Employee shares

Shares sold at a discount to the employees of a stock corporation, with the goal of involving them directly in the company's economic success – or risk exposure.

Employee shares are created when the company either undertakes a capital increase, or buys back its own stock on the stock exchange. They are usually issued at a preferential price that is substantially lower than the market price. Once purchased, the shares are usually frozen for a period of up to five years before they can be sold.

From the point of view of the company, one advantage of issuing employee shares is that staff will have a greater personal stake in the company's performance. Moreover, such shares are increasingly being used as a component of flexible employee compensation systems, and thus as a way of motivating workers.

When staff member purchase an employee share at the preferential price, the resulting non-cash benefit is tax-free, provided it does not exceed half of the market value of the stock, or €150. In addition, the shares must be held at least six years.

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