'So, instead of our paying you in cash, we will agree to pay in you in stock options. Our stock will provide you with far more monetary value than the paltry fee we would pay you for your services and by working with us, you will gain entry into the lucrative Chinese market and highly profitable work for Chinese companies will follow'.
Where these global banking stock option scams in US are growing-----the goal is of course for these COMPLEX FINANCIAL INSTRUMENTS to crash and burn. When we allow stock options for wages----we allow global banking 1% to change what has been monetary wages for thousands of years------cash vs stock options will expand to eliminate CASH as wages.
We do not understand why global 1% from Asia, Arabia et al would feel the need to adopt this ONE WORLD ONE GOVERNANCE all FOREIGN ECONOMIC ZONES operating the same globally knowing the global 1% of OLD WORLD EUROPE will lie, cheat, and steal in all partnerships.
China Stock Option Scams
Foreign individuals and companies should not accept promises of stock options or stock in a Chinese company in place of employment compensation or payment for services.
By Dan Harris
Oct 3, 2016 at 5:47 PM
The China lawyers at my firm have been experiencing an increase in companies and individuals contacting us after having been offered stock in a Chinese company as an alternative to cash. Mainland Chinese companies offering company stock is a scam that cannot work for foreigners.
This is how this stock scam typically goes down. The Chinese company — usually in the tech sector — desperately needs the expensive skills or knowledge of a foreign person or entity, but either lacks the funds to pay or the desire to do so. So, instead of paying hard cash, the Chinese company will offer founders’ stock or employee stock options in their Chinese entity and talk about its plans to go public (“do an IPO”) and of how profitable that will be for the stock recipients.
Unfortunately, this is all an illusion for the simple reason that foreigners cannot own stock in a Chinese domestic company not already listed on a stock market. So any such option or stock transfer is void from the start. Foreigners are not permitted to be shareholders of Chinese domestic companies, nor does China recognize the concept of nominee shareholders.
Even though the offering of stock in Chinese companies is a fraud, we are still seeing many foreign individuals and companies taken in by such offers, most commonly in the fintech sector. The Chinese company will use the “standard” Silicon Valley approach of offering a stock option package as a key benefit in the employment package. By offering stock options, the Chinese company can pay less and secure greater loyalty, while still exploiting the skills and extracting the knowledge of foreign individuals in developing an innovative software or other high tech product.
This exploitation period typically lasts one to three years, at which point the Chinese company tells the foreign individuals, “Sorry, the Chinese government has now informed us that we cannot issue you any of our stock.” Sometimes, to prolong the scam, the Chinese company will propose elaborate nominee schemes illegal under Chinese law. These proposals often convince the foreign employees to waste another year or two with the Chinese company. But, in the end, the result is always the same. The Chinese company defaults on its promise to provide the foreigners with stock in the company. Since the founders’ stock/stock option scheme was void from the start, there is nothing the foreigners can do to enforce their rights in China, since they never had any rights.
A similar scam is often perpetrated on foreign companies with technical services of great value to the Chinese company. The Chinese company will win over such a company with the following type of pitch:
We really need your services, but we are growing so fast these days that we simply do not have the free cash to pay you in cash for that. Since we are growing so fast, it is certain we will soon do an IPO on the Shanghai stock exchange. So, instead of our paying you in cash, we will agree to pay in you in stock options. Our stock will provide you with far more monetary value than the paltry fee we would pay you for your services and by working with us, you will gain entry into the lucrative Chinese market and highly profitable work for Chinese companies will follow.
This scam results in the same result as the employee stock option scam. Just as with employee stock options, a foreign entity cannot own stock in a Chinese domestic entity, so the option is void from the start. Also, the private Chinese entity never does an IPO on the Shanghai market, so the whole concept was an illusion. The foreign company virtually never figures out the scam until after it has already transferred its service or valuable information to the Chinese entity.
There are a couple of elegant variants Chinese entities use to implement the Chinese stock scam. In the rare case where a private Chinese company actually completes an IPO, the listing is on a foreign exchange — usually either on a Hong Kong or United States or London exchange, where due to Chinese law requirements, the actual listing entity is not the Chinese company for which stock options or stock were purportedly given. Instead, the listing entity is some form of subsidiary or other affiliate of the Chinese company. This means the holder of the scam option or stock in the Chinese company can be told: “Your stock option (or stock) is with the Chinese parent; you do not have an option with the affiliate actually listed. Sorry.”
