Marval Legal Pulse – Legal Nature of Stock-Based Compensation

A new episode of Marval Legal Pulse is now available, in which we analyze one of the most significant changes introduced by the Labor Modernization Act for companies that implement long-term compensation and incentive programs for their executives and employees.

In this episode, our partner Guillermo Osorio and our associate Javiera Correa, from the Labor Law practice group, discuss the legal nature of stock-based benefits and the new regulatory framework applicable to these compensation schemes.
 

In this episode, they discuss:

• the amendment to Article 105 of the Employment Contract Law,
• the exclusion of certain equity-based benefits from the definition of compensation,
• the treatment of stock plans, stock options, and other long-term incentives,
• the various criteria that existed in case law prior to the reform,
• the recent regulations and the limits established for these types of benefits,
• the challenges posed by the practical interpretation of these rules,
• the impact these schemes may have on the calculation of severance pay.
   

This is a key analysis for understanding how the reform seeks to provide greater predictability to equity-based compensation programs—a tool increasingly used to attract, retain, and incentivize talent in organizations across various sectors.

We invite you to watch the full episode and learn more about these developments on our website.
 

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