Stock options are considered a taxable benefit for physical persons. In Belgium, the benefit is realized at the time the options are granted whereas in most other countries, it is the moment of exercise of the option that is taken into account. The value of the benefit has been set at 15% of that of the underlying shares. Under certain conditions, the percentage may be reduced to 7.5%. Taxes are withheld by the employer as a payroll withholding tax and the withholding is definitive. If the employee is not able to exercise the option and does not realize a benefit, the beneficiary will never be able to recuperate the paid withholding tax.

 

 

The obligation to pay taxes at the time of option granting and the low share prices have led beneficiaries to refuse stock options. To remove these constraints, Dexia has created a financing plan with

- a financing of the amount of the withholding tax due at moment of grant of the options

- in exchange of a part of the future gain of the underlying shares.

 

If the options are not exercised because there has been no increase in share value, the employee does not owe Dexia anything.

 

 

A beneficiary of options has the right to acquire company shares over a given period of time at a predetermined price.

 

The underlying shares must be listed on the stock market and have sufficient liquidity.

Furthermore, the financing plan must be put into place for a sufficient number of employees. Dexia Employee Benefits recommends offering all beneficiaries of options the financing plan.

 

 

A stock option plan increases the motivation and performance of a given target group of employees and builds loyalty. The number of options received can be directly linked to their past, current and future expected performance.

 

Offering a financing plan increases the number of option acceptances and promotes the goals of the company at the time the stock option plan is created.