With the preparation of the annual figures, supermarket chain Picnic once again plunged into the red: it made a loss of 45 million in the 2020 financial year. However, the Financial Newspaper reports a huge calculation blunder or a ‘material misstatement’ in the annual accounts of Picnic. M&A lawyer Dirk de Waard recently wrote bout the construction underlying this material misstatement at Picnic.

SAR: a brief explanation

SAR stands for Stock Appreciation Rights. This construction is often used by companies to give employees ‘fictitious’ shares. Through a SAR, an employee acquires a right to the value of the shares, without holding the shares themselves and thus being able to exercise rights attached to the shares.

SAR’s benefits

Stock Appreciation Rights have multiple benefits, including:

  • Flexible construction to bring in and retain key employees by granting Stock Appreciation Rights and increasing employee engagement;
  • In this way, a start-up can let employees benefit at a very early stage from the possible enormous increase in value of the start-up;
  • Simple allocation without having to draw up a notarial deed;
  • Holders of Stock Appreciation Rights do not have voting rights in the shareholders’ meeting;
  • It is a very fiscally attractive construction, because the benefit is taxed for the employee as salary from employment. For the employer, the benefits are deductible from the profit on the basis of the SAR.

PICNIC will use Stock Appreciation Rights from 2015

The revised 2019 financial statements now report an additional loss of EUR 5.8 million. This adjustment was a direct result of the revaluation of the stock appreciation rights that supermarket chain Picnic had granted to a number of key employees in 2015 and 2016. At Picnic, employees were able to invest in small pieces of SARs during those years in order to benefit from the appreciation of picnic.

VIOTTA is happy to help

Are you looking for ways to retain key employees without having to give shares to these employees? In that case, applying Stock Appreciation Rights is a great construction. The VIOTTA M&A team is happy to help.


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