Private companies in China are effectively locked out of China’s domestic IPO market. On the other hand, such companies have become attractive targets for private equity financing. But the story here is the same. The private equity financing occurs in China, resulting in a big payout to existing shareholders of the Chinese entity. The foreign stock option holder looks for an equivalent benefit. The Chinese entity then responds: this was a private equity deal, not an IPO. You did not own any stock at the time of the private financing, so you are not entitled to any benefit.
Foreign individuals and companies should not accept promises of stock options or stock in a Chinese company in place of employment compensation or payment for services. Chinese companies that offer payment in stock are either ignorant of the requirements of Chinese law or intentionally committing fraud. Either way, foreign individuals and companies should refuse to work with any Chinese company that makes this sort of stock offer. We have seen many of these deals and none have worked out well.
And here are those Chinese 5% players thinking they are WINNERS-----senior management as in US being tied to stock options making the BLING DISAPPEAR.
Remember, these stock option complex financial instruments are COMPLEX because hidden in a long explanation is that only the TOP TIER global investors and global 1% corporate executives KEEP THE BLING in these stock option deals where 99% of WE THE PEOPLE including those dastardly 5% to the 1% players will soon lose it all.
This is what they call the growing Chinese middle-class in MOVING FORWARD a few decades from now if we keep allowing global banking 1% to install SMART CITIES policies------they will not need to PRETEND TO MAKE A MIDDLE-CLASS----Libertarian Marxism brings extreme wealth extreme poverty to all 99% of US and global citizens.
Economics and Policy from China's Newspapers
China Evergrande launches employee stock options
Board of directors grant nearly 8,000 senior management employees a total of 744 million shares
By Asia Times staff October 10, 2017 10:05 AM (UTC+8)
After three years, China Evergrande has once again implemented a share option incentive plan to inspire its employees, Caixin reported.
According to the announcement on October 6, the Board of Directors of China Evergrande decided to grant nearly 8,000 senior management employees a total of 744 million shares.
People who received the incentive accounted for around 7.8% of total employees in the company. The exercise price of the incentive was HK$30.2 (US$3.87), which is equivalent to the closing price on 6 October.
This is the third time that China Evergrande has announced an options incentive since its listing.
In May 2010 and October 2014, China Evergrande granted 713 million shares and 5.30 billion shares, respectively, to its employees. The two exercise prices were HK$2.4 and HK$3.05 — far below the latest option incentive.
Shares of China Evergrande have constantly increased this year. The latest closing price was up 500% compared to the beginning of the year, pushing China Evergrande Chairman Xu Jiayin to the top of Forbes China list several times, the report added.
Below we see during Bush era SUPREME COURT rules stock options are WAGES. This is a ruling over TAXATION. All these Supreme Court rulings these few decades on stock options as WAGES is not a GOOD 99% PUBLIC INTEREST stance, it is a global 1% banking stance the goal of moving Western nation citizens away from the idea of receiving CASH as wages. We are already seeing other methods of PAYING SALARY replacing cash------that will be BED AND A MEAL-------which is of course GLOBAL CORPORATE CAMPUS SOCIALISM------where we eat, sleep, are schooled, and never leave that global corporate campus......no WAGES OR CASH needed.
As stock options become filled with fraud and corruption getting to the point of workers not wanting to be tied to them-----as with dysfunctional and defunded public schools and public transit--------the courts and global banking pols and players are building the case for global corporations that CASH AS WAGES are no longer happening in FOREIGN ECONOMIC ZONES.
Schachter v. CitiGroup: The Other Side of the Supreme Court’s Decision
Author(s): Alisa Baker , Richard Levine
Synopsis: In Schachter the California Supreme Court expressly holds, for the first time, that restricted stock and other forms of deferred equity compensation are "wages" for purposes of the California Labor Code. This means that employees can expect to be protected as to both attorneys' fees and arbitration fees in employment law disputes based on equity compensation.
In November, the California Supreme Court issued an unusually significant decision in the area employment compensation. Schachter v. CitiGroup, Inc. (PDF, 107KB) (S161385), Nov. 2, 2009, concerns Citigroup’s restricted stock incentive compensation plan, pursuant to which employees may elect to receive a portion of annual earned compensation in the form of restricted company stock that vests over time. The restricted stock plan provides, however, that if a participating employee resigns, he or she forfeits rights to any unvested restricted stock (as well as to the cash the employee would have received had he or she not opted for restricted shares instead).
Schachter had opted to receive restricted shares in lieu of cash during certain years. The restricted shares were awarded at a 25% discount below market price at the time of award. Schachter quit and therefore lost the value of not-yet-vested restricted stock. He claimed the restricted stock plan violated two sections of the California Labor Code, sec. 201 (which requires unpaid earned wages to be paid upon discharge), and sec. 221 (which prohibits an employer from “collecting or receiving from an employee any part of wages theretofore paid . . .”
