The breadth of our equity and incentive plan experience across all major global business centers enables us to provide clients with practical, comprehensive solutions, whatever their circumstances. The lawyers in Mayer Brown’s Equity & Incentive Plans (EIP) practice help both local and global employers in accomplishing their strategic goals and meeting the challenges in the war for talent by rendering comprehensive advice on the creation, implementation and operation of equity- and cash-based compensation and other incentive plans.
Our EIP practice advises on the full-range of employee incentive schemes and related issues including:
- Restricted stock and restricted stock unit plans or LTIPs
- Stock option plans
- Stock purchase plans
- Stock appreciation rights and phantom plans
- Equity-based incentive plans for companies backed by private equity firms
- Deferred cash bonus arrangements including Long Term Incentive Programs
- Investment fund arrangements (including carried interest structures)
Our EIP practice is a globally coordinated practice providing advice on the myriad laws and regulations that affect incentive plans in multiple jurisdictions including:
- Tax law (such as income and social security taxation, employee mobility issues, tax audits and litigation)
- Securities regulation (including European prospectus issues)
- Stock exchange rules
- Exchange control regulations
- Corporate governance and compliance rules and protocols, including considerations for pre-IPO and newly public companies
- Investor guidelines
- Company law
- Trust law
- Employment law
- Privacy and data protection laws
- Pensions finance
We perform multi-territory tax, regulatory and legal reviews for employers wishing to implement their plans globally. An important part of this service is providing assistance with the solicitation, coordination and review of advice from local counsel to deliver effective and commercially practical solutions that are tailored to the client. We also work with local counsel to draft territory-specific plan schedules to take advantage of tax-favored structures, where available, and/or to comply with local regulatory or legal requirements.
Mayer Brown is a truly global legal services provider. Mayer Brown has offices throughout the Americas, Asia, Europe and the Middle East. In Brazil we work with the lawyers at Tauil & Chequer Advogados. We have an established and reliable network of lawyers in jurisdictions where we do not have our own offices and with whom our EIP lawyers work successfully to provide globally comprehensive advice.
Over the last decade in the United States, the pace and breadth of regulations relating to equity-based compensation plans and other incentive arrangements has become ever-increasing. By staying abreast of these changes, our lawyers are able to proactively advise clients to ensure timely compliance with new regulations and to anticipate changes in plan design that will be necessary to accommodate foreseeable changes.
We have extensive experience advising public companies in the design of incentive and equity-based plans, including plans that require shareholder approval, taking into consideration institutional shareholder concerns that have become increasingly prescriptive to the design of such arrangements. A significant portion of our practice involves advising clients on the application of U.S. Internal Revenue Code Section 409A to incentive and equity-based plans and the impact of changes in stock exchange rules and securities laws on equity-based plans. We also work closely with our clients’ accountants to coordinate our advice with accounting rules applicable to equity-based plans.
Members of our Global Share Plan practice often work with other practice areas in the United States on the many issues that can arise for equity-based compensation plans. In conjunction with other lawyers at Mayer Brown, lawyers from our practice have been involved in regulatory rulemaking and enforcement efforts as well as tax litigation involving stock options and other equity-based compensation.
Interdisciplinary teams comprising our executive compensation, tax and securities lawyers also work closely with clients who perform internal investigations, or are subject to governmental investigations, relating to alleged stock option backdating.
Mayer Brown’s Tax Controversy practice frequently represents companies during Internal Revenue Service (“IRS”) audits that increasingly involve executive and equity compensation issues. The firm has successfully represented multi-national taxpayers in controversies involving the IRS’ attempt to include the cost of stock options for the purposes of allocating research and development expenses in cost-sharing arrangements. Our Governmental Relations practice represents industry groups with respect to stock option issues, such as option expensing.
Representative Experience in the United States
- Advised several multi-national companies with respect to international equity plans and awards. Assisted these companies in drafting plans and underlying award agreements and provided advice with respect to the tax implications of awards.
- Advised a public insurance company on the redesign of its entire equity compensation program to increase the appeal of the company’s program to shareholders in order to ensure that the company would receive a favorable say on pay vote as part of the new advisory vote on executive compensation recently implemented in the United States. The redesign required a complex analysis to meet the business objectives of the company and yet mitigate the tax risk to the company and the executives.
- Advising a large multinational public company on the tax implications of administrative errors made in previous years in its global equity plans for the company and for the recipients of such awards, including US citizens, resident aliens and non-resident aliens.
- Advising an international manufacturing company on the design and ongoing administration of its global equity plans for compliance issues with US federal tax laws and required securities filings.
