In an increasingly globalized world, companies are seeking innovative ways to engage and motivate their employees. Employee ownership—offering shares of ownership to employees—is one of these methods. Companies with a diverse workforce, including expats, can greatly benefit from structures like the Foundation Administration Office (STAK). This blog explores what employee ownership and STAK entail and how they can be used to engage and retain expats.

What is Employee Ownership?

Employee ownership means that employees have the opportunity to become co-owners of the company they work for. This can take various forms, such as stock options, profit-sharing plans, or direct stock purchases. The concept behind employee ownership is simple: employees who are also owners are more engaged in the company’s operations and feel more responsible for its success. After all, they have a direct financial stake in the company’s outcomes.

The benefits of employee ownership are numerous:

• Increased Engagement: Employees feel more connected to the company and are more likely to invest in its long-term success.
• Improved Productivity: Research shows that companies with employee ownership programs often experience higher productivity and profit growth.
• Attracting and Retaining Talent: Particularly in tight labor markets, companies can differentiate themselves by offering an attractive stock program.

The Challenges of Employee Ownership for Expats

Implementing employee ownership can be challenging, especially when a company has a diverse group of employees, such as expats. Expats—employees working in the Netherlands but from abroad—often face a unique set of challenges. They typically work under temporary contracts, have more complex tax situations, and may be less familiar with the local legal and financial regulations.

Some specific challenges when offering employee ownership to expats include:

• Tax and Regulation: Expats may be subject to different tax regimes depending on their residency status, nationality, and the countries in which they generate income. This can complicate structuring employee ownership in a beneficial way for them.
• Liquidity Issues: Stock options can be complicated for expats who may only stay in a country for a few years. They need flexibility to cash in their ownership when they leave.
• Understanding of Stock Structures: For expats less familiar with local financial systems, fully understanding the implications of stock ownership can be challenging. This may lead to miscommunication and misunderstandings.

The Role of a STAK in Employee Ownership

A Foundation Administration Office (STAK) can play an important role in facilitating employee ownership, especially when a company has an international workforce. A STAK is a legal entity that holds shares in a company and issues certificates of those shares to participants. This allows for a separation of the economic and legal ownership of shares.

Benefits of a STAK:

• Flexibility: A STAK enables the economic rights of shares (such as dividends and capital gains) to be separated from voting rights. This can be useful for expats who may not want or be allowed to exercise voting rights due to their limited presence or legal restrictions.
• Management and Control: A STAK can act as the administrator of shares, providing a unified voice in shareholder meetings. This prevents a fragmentation of voting rights and keeps the company stable, while employees can still enjoy the economic benefits of ownership.
• Legal Protection: The STAK offers protection against hostile takeovers and provides employees with greater security. Expats feel safer with their investment in the company.

Employee Ownership with a STAK: How Does It Work in Practice?

Imagine a Dutch tech company with an international team of employees wanting to set up an employee ownership program. The company wants to offer expats the opportunity to benefit from its growth without burdening them with the complexities of direct stock ownership. A STAK can be the ideal solution here.

• Step 1: Establishing the STAK. The company establishes a STAK to hold the company’s shares. The STAK manages these shares and issues certificates to employees, including expats.
• Step 2: Issuing Certificates. The STAK issues certificates for the shares to employees participating in the program. These certificates provide the economic benefits (such as dividends), but the STAK retains the voting rights. This allows expats to participate in the program without concerns, knowing their investments are managed by a trusted entity.
• Step 3: Flexible Options for Expats. Since expats may not remain with the company for their entire careers, the STAK can provide flexible options. For example, a buy-back option, where the company repurchases certificates when an expat leaves the company, enables expats to benefit from their participation without having to sell their shares on an open market.
• Step 4: Tax Optimization. The STAK can be structured in a way that provides tax benefits for both the company and the expat, leveraging advantageous tax schemes like the 30% ruling in the Netherlands. This helps to minimize the tax burden for expats and makes the program more attractive to them.

How Employee Ownership Can Motivate and Retain Expats

For companies aiming to grow and attract talent from around the world, a well-designed employee ownership program supported by a STAK can be a valuable asset. Expats can be motivated by the opportunity to financially benefit from the company’s growth, especially when they’re far from home and looking to feel connected with their new employer.

1. Creating a Sense of Belonging: Expats may feel less connected to their employer due to cultural and language barriers. Participation in a stock program can give them a sense of involvement and strengthen their bond with the company.
2. Long-Term Commitment: Stock ownership can encourage expats to stay longer with a company. By involving them in the company’s long-term success, companies can retain the talent they need for international success.
3. Competitive Advantage: For companies competing for international talent, a stock program can provide a decisive edge. Expats may be more inclined to choose an employer that offers the chance to become a co-owner and thus benefit from the company’s success.

What Share Council Can Do for You

Employee ownership, supported by a STAK, can be a powerful tool for companies with an international workforce. It offers expats the chance to benefit financially from the company’s growth without the complexities of direct stock ownership. This can increase engagement and motivation while helping attract and retain talent in an increasingly competitive job market.

Our team of experts can help you set up, manage, and optimize an employee ownership program that suits the unique needs of your company and employees. Whether it’s setting up a STAK, facilitating share certification, or providing tax and legal support—we are here to guide your organization through the entire process.

Would you like to learn more about how employee ownership can strengthen your company and how we can support you? Contact us and discover how Share Council can be your partner in creating an engaged and motivated work environment for all your employees, wherever they may come from!