UNDERSTANDING EMPLOYEE COMPENSATION AND BENEFITS Presented by the Employment and Industrial Relations Law Committee and the Taxes Committee

JOINT SESSION EMPLOYMENT AND INDUSTRIAL RELATIONS AND TAX COMMITTEES “Understanding Employee Compensation and Benefits” MODERATORS Marianne Granhøj, Kroman Reumert, Denmark Juan Bonilla, Cuatrecasas Gonçalves Pereira, Spain SPEAKERS Mercedes Balado Bevilaqua, MBB Abogados, Argentina Jack Bernstein, Aird & Berlis LLP, Canada Avik Biswas, RDA Legal, India Christopher Jordan, CMS, Germany Daniel Ornstein, Proskauer Rose LLP, United Kingdom Todd Solomon, McDermott Will and Emery, USA Elissa Romanin, Minter Ellison, Australia

CASE STUDY Microcredit US Mirocredit Australia Mirocredit Argentina Microcredit Canada Mirocredit India Microcredit UK Microcredit Germany Bonus Executive Equity Plan All-Employee Equity Plan IPO?

CASE STUDY: BONUS PAYMENTS Annual Bonus Based on cash mediated and profitability worldwide No limits or caps 3-4 times of base salary Mobile Employees Obligation to defer 50% Payable in Restricted Shares: 3 year vesting Good leaver and bad leaver provisions Retention Bonus ¼ paid 1 year after IPO ¾ 3 years after IPO Continuity of employment

RESTRICTIONS ON EXECUTIVE PAY: BONUS CAPS: EU / AMERICAN / ASIA-PACIFIC APPROACH CRD IV Directive UK Challenge US Position Canada Perspective Australia Approach South America Asia / India

Deferrals: clawback and forfeiture provisions Extraterritorial effect of bonus restrictions Pensions as a way to by-pass bonus restrictions? Exchange control issues Potential inconsistencies with local contracts RESTRICTIONS ON EXECUTIVE PAY: BONUS CAPS

When is it a taxable event? Is it possible to defer taxation? How complex can be the “mobile” element? What if the Mobile employee is terminated before the release date? BONUS FOR MOBILE EMPLOYEES Bonus Period Vesting Period for Restricted Shares Full Ownership 50% Cash 50% Restricted Shares Release of Restricted Shares 2019

Is it compliant with bonus cap rules? RETENTION BONUS FOR CERTAIN EXECUTIVES Award of Retention Bonus IPO ¼ Bonus

CASE STUDY Microcredit US Mirocredit Australia Mirocredit Argentina Microcredit Canada Mirocredit India Microcredit UK Microcredit Germany Bonus Executive Equity Plan All-Employee Equity Plan IPO?

CASE STUDY: EXECUTIVE EQUITY PLAN 4 year vesting Performance metrics IPO: Accelerated Vesting Restricted Awards 7 year exercise Exercise Price: nominal value IPO: Automatic exercise Stock Options IPO: 1 year requirement to hold shares Shares

TAX Taxation events: −Grant −Vesting −Release / Exercise −Sale  Potential deferral of taxation Mobile employees EMPLOYEE EQUITY

EXECUTIVE EQUITY PLAN (1) Vesting Period of the Restricted Awards Grant of Restricted Awards Exercise Period Conversion of Restricted Awards into Stock Options Taxation events Employment implications

EMPLOYMENT IMPLICATIONS Grant of Holding Co vs. Grant of local subsidiary Income tax withholding implications Choice of law and enforceability: US law and arbitration Termination payments Continuation of awards upon termination EMPLOYEE EQUITY

EXECUTIVE EQUITY PLAN (2) IPO Taxation events Employment implications Conversion of Restricted Awards into Stock Options Opening of Sale Period Full Ownership Restricted Awards

EMPLOYMENT IMPLICATIONS Impact and enforcement of non-competes on equity compensation Works Council communications Leave of absence provisions EMPLOYEE EQUITY

CASE STUDY: ALL-EMPLOYEE PLAN Restricted Shares 4 year vesting Automatic release upon vesting ESPP 10% withholding 15% discount 3 month life cycle Eligibility: 1 year of service Retirement Provision: “Rule of 55”

FUTURE THOUGHTS ON COMP&BEN Public supervision vs. individual approach? Increased regulation: moving out from employee equity plans? Fast changing compensation structures: how to make them effective? 20% cap on bonuses: is it really effective for the country?

Any questions? Many thanks!

JOINT SESSION EMPLOYMENT AND INDUSTRIAL RELATIONS AND TAX COMMITTEES “Understanding Employee Compensation and Benefits” MODERATORS Marianne Granhøj, Kroman Reumert, Denmark Juan Bonilla, Cuatrecasas Gonçalves Pereira, Spain SPEAKERS Mercedes Balado Bevilaqua, MBB Abogados, Argentina Jack Bernstein, Aird & Berlis LLP, Canada Avik Biswas, RDA Legal, India Christopher Jordan, CMS, Germany Daniel Ornstein, Proskauer Rose LLP, United Kingdom Todd Solomon, McDermott Will and Emery, USA Elissa Romanin, Minter Ellison, Australia