Through lawyers at Tauil & Chequer Advogados working in association with Mayer Brown, we aid international corporations on the implementation of their incentive plans, commissions plans, profit sharing plans and internal policies in Brazil. The lawyers at Tauil & Chequer Advogados have in-depth expertise in analyzing and adapting multinational companies’ world-wide benefits policies in accordance with Brazilian legislation, which is extremely protective towards employees. We also advise our clients on the best strategies for senior executives' compensation, by offering them the most suitable options whilst minimizing risk from the perspective of employment, tax and social security laws.
Our Employment & Benefits lawyers also advise clients on structuring and managing their work benefits and executive compensation plans and assist them in related areas, such as tax and social security.
Our highly rated Employee Share Incentives Group aims to devise and put in place the most tax-efficient equity incentive arrangements to meet clients’ commercial requirements, and we pride ourselves on our user-friendly approach to what can be a confusing and technical area. This is reflected in clients’ comments in Chambers UK:
- “impressive turnaround time even on issues that were technically challenging”
- “willingness to pick up the phone and clarify any issue we want”
- “ability to explain things in eloquent and concise layman’s language”
One of the key features of our service is that our team of lawyers is fully integrated with the tax and corporate groups and it draws on a depth of corporate, tax, financial services and commercial experience within its own group. Our lawyers will take into account tax, social security, company law, trust law, employment law, corporate governance rules and investor guidelines, stock exchange rules, securities regulation, tax authority practice and cross border issues to provide clients with comprehensive solutions, whatever their circumstances.
Our clients comprise private and listed companies, both UK-based and international.
The group advises on all areas of share plan implementation and operation, including tax advantaged share plans (Enterprise Management Incentive (EMI) options, approved Company Share Option Plans (CSOPs), approved SAYE Share Option Schemes and approved Share Incentive Plans (SIPs)), and other (“unapproved”) arrangements such as option schemes, phantom or shadow option schemes and share appreciation rights, Long Term Incentive Plans (LTIPs) and restricted share schemes.
Additionally, we have a depth of experience in the implementation of share plans for overseas companies in the UK – where possible in a tax-efficient manner, such as the implementation of US share purchase plans through UK-approved SAYE option plans or share incentive plans.
Employee Benefit Trusts
We advise on all aspects of the use of employee benefit trusts in connection with the operation of share plans, with good experience of both onshore and offshore trusts.
We advise on tax-efficient, tailored equity participation for management in start-ups, management buy-outs and private equity situations, and on carried interest arrangements in fund structures. We have particular experience designing and implementing “growth share” arrangements where a special class of share is designed for employees, and have combined these arrangements with EMI options to maximise tax efficiency for both employee and employer.
Representative experience in the United Kingdom
- Advising a major international bank on annual amendments to its equity and cash bonus plans, and drafting employee documentation and documentation for the delivery of shares on vesting of share awards.
- Advising LSE-listed Scott Wilson Group plc on share plan aspects of its takeover by URS. Plans involved were SAYE scheme, LTIP, approved CSOP and unapproved option scheme (all drafted by Mayer Brown). The transaction involved drafting approximately 20 detailed communications to award holders, in such a way as to be easily understood by the target audience, despite their technical nature.
- Advising a FTSE-250 company on the drafting and HMRC approval of an approved schedule to work in conjunction with the company’s LTIP, combining approved CSOP options with unapproved share awards which covered the exercise price of the CSOP options.
- Advising a private company on the reorganisation of its share capital in advance of a London listing.
- Advising a major private equity house on the incentive aspects of changes to the CEO of one of its main portfolio companies. The nature of the incentives entailed complex and innovative drafting to achieve the client’s aim, which then needed to be negotiated with the incoming and outgoing CEOs’ advisers, all in a short time frame.
- Advising a major international financial institution on the feasibility of implementing an award plan for fund managers paying out in fund units, with particular emphasis on the regulatory regimes in the UK, US and Germany.
Our German EIP practice, combining the knowledge from our securities, tax, accounting, employment, benefits and executive compensation specialists to a seamless product, advises national and international organizations on the design and implementation of their equity-based compensation plans and other incentive arrangements. We help our non-German clients understand the complexity and intricacies of German and EU laws and regulations applicable to their respective plans and schemes and to maximize the tax benefit for both employers and employees. We also assist our German clients to deal with the German legal and tax environment and to cope with the challenges of setting-up multinational equity plans and incentive schemes for their global workforce and international executives.
Our group is recognized by local and international reviews as one of the leading practices in the negotiation and implementation of compensation structures and incentive schemes. Our Paris practice covers setting up efficient equity-based compensation plans and other incentive arrangements (i.e. shareholding structures for French and foreign managers) from a legal, tax and employment point of view, notably in an LMBO context.
