BELGIUM - Extending the Term of Under Water Options - 12 MAY 2009

Global Employer Services

Extending the Term of Under Water Options

A Bill was submitted to the
Belgian Parliament on February 3, 2009, proposing the extension of the term
of an option without any adverse tax consequences.

Background

In Belgium, stock options are taxed at grant if the options
are accepted in writing within 60 days of the offer date.

The taxable benefit is
calculated as a percentage of the value of the underlying shares at the
moment of the offer.  The percentage increases with the life of the
option.  As a result, the longer the life of the options, the larger the
tax burden.

Taxes that have been paid
upfront cannot be refunded afterwards if the options become underwater during
the exercise period or if the options are forfeited for any reason.

Update

Taking the current market
conditions into account, a high number of outstanding options are currently
underwater.  The employees thus risk being in a position that they will
never be able to exercise their options, while taxes that have been paid
upfront cannot be recovered.

The Belgian government has therefore submitted a Bill to the Parliament,
proposing allowing companies to extend the life of an option by a maximum of
five years in a tax neutral way.  Without this bill, such extension
would be treated as a new taxable offer of options.

The following conditions are required by the bill for the extension:

·         
The issuing companies
should obtain a consent from the employees;

·         
The total fiscal value of
the options to which a employee has subscribed cannot exceed EUR100,000
(approximately US$132,750) per employee per corporation;

·         
The options must had been accepted between January 1, 2003 and
August 31, 2008.

It is still not clear when
the proposed bill would come into force. We expect the decision to be made
before June 30, 2009. We will keep you posted of any updates.

Action

No action is required at
this point. We will keep you posted for any updates.

People to Contact

For assistance in this
matter or any other issue related to the operation of your global rewards
plans, please contact your local Deloitte global rewards consulting services
advisor or email us at: globalequity@deloitte.com and a global rewards consultant will contact you.

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