Zakah on shares, stock, options and bonds : Zakah on company stock options

Fatawa Question

Assalamu Alaikum, Please allow me to seek your help to know Zakat status of socks granted by companies as part of their compensation programs. They are of two types : 1-Stock options. These options got no voting power and do not earn dividends. In my situation I am granted stock options and are not part of my contractual agreement with my company. These are granted at the sole discretion of the company and are meant to incentivise employees to stay in the company for the long hauls. I do not own the principal of these stock and would benefit only form the appreciation of the stock over a fixed period of time. These stocks are granted every year. I would like to give you a specific example : -I am granted 1000 stock options, the value of the stock is $4 0, a total of $ 40,000 -I am allowed to sell 250 stocks after 1 year, 500 stocks after 2 years, 750 over 3 years and starting year 4, all 1000 stocks are vestable. -These stocks will expire after 10 years if not sold. -If for instance, the stock appreciate to $ 42 after 1 year, my own benefit would be $ 2000 but can only sell 25 % of the stocks and thus my benefit would be $ 500. If the stock appreciates to $ 50 after 4 years, my benefit would be $ 10,000 -My question is whether I have to pay Zakat every year on the outstanding benefit value or only when I sell the stocks at any time during its 10 years life span and what would it be. 2-Another type of stock I am granted is called restricted stock, this one has also got no voting power and does not earn dividends. In the above example, the 1000 stock plus whatever appreciation will be mine, however, I am no allowed to sell any of these stocks in the first 3 years. By year 3 the these stocks change to common stocks and I can then sell them at any time; if after 3 years the stock value becomes $ 45, the total value of $ 45000 would be mine and then they start having voting power and would earn dividends. What is Zakat status of this stock before the end of year 3. Jazakumallahou Kahiran for your help, Wassalamu Alaikum

Fatwa

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Publication Date

2007-03-23

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-786694

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