
16 The Financial Times Guide to Corporate Valuation
incentive programme is to be treated as salaried income for the employees.
The consequence is that an employee is obliged to pay income tax and
the company to pay social security expenses on the entire programme.
A common stipulation from tax authorities is that the price of the share,
convertible or option, which employees are entitled to acquire, must
reflect a market-based value.
When dealing with tax authorities, and this is likely to be universal,
it is better to be safe than sorry and have an independent party, often an
accountancy firm or an investment bank, to