Global Share Plan Mobility Challenges with Solium

Mobility Challenges of a Global Share Plan Dinesh Patel, Director, Product Management dinesh@solium.com +1.403.351.6306 www.solium.com

Introduction Solium Global provider of equity compensation solutions Solutions for expense and tax mobility Dinesh Patel With Solium since 2006 Part of Product team Focus on New functionality and enhancements Tax mobility Key client migrations solium.com 2

Disclaimer This presentation contains general information only and the respective speaker and represented firm are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speaker and firm shall not be responsible for any loss sustained by any person who relies on this presentation. solium.com 3

Agenda Small world big challenges Risk awareness and mitigation Key challenges Expense mobility Tax mobility Solutions solium.com 4

Small World Big Challenges The smaller our world gets The more governments want a piece of local earnings The more sensitive internal business units are to cost allocations Impact on a jurisdiction s costs and tax liabilities Ability to assign or pass through costs The more we need to balance risk with worldwide compliance solium.com 5

Small World Big Challenges Currencies What currencies do you report in How do you decide on a FX rate The noon day rate, or end-of-day rate are not the same everywhere Disparate systems and solutions Data integrity issues Time and cost to keeping current Accountability for data (ownership & content) solium.com 6

Risk Awareness and Mitigation Tax rules globally are converging but not equal IFRS 2, ASC 718 Compliance and reporting local and global Management of data Can one solution do it all? Implications for non-compliance solium.com 7

Risk Awareness and Mitigation Need corporate awareness Global entity but often local execution Define accountabilities Determine risk thresholds Auditable and defendable data Robust support network advisors, third- party administrators, legal, and compliance solium.com 8

Two Key Challenges 1. Global expense allocation and recharge a) Transparency b) Tracking c) Reporting 2. Mobile employee tax compliance a) Identifying population b) Sourcing and maintaining data c) Calculations and reporting solium.com 9

Global Expense Allocation With employee mobility, expense allocations become sizable Need for consistency in tracking employee movement Solutions to meet the needs of a global company allocations, effective dates, amortisation start dates Recharge calculations solium.com 10

Mobile Employee Tax Compliance Identifying the type of mobile employee Assignee, expatriate, foreign national, TCN (third-country national) Business traveler, commuter Permanent transferee Telecommuter solium.com 11

Sourcing and Maintaining Data Define your source(s) for capturing mobility HR or payroll software Travel records Evolving GPS smart phone capabilities Badge access records Sign-in sheets Storing that mobility info Ultimately, an ability to export it will prove valuable Equity administration software HRIS solium.com 12

Sourcing and Maintaining Data Participant attributes you will need to have Participant mobility through full life-cycle of awards, particularly: At time of grant Time of exercise or release Exact date(s) of transfer Social tax elections Employee self-certification Assumed risk for company solium.com 13

Calculations and Reporting Additional complications (tax technical) Timing of taxation Allocation of gain Amount subject to tax Interplay of tax treaties Social taxes and certificates of coverage Foreign tax credits solium.com 14

Calculations and Reporting Additional complications (logistical) Tax equalisation policies Payroll logistics Trailing liabilities Employee experience solium.com 15

Calculations and Reporting Global access One source of data accessible by all business units and departments Ability to support inbound and outbound reporting Defendable to employees, tax advisors, auditors Timely money waits for no one solium.com 16

Tax Mobility Components Identification of Employee Data Tracking Mobile Employee Compliance Payroll Logistics Tax Calculation solium.com 17

Solutions for Mobility Taxation Ownership of the problem sets a path to success An owner can Identify who is mobile Track mobile employees Keep current (or access) global tax rules and rates Empower reporting globally solium.com 18

Solutions for Mobility Taxation A balance of risk and cost can often drive decisions This will be a collaboration with internal stakeholders Equity comp, HR, Tax, Legal, IT This will be a collaboration with external stakeholders Equity administrator, tax specialist, third party consultants This will be a collaboration with mobile employees Keeping up with this mobility will require their help solium.com 19

Solutions for Mobility Taxation Tax consultants High risk, high profile Tailored direct engagement Equity administrator You will want to inquire as to their capabilities and level of automation Clear and concise taxable compensation report solium.com 20

Survey says Does your company track the movement of the following employees during the life of their awards for tax withholding and reporting purposes? Yes No International assignees who are part of a formal assignee program 80% 20% Globally mobile employees who are not part of a formal assignee program 60% 40% Individuals who travel extensively 18% 82% At least one of the above employee groups 78% 22% Source: NASPP and PwC 2012 Global Equity Incentives Survey solium.com 21

Survey says When withholding income tax on an option exercise for an employee who has been a resident in two countries between the point of grant and exercise you: % Attribute all income to the country of residency at grant 2% Attribute all income to the country of residency when the grant is exercised 25% Attribute income based on the amount of time spent in each country between grant and vest 32% Attribute income based on the amount of time spent in each country between grant and exercise 26% Attribute income based on the parameters for each country independent of each other 16% Source: NASPP February 2011 Compliance-O-Meter Quiz on Global Mobility solium.com 22

Survey says How does your company track the movements of expatriates/cross-border employees from the time of grant of an award through settlement date? Reconcile SPA software to payroll stubs, 2% Number of mobile employees is too small for this to be a priority (49%) Other, 13% Mobility dept., 34% External administrator, 10% Still developing an effective approach to managing (45%) Internal SPA software (snapshot only), 11% Excel, 29% Source: NASPP and PwC 2012 Global Equity Incentives Survey Why aren t companies tracking mobility? solium.com 23

Thank you Dinesh Patel Director, Product Management Solium Phone: +1.403.351.6306 dinesh@solium.com solium.com 24