On October 6, 2015, the European Court of Justice ruled that the US-EU Safe Harbor Privacy Program (“Safe Harbor”)* is invalid.  As a result, US companies that had certified under Safe Harbor are scrambling to determine the impact on their operations.  For an alert issued by our data privacy colleagues on this topic, please click here.

Will This Impact Our Equity Compensation Programs?

The impact of the ruling on the personal data collection / processing / transfer activities of US multinationals in the context of offering of equity compensation programs to European employees depends upon whether the company had relied on Safe Harbor in this context – or, instead, relied on an alternative method for managing data privacy considerations (e.g., relying on express consent obtained from participants, either through acceptance of its equity award agreements or provided as part of the local new hire on-boarding process).  If alternative methods have been relied upon, the ruling is unlikely to have any impact on the equity program.  If the company relied on Safe Harbor, it will likely need to start relying on an alternative method.

Next Steps

Companies should review their practices with regard to data privacy, including in the context of operating their equity compensation programs.  Even if the ruling does not have any direct impact on the equity program, data privacy requirements around the globe are tightening and a regular review of your company’s approach to data privacy is highly recommended.  Please contact your GES attorney with questions or for assistance.