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What is an employee share plan?
A capital increase with discount reserved for employees by virtue of article 609 of the Company Code (hereafter called “employee share plan”) is a share plan reserved for all employees of a company. It enables them to subscribe company shares at a discount of up to 20% on the market price of the shares. The subscribed shares are non transferable for five years and the benefit granted in this way is tax-exempt and not subject to NOSS social security payments.
Which companies may create an employee share plan and under what conditions?
Target companies and the conditions under which they may create an employee share plan are described in Article 609 of the Company Code.
The company must have paid at least two dividends during the past three fiscal periods
What is the target group within the company?
The offer must be made to all company employees on condition that they have been employees of the company for at least a certain period determined by the general assemblee or the board of directors (minimum 6 months and maximum 3 years).
Why offer employees a share plan?
There are several reasons:
- In this way all employees can participate in the company’s profits
- A social link is created between employees and the group to which they belong and with international employees
- The feeling of belonging is enhanced
Why add a leverage option to the employee share plan?
Not all employees have the same financial means to subscribe company shares. As a result, the share plan may seem primarily attractive for senior management and high earners. To enhance the adhesion of all employees, Dexia SA has designed a leverage system which enables employees to pay only 1/10th of the total subscription price of their shares with own funding, while the remaining 9/10th is financed by a third party. In exchange, the employee transfers, at the end of the lock-up period of 5 years, a portion of the surplus value of all acquired shares. Consequently all employees can participate in the company’s growth with only a limited stake.
Can an employee share plan be offered to international subsidiaries?
Dexia SA has offered an employee share plan to employees in 25 countries since the year 2000. An employee share plan is one of the rare products that allows to treat one of the compensation & benefits aspects in the same way on an international level. In other words, it reinforces the feeling of belonging to a group, independently of the country in which the employees are located.
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