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One for You and Two for Me: Compensating Employees with Equity

October 20, 2021 (3 min read)

As a slice of the total compensation package, most executive pay is delivered in the form of equity, typically company stock, whether of a public or private employer, in shares or derivatives. Using equity compensation is viewed as an incentive because award value is keyed to the company's stock price. So, as the company’s stock value increases, so does the incentive meant to boost executive performance planning for a greater reward. This resource kit details the types of equity compensation for public and private employers and provides checklists and annotated forms to draft the documents you need. 

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Related Content

  • Equity Compensation Plan Design for Public Companies
    Reference this practice note, which discusses the design of equity compensation plans for public companies. Publicly held companies often grant equity awards to executives and other key employees (and, in many cases, even to fairly low-level employees) to align their interests with those of the shareholders. This practice note addresses key legal and practical issues with these plans and programs and provides drafting tips.
  • Equity Compensation Plan Design for Private Companies 
    Check out this practice note, which discusses the design of equity compensation plans for private companies. Like public companies, privately held companies often like to incentivize their executives and other key employees through equity compensation grants that better align their interests with those of the company’s equity holders. While equity compensation plans for privately held companies resemble those of public companies, a number of significant differences exist due primarily to the illiquidity of the stock.

Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.  

  • Employee Benefits & Executive Compensation Key Legal Developments Tracker
    Stay informed on new developments.
  • ERISA Litigation.
    The Sixth Circuit agreed with the district court that an actuary’s use of the Segal Blend interest rate to calculate a multiemployer pension plan’s unfunded vested benefits and a participating employer’s withdrawal liability “violates the statute because the resulting interest rate is not ‘the actuary’s best estimate of anticipated experience under the plan.’” The court concluded that the Segal Blend “dilutes the actuary’s best estimate with rates on investments that the plan is not required to and might never buy, based on a set formula that is not tailored to ‘the unique characteristics of the plan.’” Sofco Erectors, Inc. v. Trs. of the Ohio Operating Eng'rs Pension Fund, 2021 U.S. App. LEXIS 29279 (6th Cir. Sept. 28, 2021).
  • Health and Welfare Plans.
    IRS issues guidance regarding COBRA election and payment deadlines during the coronavirus pandemic, building on EBSA Disaster Relief Notices 2020-01 and 2021-01, and providing transition relief, to Nov. 1, 2021, before certain premium payment deadlines expire. I.R.S. Notice 2021-58.

    DOL, IRS, and HHS issue guidance under certain provisions of the CARES Act, HIPAA, and the Affordable Care Act, regarding (1) Rapid Coverage of Coronavirus Preventive Services, and  (2) HIPAA Nondiscrimination and Wellness Programs, which includes a discussion on providing  premium discounts and surcharges for receiving or not receiving the COVID19 vaccination. Affordable Care Act Implementation FAQs (Part 50).

    HHS issues guidance on the application of HIPAA to COVID-19 vaccination information (i.e., when HIPAA does, or does not, regulate COVID-19 vaccination status). HHS, HIPAA, COVID-19 Vaccination, and the Workplace.


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