GEO INSIGHTS

Employee equity compensation is expanding beyond executives to include employees at all levels, with companies offering more flexible equity options such as performance units and restricted stock. However, increased regulatory complexity, particularly around 10b5-1 trading plans and SEC rules, requires careful planning and compliance. As equity compensation evolves, companies are encouraged to seek external expertise to navigate these changes effectively.

Barclays is granting shares to around 90,000 employees for the first time, offering stock awards valued at £500 each as it prepares to announce its 2024 annual results. The initiative, costing between £45m-£50m, aligns with CEO CS Venkatakrishnan's belief in promoting equity ownership to stimulate markets. The bank is also expected to report progress in its investment banking business, while Venkatakrishnan's own pay package will be adjusted, with bonuses potentially pushing his total compensation above £14m.

A proposal has been made to allow start-ups to defer the tax point for employee share schemes (ESS), aiming to ease the tax burden on employees who may struggle with illiquid shares. The deferral option is not a tax concession, as employees will be taxed on any further appreciation in share value, and employers won’t receive tax deductions until the deferred taxing date. Start-ups are encouraged to provide feedback by March 15, 2025, as this is a rare opportunity to influence the proposal, which may be elective and apply to unlisted businesses with a turnover under NZ$15 million.

Equinor ASA has initiated a share buy-back program from 14 February 2025 to 15 January 2026 to support its employee share-based incentive plans, with a total purchase amount of NOK 1,992,000,000 and a maximum of 19,080,000 shares to be acquired. The buy-back is divided into two periods, with up to 8,040,000 shares purchased before 15 May 2025 under an existing authorization, while the remaining 11,040,000 shares require new approval from the 2025 annual general meeting. The purchases, conducted on the Oslo Stock Exchange, comply with Norwegian and EU regulations, ensuring adherence to safe harbour conditions.

In January 2025, several prominent companies, including Yes Bank, Swiggy, and Zensar Technologies, allocated significant equity shares under their Employee Stock Ownership Plans (ESOPs), highlighting a growing trend of rewarding employees. As the Indian budget approaches, there is heightened anticipation within the startup and venture capital community for tax rationalization to alleviate double taxation on ESOPs, which could make them more attractive. The shift to a more favorable tax environment for ESOPs is seen as a key strategy to incentivize talent retention and boost India's startup ecosystem.

As India's 2025 union budget approaches, investors are calling for tax relief on Employee Stock Ownership Plans (ESOPs) to make the startup ecosystem more employee-friendly, emphasizing the need to eliminate double taxation. Currently, ESOPs are taxed both when exercised and when shares are sold, which discourages employees from fully benefiting from these options. Investors argue that taxation should only occur when a gain is realized, aligning India's tax policy with global standards and fostering a more attractive environment for talent retention in emerging sectors like AI and spacetech.

Companies must furnish annual information statements to employees who exercised incentive stock options (ISOs) or transferred employee stock purchase plan (ESPP) shares by January 31, 2025, and file IRS returns (Forms 3921 and 3922) by February 28, 2025 (paper) or March 31, 2025 (electronic), with potential penalties for non-compliance. Electronic filing is required for companies submitting 10 or more ISO or ESPP returns, and they must obtain a Transmitter Control Code (TCC) to use the IRS FIRE system. Additional reporting obligations include disqualifying dispositions of ISO and ESPP shares, which must be reported on employees' Form W-2, with failure to do so potentially leading to financial penalties and loss of tax deductions.