McNees Authored Articles, White Papers

Equity Incentive Plans: Compensating Key Employees with Equity, Options and Equity Appreciation Awards

June 2011

Equity Incentive Plans: Compensating Key Employees with Equity, Options and Equity Appreciation Awards

By: Michael L. Hund and Salvatore J. Bauccio

Introduction
There comes a point in the life cycle of many businesses when its employees desire equity in consideration of their services to the business—the employees want to become owners and not just work for the business and its owners. Wanting to align the interests of the employees with those of the business, the business owners may be receptive. What the business owners do not want, however, is to give up control of the business or adopt a system that is burdened with legal and tax complexities.

This article will discuss the factors that businesses, particularly those that are closely held, should consider when developing an equity incentive plan while giving a basic explanation of the key legal and tax concepts involved.

use the link below to download a pdf of the white paper