GEO INSIGHTS

As IPO activity is anticipated to increase in 2025, private companies planning for an IPO must carefully prepare their executive compensation programs to ensure successful transitions and sustained engagement. Pre-IPO considerations include addressing potential "cheap stock" issues through frequent valuations, proper recordkeeping, and alignment with SEC requirements, while also reviewing equity and bonus structures to incentivize executives. Post-IPO preparations often involve adopting a new equity compensation plan, granting IPO-related awards, formalizing executive agreements, and potentially implementing an Employee Stock Purchase Plan (ESPP) to align incentives for broader employee engagement and long-term success.

Remote has launched Remote Equity, a solution designed to simplify global equity compensation by enabling companies to create and manage legally compliant stock option plans for international talent. Partnering with Carta, Remote Equity integrates with Carta's cap table management solutions, providing synchronized draft option grants, seamless document generation, and country-specific insights to streamline cross-border equity offerings. This collaboration enhances equity compensation accessibility, reduces legal complexity, and supports a holistic view of global compensation programs for both employees and contractors.

A proposed amendment to the Income Tax Act seeks to simplify the taxation of income from employee stock option plans, allowing employers to choose between the current system of deferred taxation or reverting to pre-2024 taxation practices. The amendment addresses complexities introduced in 2024, such as tracking taxable moments, avoiding double taxation abroad, and coordinating taxation with insurance premiums. Transitional provisions would allow employers to apply postponed taxation retroactively for 2024 without penalties, provided they notify the tax authorities within two months of the amendment’s effective date.

The New Zealand Government has introduced a Bill increasing the thresholds for exempt employee share schemes, offering significant benefits to both employers and employees. Effective 1 April 2025, the maximum value of shares an employee can receive annually will rise from $5,000 to $7,000, while the maximum permissible discount on share market value provided by employers will increase from $2,000 to $3,000. These changes reduce tax liabilities for employees and allow companies to offer more attractive share schemes, but employers must update their plan rules to fully leverage the new thresholds.

The 2024 Renaulution Shareplan achieved remarkable success, with 43% of eligible Renault Group employees participating, up from 36% in 2023. Over 93,000 employees will benefit from 7 free shares each, and nearly 46,000 employees subscribed to additional shares at a discounted price, resulting in the transfer of approximately 1.88 million shares, representing 0.64% of Renault SA's capital. This initiative reflects strong employee confidence in the Group’s strategy, bringing total employee ownership to 5.74% of Renault SA's capital, as the company works toward its goal of 10% employee shareholding.

Luxury goods brand LVMH has launched "LVMH Shares," an employee share plan covering 70% of its global workforce across 11 locations in Europe, North America, and Asia. Eligible employees will receive a matching contribution of shares and a 20% discount on the share subscription price, which equals the opening price of LVMH shares on the Euronext market; the scheme involves 200,000 newly issued shares available from 24 October to 13 November. The initiative aims to involve all employees in the group's development and show appreciation for their commitment, emphasizing LVMH's belief that its employees make all the difference, as highlighted by Chantal Gaemperle, group executive vice president of human resources and synergies.

The UK government is considering converting the Post Office into an employee-owned company through an Employee Ownership Trust (EOT), similar to the John Lewis model, which would give employees a stake in the business and a say in its operations. The move comes as EOTs have become more popular, with calls for ownership reform at the Post Office intensifying due to recent governance issues and the Horizon IT scandal. While EOTs offer benefits like profit-sharing and increased employee influence, union representatives emphasize that governance changes are essential for the model’s success at the Post Office, advocating for a cooperative approach with greater accountability.

Employee Share Schemes (ESSs) are increasingly popular in advice businesses for talent retention, though their feasibility depends on a firm's size and structure. Integro Private Wealth, for example, has introduced an ESS to attract and retain talent, especially in wealth management, where long-term client relationships are crucial. While ESSs offer financial security and engagement for advisers, smaller firms face implementation challenges due to scale and structure, which leads some to consider mergers to enable broader employee ownership.

LVMH has launched "LVMH Shares," a new international employee shareholding plan targeting 70% of its workforce across 11 regions in Europe, North America, and Asia, providing preferential subscription terms to enhance employee involvement in the Group's growth. The initiative reflects LVMH's commitment to its values of innovation, excellence, and long-term partnership with employees, highlighting the crucial role of its workforce. Employees can subscribe to shares at a 20% discount during the subscription period from October 24 to November 13, 2024, with securities delivery scheduled for December 18, 2024, and shares to be listed on Euronext Paris.