JAPAN is of course a PUPPET nation to global banking 1%----and all Foreign Economic Zones these few decades are installing these far-right wing neo-liberal/Liberatarian MARXIST policies.
Stock option income counts as salary: Supreme Court
- Jan 26, 2005
The top court’s first ruling on the matter rejected a suit filed by a former president of the Japan unit of U.S. chip-maker Applied Materials Inc.
Tuesday’s decision in favor of tax authorities upheld an earlier ruling by the Tokyo High Court and will probably affect affect similar lawsuits across Japan. There are 102 such suits pending, according to the National Tax Agency.
“Proceeds from exercising (stock options) are compensation for labor and services rendered and constitute salary income,” said Justice Tokiyasu Fujita, who presided over the case at the court’s No. 3 Petty Bench.
In the lawsuit, Keisuke Yawata, former president of the Japanese unit of Applied Materials Inc., was challenging a move by tax authorities to impose a higher tax applicable to pretax salary income on the 360 million yen in income generated by his sale of stocks after exercising stock options between 1996 and 1997.
He declared the amount as nonpretax income in the relevant tax years, thus rendering them eligible for a lower tax rate. However, tax authorities rejected this and imposed additional taxes of 79 million yen.
The Tokyo District Court ruled in August 2003 that the stock option income should be treated as nonpretax income subject to a lower tax because proceeds from such transactions are determined by the contingent factor of stock prices, which fluctuate.
But the Tokyo High Court overturned the ruling in February and rejected Yawata’s request, saying provision of stock options to employees is intended to motivate them to continue working at the company and constitutes compensation for labor and services.
Stock options refer to the rights to buy shares at predetermined prices, which allow the holder to generate a profit by selling shares provided that the market price is higher than the predetermined level.
The Commercial Code was revised in 1997 to allow companies to give employees stock options. Some preferential tax treatment is provided on income gained from such options under the code if certain conditions are met.
But most cases subject to the lawsuits over taxation concern stock options given to employees of the Japanese units of foreign companies that are outside the scope of the Commercial Code.
As we say, it is those 5% players black, white, and brown being positioned in executive positions making them feel MERELY RICH----affluent and those are the very positions global banking 1% will be throwing under the bus. All of HILLARY'S NASTY 5% LADIES in global corporate executive positions are those being tied to stock options in lieu of CASH.
Women in Company Leadership Tied to Stronger Profits, Study Says
By DANIEL VICTORFEB. 9, 2016
Women after the 1960s-70s labor and justice protests were heavily placed in PUBLIC SECTOR employment as were our 99% black, and brown citizens now fighting to protect those pensions, 401Ks, and stock options. If we continue MOVING FORWARD US CITIES DEEMED FOREIGN ECONOMIC ZONES------in just a few decades these managers thinking they are WINNERS will disappear ending that status of MERELY RICH---AFFLUENT. We are watching as global banking pols make access to ORDINARY HEALTH CARE and insurance something that only those AFFLUENT/MERELY RICH can afford. We see how in only a few decades all 99% of US WE THE PEOPLE will not be accessing that health care with MEDICARE et al dismantled.
While those global 1% Hillary pols and player ALT RIGHT ALT LEFT women's rights organizations PRETEND there is a fight for equal wages and lots of family policy in the workplace being installed---they are lining 99% of women in employment structures that will kill their wealth yet again.
REMEMBER, the global 1% and their 2% of women are working for global 1% of men killing 99% of women
'Employee Stock Options (ESOPs) and Restricted Stock ...
Employee Stock Options (ESOPs) and Restricted Stock: ... technology firms in the United States. ... Firms use equity options to reward managers as well as other ... '
Why there are so many female managers but so few CEOs
Women fill 50 percent of middle management positions globally, but make up less than 5 percent of CEOs.
by Sharon C. Bolton March 11, 2015
Sharon C. Bolton is a professor of organizational analysis at the University of Stirling in Scotland.
Yahoo chief executive Marissa Mayer is in rare company as a woman in the C-suite. (Henny Ray Abrams/AP)
The number of women in paid employment has risen significantly over the past 40 years. In developed countries especially, there are increasing numbers of women reaching top positions in different fields of work. And new research shows how girls are doing far better than boys educationally across the world.
For all this good news for gender equality, however, some of the latest reviews of women and work across the globe reveal that on virtually every measure available, women suffer greater economic exclusion than men. Women’s earnings are significantly less than men’s — on average between 10 and 30 percent less globally — and the jobs available to women across the world remain segregated.
