Stock Options

There are differences of opinion among contemporary scholars with regard to the calculation of Zakat on types of wealth that were unknown in the times of the classical jurists. These issues are new and have yet to receive the attention from jurists that they deserve. As the demand for solutions increases, so will the attention these issues receive from scholars. Some modern scholars have characterized employee stock options as a form of reward for the completion of a specified task or services. Another group of contemporary scholars, however, insists that the rate on this type of wealth should equate to the rate on agricultural produce, where the land is exempted. Instead, their position is that Zakat must be paid on the profits earned from one’s holdings at the rate of 10% on the net profits earned in a lunar year (or 10.3% per calendar year). Other scholars refine this position somewhat and draw a legal analogy from agricultural produce that has benefited from irrigation, and for which the rate of Zakat is lower, or 5%. It is preferable that one consults with local imams who have knowledge of the subject of Zakat, or with several people, and then decide what is best. (Reference: Sheikh Yusuf Talal DeLorenzo, www.muslim-investor.com)

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