One of the employer’s biggest fears is losing their key talent. How can you retain the strongest performers and high potentials within your organization?
Google, Facebook, LinkedIN as well as many other tech-companies have struggled with the same challenge. Excellent software developers, magnificent marketing professionals and the sales guru who closes deal after deal. They are all indispensable to the success of these companies.
Employees desire the best of everything – competitive salaries, comfortable and aspirational lifestyles, job security, career enhancement options, work-life balance, and so on. A competing salary and fringe benefits, such as a company car, iPhone and iPad are still great ways to attract employees. But to retain key talent there is definitely a trend visible towards rewarding those employees in critical position with share participations.
Have you wanted to include employees in your company’s growth, but don’t want to include them as a shareholder? Perhaps a “participating plan” would meet your needs!
A participating plan allows employees to share in the future growth of your organization. There are no shares involved in a participating plan; rather, the employee is rewarded a percentage of the profits. The voting rights can be brought into a Trust Foundation (Stichting administratiekantoor or STAK), of which you or your holding company is appointed as director. As a result you keep 100% of the voting rights, while the employees can see their relative value increase as the value of the company increases.
The following figure shows the structure of a company with a participation plan for employees:
A few benefits of this structure:
- The participations can be issued without a visit to the notary.
- Any additional condition (such as a Good leaver / Bad leaver clause) can be included in the administrative terms of the STAK.
- You keep the formal control over your company.
- The employees will be more involved in your organization and you will give them an extra incentive to boost their performance.