Custom-designed employee equity and incentive plans
Employee participation plans, such as stock options, depository receipts, or share appreciation rights, are powerful tools for attracting and retaining talent. With that power comes complexity. Tax implications, valuation requirements, legal structuring and disputes with (former) employees, shareholders or other stakeholders can create significant risk. Whether you are a start-up issuing options for the first time or a mature company scaling your program, valuation and structuring is important.
Through our global alliance of valuation, legal and tax professionals, we provide calculations, structuring assistance and documentation required to implement or maintain your employee participation plans in a compliant, transparent manner that is suitable for you. We combine valuation expertise, international standards and local knowledge.
Employee participation plans (EPPs) are arrangements that allow employees to benefit from the growth and value of a company, usually through ownership or financial rights tied to equity. These plans come in many forms, such as employee stock options (ESOPs), stock appreciation rights (SARs), restricted stock units (RSUs), STAK structures, and more.
EPPs often involve granting equity-linked instruments to employees with specific terms such as vesting periods, expiry dates, or performance conditions. Depending on the form and structure, these plans may require periodic or transaction-based fair market valuations to comply with accounting standards (IFRS, NL GAAP, US GAAP), tax legislation, or internal governance policies.
Valuations may be needed:
Poorly supported or outdated valuations can lead to tax penalties, employee dissatisfaction, audit issues or litigation. That’s where AN Valuation comes in.
AN Valuations provides tailored support for employee equity and incentive plans at all stages of their lifecycle:
We work with legal and tax advisors, HR teams, founders, and CFOs to ensure alignment with strategy and compliance requirements.
✔️ Global alliance of valuation, legal, and tax professionals: We provide nose to tail support, from inventorying your needs to final documentation ✔️ Valuation Expertise: From early-stage option plans to complex exit modeling, we know the valuation mechanics, models, and standards that apply ✔️ International Reach: We advise on employee equity plans under Dutch, US, and international accounting regimes ✔️ Audit-Proof Documentation: Our deliverables meet the expectations of your auditors, investors, and tax authorities ✔️ Startup to Scale-Up: We support growth-stage companies and international enterprises alike ✔️ Strategic Perspective: We balance compliance with your business goals, helping you build trust with your team and stakeholders
What is an employee participation plan? An employee participation plan allows employees to share in the financial success of a company. This can be through direct ownership (shares or certificates) or through equity-linked instruments such as options or stock appreciation rights. Plans may include conditions such as vesting, performance goals, or restrictions on sale or transfer.
Why do these plans need to be valued? Valuations can be required for tax compliance, financial reporting (e.g., IFRS 2 and ASC 718), or legal purposes. Valuations typically need to be determined at grant date, and sometimes updated annually or at specific events such as exit, funding, or disputes.
What valuation methods are used for employee participation plans? The valuation method depends on the type of instrument involved. For stock options, models such as Black-Scholes, binomial models, or Monte Carlo simulations are typically used. When valuing depository receipts or shares, methods such as discounted cash flow (DCF), market comparables, or transaction-based approaches may apply. For stock appreciation rights (SARs) or restricted stock units (RSUs), the fair value is determined with adjustments based on plan-specific conditions and the probability of vesting.
When should I get a valuation? You should obtain a valuation at several key moments during the lifecycle of an employee participation plan. Common triggers include:
Regular valuations help ensure compliance, avoid disputes, and maintain transparency with auditors, employees, and regulators.
Need a trusted partner for your employee participation plan valuations? Contact AN Valuations for specialist EPP valuations, audit-ready support tailored to your plan structure, jurisdiction, and reporting needs.