GEO Nov 09 Pearson

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A snapshot of Pearson global share plans, set in the context of the current economic climate

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GEO Nov 09 Pearson

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

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