Management Equity Plans In A Mobile World - Restricted Share Awards

This short article highlights some of the complexities arising from the participation of internationally mobile employees in Management Equity Plans (MEPs) that often involve the award of restricted shares to mobile senior executives. MEPs continue to be an important tool in incentivising and retaining employees. However, the tax treatment has become increasingly complex given the continued growth of international management teams and because different jurisdictions often have different tax rules in this context. This complexity is compounded where participants move between jurisdictions during the course of the MEP.

This article considers some of the tax issues that arise when mobile employees hold shares in a company which forms part of the employer group, e.g. the typical sweet equity style MEP implemented by many companies where there is significant investment from private equity. This article does not address other forms of incentive award, e.g. stock options,