Executive Stock Options, Restricted Shares and Restricted Stock Units — What’s Best for You
One week ago, on Tuesday August 3, 2021, the website Ivy Exec published under “Career Advice” an article I wrote on “Executive Stock Options, Restricted Shares and Restricted Stock Units — What’s Best for You”.
This new article is designed not only for C-level and senior executives, but even for many directors and mid-level executives, where a major part of executive compensation involves executive equity in the employer company. This article is intended to assist executives in those negotiations by setting out key things to look for in your equity package, including the level, tax structuring and terms of equity compensation.
The article discusses the merits and issues among the four main choices for structure of equity:
My article first discusses where equity might achieve its highest value for you using important favorable tax leverage, and then the level of equity to seek appropriate to your position. The remainder of my article goes over the different circumstances under which each of the four main equity choices can be beneficial to you, to help you determine which structure is best for you in your case.
To see my full IvyExec Career Advice website article, go to LINK: https://www.ivyexec.com/career-advice/2021/executive-equity-structure/
Or on my website at https://www.executiveemploymentattorney.com/executive-stock-options-restricted-shares-and-restricted-stock-units-whats-best-for-you/
IvyExec hosts articles and webinars from experts in the career, leadership, and business spaces who wish to share their knowledge with our audience. In April 2021, I was invited to write for IvyExec since it seeks original content on the topics of career development, leadership, and business strategy as it applies to senior-level and C-Suite professionals. IvyExec blog posts and webinars are shared with its community of more than 2 million members on its website, in its newsletter, and on its social media channels. https://www.ivyexec.com/career-advice/write-for-us/
It is my hope that this article will be of benefit to C-level and senior executives who have the opportunity or should have the opportunity to gain an equity stake in the company that their management skills and efforts or helping to build, so that you along with the investors can share in the benefits of that company growth. This article discusses the merits of the four main choices among equity structures. Taxation and financial benefits differ among them. As I tweeted… One size does not fit all. So, I hope this article will be instructive for you. Feel free to share this article. If you or any colleague of yours has a need in this area, please do reach out to me.
Restricted stock can be offered in lieu of cash to deliver immediate value with a strike price
Restricted stock can be offered in lieu of cash to deliver immediate value with a strike price much less than current fair market value. For senior recruits, technical or executive, you want to offer more to beat the competition – restricted stock does this. Robert Adelson, an executive compensation attorney, negotiates executive compensation; in one representative case, he worked with executive Steve Miles* to set up a vesting schedule to later grant him compensation in the form of stock.
By using its stock, the company avoided cash cost, and stock offers key advantages that make equity more valuable to employees than cash. Some of these benefits are:
In addition, restricted stockholders usually provide voting rights. As a result of the benefits of restricted stock, the use of this form of employee compensation has become very popular. Since the issue of founders' shares is deductible, the company can save money that would have gone to taxes by using stock for pay. The tax windfall can also be used creatively to enhance efforts to recruit or retain key people. This is done by sharing the company's tax windfall with employees. As an executive employment attorney, Robert Adelson works with C-level executives everyday and sees that when growth is the priority, cash savings are important, and building the team is critical – stock options provide lucrative advantages for both the company and the executive.
When working with executive Steve Miles, Robert Adelson negotiated his employment compensation and set up a several year vesting plan with attainable restrictions. This allowed the company to avoid cash cost and gave Mr. Miles compensation to work and look forward to down the road. Attorney Adelson also worked with the Company to grant Mr. Miles voting rights, like any other shareholder would have. A main advantage with restricted stocks is that they differ from other stock options and still retain some value if the price were to go down.
Attorney Robert Adelson frequently represents employees and executives negotiating their executive contract terms, stock, options, relocation, non-competes, termination and separation agreements. He also represents startup and smaller companies in software, medical device and other technology-based fields, independent consultants with compensation and stockholder arrangements, incorporation and liability protection, intellectual property protection, and in vendor, client and subcontractor contracting arrangements. Executive Steve Miles was a key employee and through the negotiation of his executive employment agreement; Attorney Adelson was able to grant him a lucrative and flexible form of executive compensation.
*All dates, client’s names and companies have been altered to keep confidentiality.
A week ago, on October 30, 2019, CEOWorld magazine published an article I wrote on “Executive Equity Compensation in Severance Negotiations”. The magazine advised me that I can use “Featured in the CEOWOLRD magazine” and the CEOWORLD “Logo” on my website.
This was my 25th article published in CEOWORLD. Earlier this year, the editor advised that I can add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.
This article, my most recent, published October 30, is designed for CEOs, C-level and senior executives, for whom equity can often be the most valuable part of their executive compensation package. The article addresses the question – what happens to that equity position if you face employment termination – and offers tips for severance negotiations over equity, including
Or on my website at
With more than 12.4+ million-page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.
The editor has also advised that I can add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.
It is my hope that this article will be helpful to CEOs, COOs, CMOs, other C-Level and senior executives to provide for appropriate terms to protect their equity rights in any present or future severance negotiations. If you or any colleague of yours has a need in this area, please do reach out to me at email@example.com.
On July 10, 2017, CEOWorld magazine published an article I wrote on “Restricted Stock And Other Equity Options For Your Executive Compensation Package” This article was designed for CEOs, C-suite executives and other senior executives who are negotiating stock, options, RSUs or other equity as part of their compensation package.
The article first discusses the key ways to assure value in your executive equity compensation package –
The article then goes on to discuss the merits of Stock Options both, non-qualified and incentive stock options, Restricted Stock and Restricted Stock Units (RSUs).
The article indicates that in the high growth and turnaround situations, the much better choice is to get all or a significant part of your equity structured as Restricted Stock, which offers these. significant advantages:
My article also discusses how RSUs structure is quite desirable in companies where high growth is not expected and the executive wants to be assured of equity that will have value. For more information on RSUs, see my February 2017 CEOWorld article focused entirely on RSUs – LINK: http://www.executiveemploymentattorney.com/articles-section/the-advantage-of-rsus-in-your-ceo-compensation-package/
My article on “Restricted Stock And Other Equity Options For Your Executive Compensation Package” was published July 10, 2017 by CEOWorld magazine.
To see my full article, go to http://www.executiveemploymentattorney.com/restricted-stock-and-other-equity-options-for-your-executive-compensation-package/
With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.
It is my hope that this article will be helpful to senior executives who are negotiating equity terms as part of their compensation package going into a new position or in connection with a raise, promotion or change of control. If you or any colleague of yours has a need in this area, please do reach out to me, your executive employment lawyer, at firstname.lastname@example.org.