In many countries there are obvious limits to what work women are allowed to do — for example, places where women require permission from their husbands to work and/or where they are concentrated in poor quality jobs. Women are concentrated in certain roles and limited to specific management functions in a way that is indicative of the “glass walls” phenomenon, which is occupational segregation by gender.
When examining differences in workplace opportunity, management roles are useful indicators of equality. Becoming a manager or senior executive offers the largest chance to achieve economic equality and to influence access for other women in the labor market.
To be selected for top management jobs, it is necessary to have diverse experience across different company areas. As long as women are boxed into certain roles, this will not happen — hence the need to break down glass walls before women can break through the glass ceiling to top management.
A closer look at the numbers
A recent report by the International Labour Organization reveals women hold 50 percent of middle management positions. But that is as far as equality extends, as less than 5 percent of chief executives of publicly listed companies in OECD countries are women and just 2.8 percent in the European Union. Britain’s Chartered Management Institute reveals a gendered pyramid that is mirrored worldwide, with women holding positions as 60 percent of junior managers, 40 percent of middle managers, 20 percent at senior levels and single digits at chief executive.
There is also some obfuscation around women on senior boards, with women on boards reaching just over 20 percent in Northern European countries and less than 5 percent in the Middle East, Southern Europe and Russia. But there is a lack of clarity on whether women hold executive or non-executive roles.
Recent research on FTSE 100 companies reveals a twist in the good news tale of increased female representation on company boards. The rise in numbers is concentrated in non-executive directors — from 806 in 2013 to 826 in 2014, with a decline in the number of executive directors from 307 in 2013 to 291 in 2014. This is significant because non-executive directors stand back from the day-to-day running of the company. They do not have the same significant presence as executive directors, who can act as mentors and agents of change.
Management is now a profession where women are taking a significant share of positions and diversity is declared good for business. The numbers of women in middle management and not in the top echelons is a result of women being boxed into certain roles and not necessarily for the right reasons.
In management, women are classified as having the right people skills, able to tap into female consumer power and adept at extracting employee commitment. The result is that women managers tend to have roles that are classified as female specialisms — offering less pay, prestige and career promotion opportunities.
The ILO demonstrate how jobs such as human resource management, PR and communication are almost entirely female dominated. In functional areas such as finance, research, operations and general management, women managers remain a much smaller minority. This is particularly important in the context of the generalist character of senior management, where women appear to be excluded through lack of necessary experience.
This separation into defined roles is the modern-day continuation of historical biases regarding women’s disposition and capacity to lead. It also reflects a certain degree of self-selection, as women choose to enter roles where they feel they fit. This, however, is inevitably influenced by the environment they grow up in — a lifetime’s experience of expectations to behave in a certain way — as well as the reality of acting as society’s carers.
It’s clear that the position of women in the global labor market is not a simple reflection of their actual skills and career choices. It is a product of institutionalized exclusion, which — though allowing the mass entry of women to certain occupations — is responsible for keeping them unequally positioned economically.
If we do not face up to this, progress toward equality for women in the workplace will continue to be glacial. Unless action is taken, the ILO forecasts that it could be up to 200 years before women achieve parity with men at management level globally. Nor can developed countries claim the moral high ground, as we look forward to another 80 years before we might enjoy equal opportunities.
THAT UNITED NATIONS ILO--------GLOBAL BANKING % NEO-LIBERAL PROPAGANDA ALL THE TIME.
We all remember OBAMA shouting at those dastardly global banking 1% for whom he works-------financial reform will bring salary structure changes-----SKIN IN THE GAME for those stock brokers-----those executive managers being that 5% to the 1% ROBBER BARON FRAUD connection these few decades.
As we watch this transition from CASH to STOCK OPTION we see it hitting hardest in TECHNOLOGY INDUSTRY----which in MOVING FORWARD is the only category of work that is not FINANCE.
GLOBAL FINANCE---GLOBAL TECHOLOGY-----ONE WORLD ONE WORLD CENTRAL BANK ONE ENERGY TECHNOLOGY GRID.
Global banking 1% CLINTON, BUSH, OBAMA sell this as holding power accountable-------when they are simply killing the 99% gradually------
SKIN IN THE GAME is far-right wing speak as is BOOTSTRAPPING while Clinton/Bush/Obama operate a STEALING FROM THE POOR economy ------
Sep 23, 2014 @ 09:17 AM 6,438 2 Free Issues of Forbes
Giving Your Employees Skin In The Game
Steve Parrish , Contributor I use my experience to help save business owners a headache or two. Opinions expressed by Forbes Contributors are their own.
