Stock options and warrants
An essential part of your company's reward policy
• An alternative extra bonus or reward
• Comprehensive support from KBC
• A modern reward policy increases employee satisfaction
Stock options and warrants: essential tools for your company's reward policy
As an employer, you always want to draw the best employees to your business and reward them accordingly. The current war for talent means that stock option and warrant plans are now indispensable, but you can count on KBC to help you find the solutions you're looking for.
The stock option plan: an incentive within your company
If you've been considering a stock option plan as part of a diversified and up-to-date reward policy for your business, you'll be pleased to know KBC has built up years of expertise in this field and is happy to be your professional partner.
How does it work?
As an employer, you write share options on shares of a fund and offer them to your employees. They can accept these options and take home the equivalent value following the mandatory lock-up period one year. Your employees pay income tax on the benefit in kind resulting from the offer and acceptance. As these are unlisted stock options, the benefit in kind is calculated at a flat rate based on the value of the underlying share, which has a favourable impact on the tax to be paid. The tax is withheld via payroll withholding tax 60 days after the offer. Stock options are also exempt from social security contributions (employer and employee contributions).
KBC can assist you in setting up this kind of stock option plan. We provide hedging for stock options written by your company and also offer a system that allows employees to receive at least their prepaid income tax upon exit, assuming certain conditions are met.
Please note that the stock options are blocked for one year, and are therefore subject to a stock market risk of one year at minimum. Employees who would rather have their bonus quickly are better off opting for warrants.
The warrant plan: time-limit the stock market risk
In addition to the stock option plan, another alternative to paying extra remuneration is the warrant plan, the difference being that your company can purchase warrants from KBC and then offer them to your employees. Warrants can be sold after a very short lock-up period. As there is no mandatory lock-up period of one year, the stock market risk is limited. On the other hand, your employee will pay income tax on the full warrant value 60 days after the offer. Warrants, like stock options, benefit from an exemption from social security contributions (employer and employee contributions).
The main properties at a glance
|Cash bonus||Stock options||Warrants|
Social security contributions
Employer contributions +
|Tax burden (indicative)||53.5%||30 à 35 % (depending on market trends)||53,5%|
|Minimum 1 year||Limited in time due to short lock-up period|
Employee net / Employer budget
(indicative only, no future guanrantee)
|+/- 66%||+/- 44%|
If stock option plans and warrant plans sound like something you'd be interested in, please contact your KBC relationship manager. Together with the Employee Benefits team, we will provide you with the information your company needs.