The success of your business depends directly on the caliber of your executives. To attract and retain the very best management team, you have to offer your key employees a compensation package that delivers the most value while minimizing tax risks both for them and for your business.
Caplin & Drysdale can help you with every aspect of your executive compensation arrangements. We routinely negotiate employment agreements, structure various forms of nonqualified deferred compensation arrangements, and prepare equity-based compensation programs. We can help your business navigate the punitive tax rules for golden parachute payments and executive pay above the $1 million cap. And we can give you the critical advice you need to determine when an "innovative" compensation strategy exposes your business and your executives to unnecessary tax risks.
Representative Engagements
- A public company needs to grant significant numbers of stock options to its top executives before the earliest date on which it can obtain shareholder approval for purposes of section 162(m).
Result: Caplin & Drysdale devises an innovative structure to permit the immediate grant of options while ensuring that the requirements of section 162(m) are satisfied.
- A large corporation needs a nonqualified deferred compensation plan for its key employees.
Result: Caplin & Drysdale helps the corporation structure a complex plan, involving intricate contribution triggers and sophisticated investment strategies, to meet the corporation's objectives.
- A pre-IPO internet start-up needs a competitive, broad-based incentive compensation plan to assemble its management and technical teams.
Result: Caplin & Drysdale structures, drafts, and implements a comprehensive equity-based compensation arrangement, providing for nonqualified stock options, ISOs, and stock appreciation rights. Caplin & Drysdale advises the employer on how to anticipate critical tax and cash-flow concerns for its employees and how best to address those concerns in both the pre- and post-IPO phases.
- A corporate employer requires representation for an employment agreement with its incoming president, including significant amounts of nonqualified deferred and incentive compensation.
Result: Caplin & Drysdale negotiates and prepares the employment agreement, ensuring that the agreement delivers maximum value to the new president with minimum tax risk to both sides.
Our Services
- Designing and drafting nonqualified deferred compensation arrangements
- Structuring equity-based compensation arrangements, including
- nonqualified stock options
- incentive stock options
- employee stock purchase plans
- restricted stock
- stock appreciation rights
- phantom stock and phantom stock options
- Negotiating and drafting executive compensation agreements
- Advising on golden parachutes and the section 162(m) $1 million cap on deductible compensation
- Advising on compensation arrangements using life insurance, including traditional, equity, and reverse split-dollar life insurance
- Counseling tax-exempt employers on special issues under section 457
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