Foreign Equity-Based Compensation and U.S.Securities Laws

Abstract

As more foreign companies move into the U.S. and install equity-based compensation plans, legal issues arise. Foreign equity-based incentive plans involve many considerations, including tax and accounting issues as well as corporate and regulatory concerns arising from the employer's home jurisdiction. From a U.S. legal perspective, a principal issue is compliance with the require-ments of U.S. securities laws. The application of U.S. securities laws to different types of equity-based incentive plans can be complicated, and small design features can have substantial conse-quences. Compensation planners and managers need to be aware of the basic pressure points which might implicate the U.S. securities law concerns and be sensitive to these issues in their compensation planning.