Employee motivation is key to business success.

In 2025, Dutch companies have several options to incentivize employees through Stock Appreciation Rights (SAR), STAK (Stichting Administratiekantoor), and direct share ownership. Each approach offers benefits but also comes with potential challenges, particularly around taxation and implementation. Below, we break down how each option works, the advantages, and key considerations for employers.

Stock Appreciation Rights (SAR)

What is SAR?

Stock Appreciation Rights (SAR) offer employees a financial reward based on the company's share price increases. Employees receive cash or equivalent value instead of direct shares, allowing them to benefit without purchasing stock.

Benefits of SAR:

• Aligns employee and company interests—employees are motivated to contribute to business growth.
• No need for employees to invest money upfront.
• Can be structured to minimize immediate costs for employers.

Key Considerations:

• Benefits received from SARs are typically taxed as income, which may reduce their appeal.
• Designing an effective SAR program can be complex.

STAK (Stichting Administratiekantoor)

What is STAK?

STAK is a legal structure that allows a foundation to hold company shares while issuing depositary receipts to employees. This gives employees financial benefits of ownership without voting rights.

Benefits of STAK:

• Helps companies offer share benefits without changing control structures.
• Provides flexibility in designing employee incentive plans.

Key Considerations:

• Can be complex and administratively demanding to set up and maintain.
• Employees are typically taxed on any financial benefits received.

Direct Share Ownership

What is Direct Share Ownership?

Employees receive actual company shares, making them direct shareholders.

Benefits of Direct Share Ownership:

• Strengthens employees’ connection to the company’s success.
• Employees may benefit from long-term financial gains if company value increases.

Key Considerations:

• Can lead to share dilution.
• Employees may face capital gains tax when selling shares.

Choosing the Right Incentive Plan

When deciding on an employee incentive plan, companies should consider:

• Company objectives: Align the plan with long-term business goals.
• Financial and tax implications: Assess the cost to both the company and employees.
• Employee impact: Determine how the plan will influence motivation and retention.

By selecting the right approach, Dutch businesses can use SAR, STAK, or direct share ownership to enhance employee engagement and drive business success in 2025.