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RAPPORT

Equity incentives in the Netherlands

Does your equity plan motivate your key employees?

With this report we would like to share our knowledge and insights in market trends of equity incentives. The questions what kind, why and how companies use equity incentives to trigger their key employees will be the focus in this report. We have made a distinction between different market segments, i.e. listed companies, middle market/family businesses and start up/scale up companies.

Insights and market trends

In our annual report ‘Executive Remuneration in the Netherlands 2017’, EY provides insights on trends in executive remuneration within listed companies. The 2017 analysis (based on annual reports of 2014, 2015 and 2016) shows that in the Netherlands, performances at the largest listed companies have improved over the last 3 years, while at the same time there is a lot of uncertainty on future performance. New opportunities and potential threats to economic stability are more diverse than ever before. In light of these developments, remuneration committees are continuously challenged to properly balance executive remuneration packages for sustainable growth. As a further deepening on equity remuneration, in this report ”Equity incentives in the Netherlands” we focus on the part of the remuneration for executives which is related to the company’s share value. We analyzed the type of equity plans issued, its relation to the fixed salary and performance measures.

Besides the listed companies on one side of the spectrum we see a lot of middle market companies and also family businesses who make use of equity incentives schemes to attract and keep key employees. We describe a recent business case in which all different stages will be discussed, e.g. from the design stage to discussion with the Dutch tax authorities regarding the valuation method.

Also within startups it is popular to grant equity remuneration to employees. Partially the same logics apply for startups as well as for the other companies: employee retention and alignment of employee interests with those of the company. Interesting differences are the type of equity plans issued and the company’s available budget to do so, which can also affect the choice for the type of equity plans issued.

A properly working equity instrument is strengthening the business. In this report you will find examples of properly working situations. You will also find information on market practices. Having insight in market practices can be useful, but not more than one of the (many) considerations. At the end, your goals are leading when deciding on type, conditions and size of the equity plan.

We hope you will enjoy reading the report. We will be happy to discuss it with you in more detail and to (re)consider with you whether equity remuneration is an effective remuneration instrument for your company.

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