GEO Nov 09 Pearson
Transcript of GEO Nov 09 Pearson
Operating Global Plans in the Current Economic Climate
Gabbi StoppShare Plans Manager, Pearson plc
Agenda
• Our global share plans
• The current economic climate
• Challenges posed by global expansion
• Our experiences: South Africa, Australia, China & USA
• Predictions for 2010…and beyond
Our global share plans
• International SAYE ‘WorldWide Save For Shares’ - 70 countries, 18,000 eligible
• Long Term Incentive Plan – restricted shares and cash/stock settled SARs in 50 countries, 1800+ participants
• Bonus deferral plan – Annual Bonus Share Matching Plan
• International corporate nominee – ‘ShareStore’
The current economic climate
• Within Pearson: pay freeze still in place, flexible & part-time working, redundancies… few business units still suffering, others doing better than expected
• Share plans industry: provider consolidation, cost rationalisation, service levels
• Globally: ‘two-speed’ recovery or ‘double-dip’ recession?
Challenges posed by global expansion
• Education business expanding outside of UK and US
• LTIP awards smaller but more widely spread
• Greater number of countries = greater tax & legal due diligence & compliance costs
• Mobile employees
• Multiple languages & time zones
• Cultural issues
• Does ‘one size’ really fit all?
South Africa – preparing for kick-off?
• ‘BEES’ – pros and cons
• Navigating securities laws and exchange controls
• Appetite for employee share ownership – considerable
• 58% WWSFS (global SAYE) take-up this year (up from 15% in 2008)
Australia – hurdles to be cleared
• Local filings for class order relief (old news)
• Tax & reporting (new news)
• Held off making our annual LTIP award earlier this year until proposed regulations were sufficiently clear
• Now satisfied that our time-vesting & leaver provisions meet the definition of ‘significant risk of forfeiture’
China - taking the bull by the horns…
• Wall Street English – recent $145m acquisition of English language teaching schools for adults in China
• Still an ‘emerging’ market?
• Population of about 1.3bn, 40% aged 33 or younger
• How we operate our WWSFS and LTIP plans currently
• Is it now worth tackling SAFE regs?
USA – avoiding ‘red tape’ and filings
• Massive market for our education business
• 60% of our annual sales and profits generated in US $
• Schools publishing market declined 18% in first half of 09
• Higher education publishing market grew by 26%
• Navigating securities laws, s409A, FBAR
Predictions for 2010…and beyond
• New 50% top rate of income tax will affect more people than expected
• Tax avoidance–type plans & structures – a red herring?
• Accelerated vesting…but for whom?
• Bonus deferrals – salary deferrals too?
• Regulatory ‘overspill’ from bankers’ bonuses
• Growing appetite for employee share ownership,
especially Asia and, longer term, Africa