Flat-fee executive compensation representation. Equity grants (RSUs, stock options, restricted stock, profits interests), deferred compensation arrangements, bonus structures, change-of-control provisions, and the compensation-side review of executive offers and equity events.
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Executive compensation has its own legal architecture distinct from general employment law. The substantive areas include equity compensation (stock options, restricted stock units, restricted stock, performance shares, profits interests for LLC equity), deferred compensation arrangements (non-qualified deferred comp plans subject to Internal Revenue Code Section 409A, supplemental retirement plans, deferred bonus structures), bonus and incentive frameworks (annual bonus plans, multi-year incentive plans, equity-linked bonus structures), and the specialized provisions that appear in executive employment agreements (severance frameworks, change-of-control provisions, golden parachutes subject to IRC Section 280G, indemnification, and various other executive-specific terms).
The legal work intersects with tax law substantially — most executive compensation provisions have specific tax treatment that affects how the compensation should be structured. Section 409A governs non-qualified deferred compensation and imposes substantial penalties for non-compliance. Section 280G addresses excess parachute payments and creates tax consequences that affect deal structures in change-of-control situations. ISO vs. NQSO treatment affects option exercise and tax consequences. Restricted stock and RSU treatment have specific timing and election considerations (83(b) elections being the most common). We address tax considerations in coordination with the client's tax advisor — we don't provide tax advice, but we structure compensation provisions to be tax-efficient and to avoid the most common tax traps.
Most of our executive compensation work falls into two patterns. Employee-side: reviewing executive offers with substantial compensation components, reviewing equity grants and equity plan documents, addressing compensation events like vesting acceleration on change of control, and structuring negotiation of executive packages. Employer-side: structuring compensation plans for senior executives, drafting equity-related agreements, and structuring change-of-control and severance frameworks for the company's executive team. The work matches our flat-fee model — most compensation projects have defined scope and specific deliverables.
Equity grants come in several forms: stock options (incentive stock options or non-qualified stock options), restricted stock units (RSUs), restricted stock, performance shares, and (for LLC structures) profits interests. Each has different tax treatment, vesting structure, and provisions. Key terms to address: vesting schedule (time-based, performance-based, or hybrid), acceleration provisions (what events accelerate vesting — typically termination scenarios, change of control, or both), exercise period (for options) post-termination, treatment on various termination scenarios, and (for private company equity) provisions for what happens on exit. We review equity grants and identify provisions worth negotiating.
Non-qualified deferred compensation plans (deferring salary or bonus to future years for tax-deferred growth) are subject to Internal Revenue Code Section 409A — a complex statute with substantial penalties for non-compliance. The plan documents must comply with specific timing, election, and distribution rules. We address deferred compensation arrangements with attention to 409A compliance and coordinate with tax advisors for tax-specific advice. For employees being offered participation in existing deferred comp plans, we review the plan documents and explain implications.
Annual and multi-year bonus structures, performance-linked equity, and various incentive compensation frameworks. Key provisions: how performance is measured (metrics, thresholds, targets, maximums), how bonuses are calculated and timed, what happens to unpaid bonuses on termination, and how the structure handles unusual circumstances. We review bonus structures in employment agreements and address standalone bonus plans for employers structuring incentive frameworks.
For executives, what happens on change of control (sale, merger, or substantial reorganization of the company) is often the most consequential compensation provision. Common structures: single-trigger acceleration (equity vests on change of control), double-trigger acceleration (equity vests on change of control plus subsequent termination), severance multiples on change-of-control termination, golden parachute provisions, and Section 280G considerations. We address change-of-control compensation provisions in employment agreements and address compensation impact when change-of-control events occur.
Section 280G of the Internal Revenue Code addresses "excess parachute payments" — compensation paid to executives in change-of-control situations that exceeds defined thresholds. Payments subject to 280G create tax consequences for both the executive (a 20% excise tax on the executive) and the company (loss of deduction). Structuring compensation to avoid or address 280G impact is a specialized area. We address 280G considerations in compensation structuring and coordinate with tax advisors for specific tax analysis.
