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Stock Appreciation Rights Agreement Template for Netherlands

A Stock Appreciation Rights Agreement under Dutch law is a contractual arrangement that grants employees the right to receive a cash payment based on the increase in value of the company's shares over a specified period, without actually receiving the underlying shares. This document, governed by Dutch corporate and employment law, outlines the terms of the SAR grant, including vesting conditions, exercise procedures, payment calculations, and tax implications. It incorporates specific Dutch legal requirements, including works council considerations and local tax treatment, while ensuring compliance with Dutch financial services regulations where applicable.

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What is a Stock Appreciation Rights Agreement?

The Stock Appreciation Rights Agreement is utilized when companies wish to provide employees with equity-linked incentives without diluting actual shareholding. This document is particularly relevant in the Netherlands, where it must comply with specific local corporate, employment, and tax regulations. The agreement typically forms part of a company's long-term incentive program and is used to align employee interests with company performance while managing cash flow and avoiding share dilution. It details the grant terms, vesting schedule, exercise procedures, and payment calculations, while incorporating Dutch-specific requirements such as works council approval where necessary and local tax considerations. The document is especially useful for private companies where share valuation is complex, or for international organizations seeking to provide consistent incentives across multiple jurisdictions while maintaining local compliance.

What sections should be included in a Stock Appreciation Rights Agreement?

1. Parties: Identification of the company granting the SARs and the recipient employee/participant

2. Background: Context of the SAR grant and reference to any relevant equity incentive plan

3. Definitions: Key terms including Base Price, Fair Market Value, Exercise Date, Vesting Date, etc.

4. Grant of SARs: Number of SARs granted, base price, and grant date

5. Vesting Schedule: Timing and conditions for vesting of SARs

6. Exercise of SARs: Procedures and conditions for exercising vested SARs

7. Payment Calculation: Method for calculating appreciation and resulting payment

8. Term and Expiration: Duration of the SARs and expiration conditions

9. Termination of Employment: Impact of various types of employment termination on SARs

10. Tax Obligations: Tax withholding requirements and responsibilities

11. Compliance with Laws: Regulatory compliance requirements and representations

12. Governing Law: Specification of Dutch law as governing law and jurisdiction

13. General Provisions: Standard contract clauses including amendments, notices, and entire agreement

What sections are optional to include in a Stock Appreciation Rights Agreement?

1. Change in Control: Special provisions for corporate transactions - include if company anticipates potential M&A activity

2. Non-Competition and Non-Solicitation: Restrictive covenants - include if allowed under local law and deemed necessary

3. International Provisions: Special terms for non-Dutch participants - include if agreement will be used internationally

4. Clawback Provisions: Terms for recoupment of payments - include if required by industry regulations or company policy

5. Data Privacy: GDPR compliance terms - include if personal data processing extends beyond basic administration

6. Works Council Approval: Reference to works council approval - include if required under Dutch law

7. Assignment and Transferability: Specific transfer restrictions - include if special limitations are needed

8. Electronic Acceptance: Terms for electronic execution - include if agreement will be executed electronically

What schedules should be included in a Stock Appreciation Rights Agreement?

1. Schedule A - Vesting Schedule: Detailed breakdown of vesting dates and conditions

2. Schedule B - Notice of Exercise Form: Template form for exercising vested SARs

3. Schedule C - Fair Market Value Calculation: Methodology for determining share value and appreciation

4. Schedule D - Tax Treatment Summary: Overview of tax implications in relevant jurisdictions

5. Schedule E - Participation Agreement: Form for participant acceptance and acknowledgment

6. Appendix 1 - Data Processing Terms: Detailed GDPR compliance provisions if applicable

7. Appendix 2 - Country-Specific Terms: Additional terms required for specific jurisdictions if international

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Netherlands

Publisher

Ƶ

Document Type

Stock Agreement

Cost

Free to use

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