In this regard, we advise management teams and private equity houses on the negotiation of the status of the management and the implementation of management equity plans. Our assistance deals with the patrimonial structures and vehicles to be set up (French or foreign families’ holding companies, shares savings plans - “PEA”, etc.) and the financial instruments to be issued (preferred dividend shares, warrants, convertible bonds, free shares, stock options, French and cross border French regulated vehicles - “FCPE”, etc.). We also provide day-to-day advice on the management of such equity plans, especially in connection with the individual taxation aspects (tax planning and tax litigation).
Additionally, we provide assistance to French and multi-national listed or privately owned companies for all legal and tax aspects of stock option plans, free shares plans, phantom plans, and other deferred compensation arrangements.
In this regard, our practice assists companies with tax audits of their compensation programs and also represents individual taxpayers during control and litigation procedures initiated by the French authorities.
Our Brussels office has extensive experience advising multinationals on the design of global incentives plans taking into account tax, social security, legal and regulatory matters in the context of Belgian legislation. In particular we take advantage of existing favorable Belgian tax rules to provide recommendations and optimize benefits to individuals whilst minimizing costs for companies.
We also guide companies through the implementation of global plans in Belgium, flagging areas of risks and the particular aspects of Belgian law to be dealt with including communications with the employees and recipients of such benefits. Managing international mobility of employees and tax-efficient incentive plans is a challenge for multinational companies and we have significant experience in this area.
We also advise on tax-efficient equity participation for managers in start-ups, management buy-outs and carried interest arrangements in private equity structures to ensure compliance with the applicable regulations.
Representative experience in Belgium
- Advised a French financial institution in reviewing the Belgian and non Belgian tax implications of the mobility of employees (passing through Belgium) on stock options plans and related proceeds.
- Advised various French and Belgium financial investment management companies in structuring the carried interest of the managers using either Luxembourg or Belgian structures.
- Advised a US-group with operations in Belgium in revising the global incentive plan to ensure that it allowed favorable Belgian tax regime to stock options granted to Belgian beneficiaries.
- Advised a US group in analyzing the tax, securities law, labour and social security aspects of stock options, restricted stocks and other awards to be granted to Belgian beneficiaries under an omnibus plan.
Our Hong Kong corporate, employment and regulatory practices work closely with our Global EIP practice to advise Hong Kong-based clients on the introduction of a wide range of equity-based compensation plans and other incentive arrangements. In addition to the traditional share option schemes for Hong Kong-listed companies, we advise on the drafting and implementation of innovative employee share purchase plans and performance share plans (restricted stock unit plans) together with the associated employee trust documentation.
Representative experience in Hong Kong
- Advising AIA in relation to the drafting and implementation of employee share incentive plans including drafting Employee Stock Purchase Plan and associated trust deed; drafting trust deed for implementation of restricted stock unit (RSU) scheme; advising on employee grant documentation for RSU and option schemes; advising on waivers from Hong Kong Stock Exchange.
- Advising a bank in relation to the incentive arrangements associated with the integration of its employees in Hong Kong including the co-ordination of the same advice from 9 regional jurisdictions.
- Advising Hong Kong Electric on the restructuring of their defined benefit scheme to a defined contribution scheme involving several thousand employees and several billion Hong Kong dollars.
- Successfully assisting a client in the mediation of a claim for substantial incentive payments brought by a former employee and advising on the enforceability of post-termination restrictive covenants.
Our offices in the PRC/Mainland China advise multinational corporations on the implementation of their equity-based compensation plans and other incentive arrangements.
We focus in particular on issues specific to PRC/Mainland China which take into account China’s social system and its exchange control restrictions. These considerations include reporting obligations to government agencies, like the Tax Bureau and Foreign Exchange Control Authority, as well as modifying certain aspects of global equity-based compensation plans and other incentive arrangements in order to accommodate these restrictions, or for the greater convenience of PRC/Mainland China employees such as phantom plans.
Legal500 2012 – 2021
Mayer Brown’s Employee Share Schemes group has been consistently recognized by Legal 500, most recently as ‘A committed team, also very commercial.’ and ‘The team was very accommodating and friendly and really helped us understand the process involved with the engagement.’
Asia Pacific Legal 500 2009 - 2020
Ranked Tier 1 for Employment – Hong Kong
Chambers Asia Pacific 2010 - 2021
Ranked Band 1 for Employment: Hong Kong Law (International Firms) – China
"A very good client base and tradition of working with a range of Hong Kong employers." (2016)
"Able representatives of prominent employers in Hong Kong. Highly experienced in handling cross-border HR policy matters as well as ground-breaking litigation. Particularly sought after by household names in the aviation, healthcare and education sectors." (2015)
"A big, dedicated team that really knows its stuff." (2014)