For employees and executives with substantial equity in private companies, exit events (acquisition, IPO, secondary sale) involve substantial compensation-related work. Provisions to address: which equity vests/accelerates on exit, treatment of unvested equity at exit, conversion of options or equity in acquisition transactions, lockup periods post-IPO, and various other exit-specific considerations. We address exit-event provisions in employment agreements before exits occur and address specific exit transactions when they happen.
Restricted stock grants (and certain other equity arrangements) involve a critical tax election under Section 83(b) — making an immediate election to be taxed on the grant value rather than the vesting value, which often saves substantial tax at vesting if the equity appreciates. The election must be filed within 30 days of grant with no extensions. We address 83(b) elections in coordination with the client's tax advisor and ensure filings are made within the deadline.
For employers structuring equity compensation, the equity plan (the overall plan document governing all equity grants) and individual grant agreements (the specific agreements with each grant recipient) need to be drafted carefully. The plan documents address all the substantive terms (vesting, exercise, transferability, change-of-control treatment, etc.) and the grant agreements customize for specific grants. We draft equity plan documents and grant agreement templates for employers; we don't handle public-company equity plans (which have additional securities and SEC compliance considerations) unless coordinating with securities counsel.
All work is flat-fee, set in writing before any work begins. Pricing scales with complexity: single equity grant reviews or specific provision analysis prices modestly; comprehensive executive offer reviews with multiple compensation components price higher; full executive employment agreement drafting with substantial compensation provisions prices as a defined-scope project.
For employers structuring executive compensation frameworks (equity plan documents, executive agreement templates, change-of-control framework), we structure as defined project engagements.
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RSUs (restricted stock units) are a promise to deliver shares of stock when vesting conditions are met. They have value as soon as they vest and are taxed as ordinary income on vesting. Stock options give the holder the right to buy shares at a defined exercise price; they have value only if the stock price exceeds the exercise price. Options come in two forms: ISOs (incentive stock options, with potential preferential tax treatment but specific qualification requirements) and NQSOs (non-qualified stock options, taxed as ordinary income on exercise). Each has different vesting, exercise, and tax characteristics that affect the actual value of the grant.
An 83(b) election is a tax election available for certain equity grants (typically restricted stock or early exercise of unvested options). The election means you're taxed immediately on the grant value rather than on the vesting value. If the equity appreciates substantially before vesting, the 83(b) election can save substantial tax — you pay tax once on the (low) grant value rather than annually on the (higher) vesting values. The election must be filed within 30 days of the grant; there are no extensions. Whether to file depends on the specific equity, the company's prospects, and your tax situation. We coordinate with your tax advisor on the analysis.
Acceleration provisions determine what happens to unvested equity on certain events. Single-trigger acceleration means equity vests on the occurrence of one event (typically change of control). Double-trigger acceleration means equity vests only on the occurrence of two events together (typically change of control plus subsequent termination). Companies generally prefer double-trigger because it keeps executives incentivized through the post-acquisition transition; executives generally prefer single-trigger because it provides certainty. Negotiated terms often land somewhere in between — for example, full acceleration on involuntary termination after change of control, but partial or no acceleration on voluntary departure.
Section 280G of the Internal Revenue Code addresses 'excess parachute payments' — compensation paid to certain executives in connection with change-of-control transactions that exceeds defined thresholds. Excess parachute payments create tax consequences: the executive owes a 20% excise tax (on top of regular income tax), and the company loses its deduction for those payments. Structuring compensation to avoid or mitigate 280G impact involves careful analysis of what counts as a 'parachute payment' and how to allocate compensation to stay within thresholds. The analysis is technical and typically involves tax advisors alongside counsel.
Several key areas. Equity grant size relative to the company's current valuation and the cap table (what percentage of the company you're actually getting). Vesting structure (typical 4-year vesting with 1-year cliff is standard; variations matter). Acceleration provisions for various termination scenarios (involuntary termination, change of control with and without termination, voluntary departure, termination for cause). Exercise period for options post-termination (standard 90-day post-termination exercise window is often too short for private company options). Treatment of unvested equity on various termination events. For private company equity, the path to liquidity (when can you actually sell or exercise). We address each of these systematically in executive offer reviews.
Flat fee set in writing before any work begins. Pricing scales with complexity. Get a free quote in under an hour by submitting the contact form.
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