The differrence between bonus & depositary receipts
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Overview of bonus & depositary receipts
There are quite a few differences and similarities between bonus and depositary receipts. To help you make a choice, we've listed the most important points below.
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What does it mean?
A bonus is an agreement for compensation when certain targets are achieved.
Certificates of shares are financial instruments issued by a foundation administration office (STAK). This creates a separation between the economic rights (dividend) and the legal rights (voting rights).
How does it work financially for employees?
Employer and employee agree on goals with corresponding compensation. If the goals are achieved, the compensation is paid.
Certificates of shares allow employees to directly benefit from the increase in the company's value.
What about employee engagement?
The bonus is not tied to the company's increase in value, so the employee does not directly benefit from potential increases in value. Also, the employee does not get voting rights.
With share certificates, employees have voting rights in a foundation that stands between the company and the employee. This means that employees do not have direct influence in the company, but rather it goes through the foundation (STAK).
What about tax implications for the employee?
A bonus is taxed as income. The amount of tax depends on the employee's income.
When the employee buys shares below market value, the tax authorities consider the difference as income. Income tax must be paid on this amount.
What are the costs?
A bonus is just a contract. There are no costs outside the bonus plan.
Setting up and maintaining a foundation is an expensive process for share certificates.
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