1) Munira Davda, head of Indian Operations for ABC Telecom, exercised and sold her stock options. She requested the proceeds be converted to Indian rupees and wired to her bank account in India. 2) Global stock option settlements can be challenging due to issues like currency conversion delays, inconsistent demographic information across systems, and regulatory compliance requirements for international funds transfers. 3) The presentation discussed common challenges for global settlements like currency controls, name variations across cultures, and anti-terrorism verification requirements for international wire transfers. It also reviewed options for disbursing funds internationally and factors for companies to consider.

1. October 21, 2014
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Simplifying Settlements for Your Global Participants
Presented at GEO NECF 2014
Dorothy Musho, HSBC
Patricia Landry, Solium

2. Picture this…
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ABC Telecom, a US company,
issues stock options to their
head of Indian Operations,
Munira Davda (who goes by
Moonie).
Munira exercises and sells her
options. She requests the
proceeds be converted to
Indian rupees and wired to her
bank account in India.
Several weeks later, Munira
still doesn't have her proceeds.
₹

3. What happened to Munira’s money?
International wires crossed?
Currency conversion slow-down?
Regulatory requirements missed?
Demographic info inconsistencies?
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4. Let’s back up!
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5. Why is global settlement so challenging?
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Challenge 1: Currency conversion
▪ Major speed bump
▪ Currency controls can require you to give
additional info
▪ Currency restrictions are continually
changing
▫ Inflow restrictions
▫ Tax agreements

6. Challenge 2: Demographic info
▪ First and last names = not a standard
construct globally, especially in Asia.
▪ Legal name vs. “what I go by”
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Munira Davda
Moonie Davda
Davda, Munira
Why is global settlement so challenging?

7. Challenge 3: US regulatory compliance –
Office Foreign Assets Control (OFAC)
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What is OFAC?
An office of the US Treasury that enforces
economic and trade sanctions against
▪ Targeted countries and regimes
▪ Terrorists
▪ International narcotics traffickers
▪ Those engaged in WMDs
▪ Other threats to US national security
Why is global settlement so challenging?

8. OFAC (cont’d)
Bank verifies payee against OFAC’s
sanctioned persons list
If payee name is similar to a name on list,
bank must verify identity before
disbursement
If verification is not done before a specified
time, funds are frozen and remitted to OFAC
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9. International payment methods
Wires Local
disbursements
Payroll Checks
 Most costly Most
common
 The one
true int’l
process
Trackable
Safe
Good cross-
border
 Great for
big payments
High degree
of control
 Not
trackable
 Less control
 Low-cost
 Good for
high volumes
 Familiar
concept to
employees
 Labor
intensive (FX,
what rate and
why)
 Need to set
timelines
clearly
Fewer
currency
control issues
Simple for
participants
 Unreliable
postal
service(s)
 Manual
 Prone to
fraud
 Can’t cash
cross-border
Fine
nationally
 Okay for
domestic
employees
not
comfortable
with digital, or
who are
terminated
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10. A closer look at wires
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Authorization
Munira ABC Telecom’s
bank
US$ debit
Provider
processes FX
from US$ to ₹
Provider’s bank
facilitates settlement
Munira’s bank
in India
₹ to
Munira
Most recommended!
! Regulatory
checkpoint:
Sending bank must
check for terrorism
! Must provide
rationale to Bank
of India
! Potential delays:
Naming convention
errors, banking info
errors, local currency
control.

11. Issuer considerations
Decide what payment methods to permit
▪ Just because you can, doesn’t mean you
should
Communications to participants must
CLEARLY identify:
▪ Required naming convention
▪ Required payment instructions fields
▪ Payroll notifications to set expectations
▪ Expected processing time
PUBLIC

12. How your equity plan provider can help?
Collecting information
▪ Essential banking info
Coordinating payments
▪ Yes, they can do settlement and therefore can
help solve mysteries
Helping with communications
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13. Pssssst…
What did happen to Munira’s money?
The money came back because….
She opened her bank account under
Moonie Davda. Problem solved!
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14. Thank you!
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