Click here to download the executive compensation and employee benefits 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 14 jurisdictions are covered in this report:

Australia; Belgium; Brazil; Chile; Costa Rica; Denmark; France; Germany; Italy; Japan; Russia; Spain; Switzerland; United States.

Questions

The set of questions relating to the topic of executive compensation and employee benefits and answered by the guide for each jurisdiction covered include:

Sources of rules and practice

• • Provide an overview of the primary sources of law, regulation and practice that govern or affect executive compensation arrangements or employee benefits.
• • What are the primary government agencies or other entities responsible for enforcing these rules?

Governance

• • Are any types of compensation or benefits generally subject to specific corporate governance requirements or approval by shareholders or government?
• • Under what circumstances does the establishment or change of an executive compensation or benefit arrangement generally require consultation with a union, works council or similar body?
• • Are any types of compensation or benefit arrangements prohibited either generally or with senior management?
• • What rules apply to compensation of non-executive directors?

Disclosure

• • Must any aspects of an executive’s compensation be publicly disclosed or disclosed to the government?

Employment agreements

• • Are employment agreements required or prevalent? If so, what provisions are common?

Incentive compensation

• • What are the prevalent types and structures of incentive compensation? Do they vary by level or type of organisation?
• • Are there limits generally on the amount or structure of incentive compensation? Are there limits that adversely affect the tax treatment of the employer or the executive?
• • Is deferral and vesting of incentive awards permissible? Are there limits on the length or type of vesting and deferral provisions?
• • Can it be held that recurrent discretionary incentive compensation has become a mandatory contractual entitlement?
• • Does the type or amount of incentive compensation awarded to an executive potentially affect the compensation that must be awarded to other executives or employees?
• • Is it permissible to require repayment of incentive compensation under certain circumstances? Are these circumstances under which such repayment is mandatory?

Equity-based compensation

• • What are the prevalent forms of equity compensation awards in your jurisdiction? What is a typical vesting period?
• • Are there forms of equity compensation that are tax advantageous or disadvantageous to employees or employers?
• • Does equity-based compensation require registration or notice? Are exemptions, or simplified or expedited procedures available?
• • Are there withholding tax requirements for equity-based awards?
• • Are inter-company chargeback agreements between a nonlocal parent company and local affiliate common? What issues arise?
• • Are employee stock purchase plans prevalent or available? If so, are there any frequently encountered issues with such arrangements?

Employee benefits

• • Are there any mandatory benefits? Are there limits on discontinuing voluntary benefits that have been provided?
• • What types of employee benefits are prevalent for executives? Are there tax or other financial incentives or disincentives for any employee benefit arrangements?

Termination of employment

• • Are there prohibitions on terminating executives? Are there required notice periods? May executives be dismissed without cause?
• • Are there statutory or mandatory minimum severance requirements in your jurisdiction? Are there any other mandatory, post-employment benefits?
• • What executive severance payment level is typical?
• • Are there limits on dismissal for “cause”? Are there any statutory limits on “constructive dismissal” or “good reason”? How are “cause” or “constructive dismissal” defined?
• • Are “gardening leave” provisions typically used in employment terminations?
• • Is a general waiver or release of claims on termination of an executive’s employment normally permitted? Are there any restrictions or requirements for the waiver or release to be enforceable?

Post-employment restrictive covenants

• • What post-employment restrictive covenants are prevalent? What are the typical restricted periods?
• • Are there limits on, or requirements for, post-employment restrictive covenants to be enforceable? Will a court typically modify a covenant to make it enforceable?
• • What remedies can the employer seek for breach of postemployment restrictive covenants?

Pension and other retirement benefits

• • Are there any required pension or other retirement benefits? Are there limits on discontinuing voluntary benefits that have been provided?
• • What types of pension or other retirement benefits are prevalent for executives? Are there tax or other financial incentives or disincentives for any employee benefit arrangements?
• • May executives receive supplemental retirement benefits?

Indemnification

• • May an executive be indemnified or insured for claims related to actions taken as an executive, officer or director?

Change in control

• • Under what circumstances will an asset sale in your jurisdiction result in an automatic transfer of benefit obligations to the acquirer?
• • Is it customary to provide for executive retention or related arrangements in connection with a change in control?
• • Are there limits or prohibitions on the acceleration of vesting or exercisability of compensation in a change in control? Are there restrictions on “cashing-out” equity awards?

Multi-jurisdictional matters

• • Do foreign exchange controls rules apply to remittance of funds, or the transfer of employer equity or equity-based awards to executives?
• • Must employment agreements, employee compensation or benefit plans, or award agreements be translated into the local language?
• • Are there prohibitions on tax gross-up, tax indemnity or tax equalisation payments?
• • Are choice-of-law provisions in executive employment contracts generally respected?