I was working with a business owner on ideas for retaining a key employee. The employee was threatening to leave for a higher paying job, declaring “I love working here, but if I’m going to stay, I want to have some skin in the game.” I started explaining to the owner why he should avoid offering the key employee stock as an incentive. He stopped me, and asked that I first give him an idea of some of his options. “I don’t even know where to start; what kinds of plans are there that can help an employee feel he or she has a financial stake in the company, and will be rewarded for contributing to our success?” Fair question. The challenge is too many options; not too few.
To get the process started, following is a checklist of possible “skin in the game” opportunities. A convenient way to sort through these opportunities is to consider: which plans share equity in the business, which share ownership of the business and which are for key personnel versus employees in general.
1. Sharing Equity, not Ownership; Employees in General
- Bonus Pool POOL +3.45%: An employer can establish a regular pay schedule, and supplement it with a year-end bonus based on company performance. Typically, the employer would declare a bonus pool after year-end financials are completed and pay the funds out to eligible employees based on pre-set metrics or criteria. This is a form of profit sharing that is outside of qualified and nonqualified plan rules, and it is important that this compensation be paid shortly after it is earned.
- Qualified Profit Sharing Plan: A qualified profit sharing plan gives employees a feeling of ownership without distributing profits currently. These plans have tax advantages for both the employer and employee, but require adherence with qualified plan rules. The company decides what portion of the company profit will be shared and that amount is then contributed to the plan, allocated to employees’ accounts and tax-deducted. Because it is a qualified plan, there are restrictions as to when and how employees can withdraw these funds.
2. Sharing Equity, not Ownership; Key Employees
- Variable Pay Performance Bonus: Procedurally, a performance bonus is similar to the bonus pool arrangement, but this bonus is targeted at key employees who are assigned specific and measurable company goals. Each key employee is given an individual goal at the beginning of the year; and, if achieved, is rewarded with a bonus at the end of the year. This arrangement is especially effective when the employee has significant control and involvement in the outcomes that determine the level of the bonus.
- Performance-Based Nonqualified Deferred Compensation: Employers who seek not only to reward key employees, but also retain them, will often use nonqualified deferred compensation arrangements. The plan can be designed so the employer’s contribution is based on the employee’s meeting of performance targets. Rather than paying the award in cash, however, it is credited to a deferred compensation account that will vest and be paid out in the future. Common designs of this plan include Phantom Stock and Stock Appreciation Rights. There are, however, a number of other ways to design these programs that use employee-targeted metrics (i.e. sales or profits goals) beyond just the value of the company’s stock.
3. Sharing Ownership; Employees in General
- Employee Stock Ownership Plan (ESOP): An ESOP is a qualified plan that allows the employer to borrow money to fund the plan, and is designed to be primarily funded with the company’s stock. This plan offers significant tax incentives, both to the company and current stockholders, plus it creates significant motivation to employees. The employees aren’t direct stockholders, but they become owners through their participation in the company’s qualified plan.
- Employee Stock Purchase Plan (ESSP): ESPPs allow employees to purchase shares of their employers' stock, typically at a discount, by using after-tax payroll deductions. They can be divided into two categories: qualified and nonqualified. Qualified ESPPs offer tax advantages, but must follow qualified plan rules, including offering to a broad base of employees.
- Stock Options: A stock option gives an employee the right to buy a certain number of shares in the company at a fixed price for a certain number of years. Employees with stock options hope the share price will go up so they will be able to profit by purchasing the stock at the lower grant price, and then selling the stock at the current market price. There are both nonqualified and qualified (incentive stock options) plans. Although stock options are usually thought of as an incentive for top management, some industries offer broad-based stock option plans.
4. Sharing Ownership; Key Employees
- Stock Options: A way for management and key employees to both profit from the company’s success and share in eventual ownership is through stock options. They are often used as a form of incentive compensation for the executive leadership in established or growing companies. Typically using nonqualified stock options, companies will grant options to select employees that are designed to vest in the future. Although there is no significant tax advantages involved, these plans give executives the motivation to work hard, have some control over timing of their profits and are a reason to stay with the company.
- Restricted Stock (RSU): These are typically granted with restrictions as to vesting or ability to sell. When used as a form of compensation, stock typically becomes transferrable or vested upon the satisfaction of certain conditions, such as continued employment for a period of time. And, sometimes the achievement of particular financial targets is required before vesting. The stock value is taxed to the executive when the risk of forfeiture no longer exists.