOPs particularly effective in companies reliant on human capital, AV Construction aims to provide excellent retirement benefits while maintaining its commitment to healthcare development excellence.

The US IPO market, although challenging over the past two years, shows signs of improvement in 2024 as interest rates stabilize and stock valuations recover. Despite geopolitical uncertainty, IPO proceeds reached US$23.94 billion last year, a marginal increase from 2022, with the market showing resilience and attracting cross-border listings. Technology and biotech sectors are driving IPO activity, buoyed by strong investor support and market performance, while ongoing geopolitical tensions and market volatility remain challenges for potential issuers. However, a positive start to the year and pent-up demand may encourage more companies to pursue IPOs in 2024.

Australia is trailing behind the US and advanced European economies in implementing employee share schemes, as revealed by the first global survey spearheaded by tax partner Shaun Cartoon and lawyer Eileen Liu. Conducted by a team of specialists from Arnold Bloch Leibler, Baker McKenzie, KPMG, and Tapestry Compliance, along with issuers and academics, the survey measured operating environments across 26 countries. Australia's complex tax rules and regulatory constraints on unlisted companies have hindered the scaling up of share plans, with tax incentives playing a significant role in decision-making for companies.