Global Developments & Updates November 26, 10:15 Jeremy Edwards & Mariel Chatman Baker & McKenzie Mike Pewto

1. Global Developments & Updates November 26, 10:15 Jeremy Edwards & Mariel Chatman Baker & McKenzie Mike Pewton Global Share Plans

2. Global Developments & Updates • 2008 Update/Credit Crunch Backdrop • France • Italy • China • Russia • Japan • Saudi Arabia

3. 2008 Update • Backdrop of credit crunch/ executive pay criticisms/ volatile markets • Cost pressures, leading to even more emphasis on: • cost efficient global share plan launches • ensuring tax withholding and reporting obligations are met • desire to maximise tax efficiency

4. 2008 Update • More scrutiny from Revenue authorities • tightening up of tax legislation • Revenue authorities- increased review of share plan tax and reporting compliance? • Internationally mobile employees

5. 2008 Update • Increasing trend towards long term incentive plan awards, as opposed to options, for executives • Differing experiences during credit crunch– therefore, increased need to consider particular requirements • e.g. oil/ energy companies vs. building industry/ banks • options b/c share price undervalued

6. FRANCE

7. France • Share options and awards: qualified vs. non-qualified • Significant benefit for the employer and the employee to implement a qualified scheme since rates of social contributions for employer and employee for non-qualified options and conditional share awards are very high • Discussion on requirements for adapting French qualified share plan in session on launching International Sharesave Schemes • Contemplated new 1.1% tax on qualified spread and qualified RSUs and capital gain • New 2% tax for employer for qualified awards • New requirement for grant to corporate officers? • Last year - new employee in October 2007 proposal for any grant of options not just qualified

8. France • Non-qualified options • Spread: • Subject to social insurance contributions at exercise both for the optionee (23%) and the local employer (46%) • Subject to personal income tax at marginal rate (up to 40%) on the net amount • Capital gain: • Taxation at sale at 29% provided sale of the shares is > €25,000 for the year concerned (2008 threshold) • Reduction of the taxable basis/losses for EU shares held more than 5 years (1/3 per year as from the 6th year of holding) • No [.........] after 8 years

9. France • Qualified options • 2.5% Employer grant • No taxation at exercise (except excess discount) • No social insurance contributions on the spread provided shares are not sold within 4 years as from the grant (except excess discount) • Spread: • is taxed upon sale of shares at 31.5% to 53.5% depending on the amount of spread/holding period of shares (Aggregate rate includes the new 2.5% employee social contribution for options granted as from October 16, 2007) • is taxed only if amount of sale of shares > €25,000 for the year concerned (2008 threshold) • Capital gain: taxed at 29% if sale of shares > €25,000 for the year concerned (2008 threshold) and possible reduction for holding of EU shares

10. France • Non-qualified RSUs • Gain at vesting • Subject to social security contributions (23%-46%) • Subject to personal income tax up to 40% on the net amount • Capital gain • Taxed at 29% if sale of the shares is > €25,000 for the year concerned • Capital losses • Reduction of the taxable basis/losses for EU shares held more than 5 years (1/3 per year as from the 6th year of holding)

11. France • Qualified RSUs • No taxation at vesting, i.e. postponed at sale of the shares • No social security contributions on the gain at vesting • Gain at vesting: taxed at 43.5% upon sale of the shares (grants made as from October 16, 2007) • Capital gain • Taxed at 29% if sale of shares > €25,000 for the year concerned • Capital losses to be offset against qualified gain at vesting and capital gains • Reduction of the taxable basis/losses for EU shares held more than 5 years (1/3 per year as from the 6th year of holding)

12. France • No changes on corporate officers sale restriction for qualified options/share awards • Qualified Options: on exercise of options OR on sale of shares acquired at exercise until cessation of corporate duties • Qualified Share Awards: on sale of shares acquired at vesting of the awards until cessation of corporate duties • New restriction with respect to corporate officers for the benefit of French qualified options/share awards: scope?

13. France • New employer contribution at grant of qualified options and of qualified share awards • Options: equivalent to 10% of the accounting value of the options or 25% of the fair market value of the shares underlying the options at the time of grant (i.e., 2.5% of the value of the shares underlying the options) • Share awards: 10% of the shares value underlying the awards or 10% of accounting value of the awards • For grants made as from October 16, 2007

14. Italy No more favourable tax plans Tax payable on exercise of options No social security payable on exercise of options Other plans still subject to social security

15. Registering Plans in China Any plan involving shares should be registered with SAFE Process is complex and expensive 2 months $20,000 Do cash plans require a filing?

16. Russia Securities laws continue to be an issue Newly issued shares or Purchases shares Cash plans may now also be caught if considered derivative

17. Japan Limit is still less than 50 persons to avoid filing with SEC Double counting of two offers to one person in 12 months

18. Saudi Arabia Securities laws filings with CMA The process Requirement to appoint “authorised agent” 2 month process Uncertain procedure

19. Questions? Thank you for your participation