LONDON (07/20/2000) - Veritas Software Corp. announced Thursday that it plans to invest 250 million pounds (US$375 million) over the next five years to establish a European headquarters in the U.K. Concerns about the business climate here prevented the company from making a much larger investment, a Veritas executive said.
The U.S. data management company plans to set up a European headquarters in Reading and a research and development center in Watford, towns on the outskirts of London. Combined, the two facilities are expected to create more than 1,000 jobs, said Philip Bousfield, Veritas' senior vice president of global operations.
Veritas had actually set aside more than 500 million pounds to invest in Europe, but chose to defer the second half of the investment, largely over concerns about a tax introduced earlier which requires businesses to pay National Insurance contributions from gains on employee stock options, Bousfield said.
Veritas will evaluate the business climate in Britain over the next 12 months before it decides where to spend the balance of its investment, and may take the money elsewhere in Europe, Bousfield said. The company plans to employ as many as 3,000 staff here in the next few years, up from about 650 today, he said.
"My goal isn't to create a negative impression about Britain; my goal is to spur the government on to do more" to benefit fast-growing companies, Bousfield said. The U.S. and some other European countries require firms to pay taxes on options gains, but they are less severe than here in the U.K., Bousfield said.
Taxing stock options is a particular burden in the high-tech sector, where skilled IT workers are in short supply. Using stock options to make job offers more attractive is widespread in the U.S. and is becoming more so in the U.K.
Tying taxes to share gains crates an "uncapped liability" for businesses, he said.
Veritas selected the U.K. for its investment because of the strong IT skills here -- a like-minded approach to technology innovation to that of Silicon Valley, Bousfield said. The country will also provide a gateway for expansion in Europe, which is one of the company's fastest growing regions and provides about one third of its revenues, he said.
However, he cited other "philosophical differences" between the U.K. and the U.S. that also contributed to Veritas' decision to reduce its investment here.
For example, the U.K. government provides tax relief on options for the top 15 officers in a company. Providing such perks for senior managers only doesn't sit well with U.S. companies, which like to distribute such benefits more democratically, according to Bousfield.
Veritas, in Mountain View, California, can be contacted at +1-650-335-8000 or at http://www.veritas.com/.