Since 1st of January 2005 a new mechanism has been set up in France where companies (listed on the stock market or not) can grant free shares to employees and social mandatories (as long as they do not own more than 10% of the capital) in a social and fiscal friendly manner. The shares are vested after minimum 2 years (vesting period) and have to be held for at least another 2 years.

 

 

Each (French or foreign) company can grant free shares at its French employees following the social and fiscal friendly regime.

 

 

The typical target group consists of directors and managers because of their strategic influence on the company’s results, as well as of the experts who make strong contributions to the company. Nevertheless, the company can grant free shares to all employees.

 

 

A grant of free shares increases the motivation and performance of a given target group of employees and builds loyalty. The number of shares received can be directly linked to their past, current and future expected performance. In comparison to a stock option plan, the gain is “certain” (except in the case where the share is worthless at the moment the share can be sold).