GEO INSIGHTS

Capgemini has launched its 11th global employee share ownership plan (Esop), covering 97% of its workforce, including most of its 175,000 employees in India, as part of efforts to align employee interests with company performance. The Esop, offering up to 2.7 million shares (1.56% of outstanding shares), aims to sustain employee ownership at around 8% of the company's share capital, with investment options protecting employees against potential losses during the non-tradable period. Despite a 2.6% revenue decline in H1 2024, Capgemini maintained a 12.4% operating margin and increased organic free cash flow, reinforcing its financial stability as it rolls out this initiative.

Enterprise Management Incentive (EMI) schemes provide significant tax benefits for trading companies with gross assets of £30 million or less, allowing them to recruit and retain employees through share options without incurring income tax or national insurance contributions upon grant or exercise. Companies can grant options valued up to £250,000 per individual, with a total limit of £3 million, while ensuring that qualifying employees work at least 25 hours per week or 75% of their time for the company. However, companies must navigate potential pitfalls, such as changes in control or trading activities, and adhere to strict reporting requirements to maintain the favorable tax treatment of EMI options.

New Zealand's tax exempt thresholds for employee share schemes are set to increase under the proposed Taxation Bill, aimed at adjusting for inflation and boosting support for startups, particularly in the tech sector. The changes would raise the maximum value of shares offered to employees from $5,000 to $7,500 annually, and the employer's maximum discount from $2,000 to $3,000. These adjustments are intended to help early-stage companies recruit and retain talent, aligning employee incentives with company growth and contributing to broader economic recovery.

New Zealand's government is proposing to increase tax-exempt thresholds for employee share schemes as part of the Taxation Bill for 2024-25, benefiting startups and tech companies by adjusting for inflation. Under the proposed changes, the maximum annual value of shares provided to employees would rise from $5,000 to $7,500, and the maximum discount on shares would increase from $2,000 to $3,000, effective April 1, 2025. This initiative is aimed at supporting recruitment and growth for early-stage companies, aligning employee incentives with company goals, and ultimately boosting the economy.

AXA has launched its 2024 annual employee share offering, known as Shareplan 2024, across 40 countries for over 110,000 employees. Employees will have the option to participate in either a Classic offer or a Guarantee Plus offer, with shares offered at a discount to the reference price. The share subscription period will take place from November 4 to November 8, 2024, and the capital increase is expected to occur on December 5, 2024, with the new shares being listed on Euronext Paris.

Brazil's Superior Court of Justice (STJ) ruled that stock options granted to company directors, officers, and employees are not considered compensation for income tax purposes, but are instead subject to capital gains tax upon the sale of the shares. This decision was made under the 'repetitive appeal' mechanism, setting a precedent for tax authorities like the Federal Revenue Service. The ruling counters the Federal Revenue's argument that stock options should be taxed as indirect compensation when exercised, with the court affirming they are a commercial contract.