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:

• ISOs — Incentive stock options, qualified under the tax code,
• Non-quals — Non-qualified stock options,
• Restricted Stock — where you are actually issued shares and might want to make a tax election to take unvested shares into income, and
• RSUs — Restricted Stock Units, where stock is also issued and taxed as it vests.

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.
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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.
​See https://ceoworld.biz/author/robert-adelson/

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

• What to include in your offer letter or executive employment agreement when you join the company?
• What to seek in a change-of-control / retention situation?
• What to negotiate for on employment termination?
• The importance of equity in your severance negotiations.

In discussing equity severance negotiations at the time of employment termination, my article raises using your leverage in employment separation negotiations including

• Legal claims you may have against your company related to wrongful termination of employment,
• Termination transition services and support the company may desire from you,
• Cooperation to sign a lock-up agreement or other documents or actions post-termination.

To see my full CEOWorld magazine. article, go to LINK:
     https://ceoworld.biz/2019/10/30/executive-equity-compensation-in-severance-negotiations/

Or on my website at 
     https://www.executiveemploymentattorney.com/executive-equity-compensation-in-severance-negotiations/

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.

     https://www.linkedin.com/company/ceomagazine/

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. 

     See https://ceoworld.biz/author/robert-adelson/

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 protected].

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 –

• What will be the strike price?  Is there opportunity for considerable appreciation within the given time horizon.

• Did you receive enough equity to make this worth it?  In the article, I give an example where the executive with a base salary of $400,000, has an equity award of $2 million vesting over 4 years, and then state that because the executive started with equity whose aggregate strike price was $2 million, 3x appreciation translated to an appreciation of $4 million.  Had the aggregate strike price been $200,000, then even with 3x growth, the potential gain for 4 years would only have been $400,000.

• Type of equity and its tax treatment is important.  There are many choices in how to structure equity.  The executive in a high potential growth or turnaround situation should seek the structure for his or her equity that offers the best prospect for capital gains on the appreciation.

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:

• Avoiding the strike price. CEO and executive restrictive stock grants often grant the stock at zero cost so there is no payment of the strike price.

• Retention of value on termination. ISOs must expire within 90 days of employment termination, and though the tax code does not require that for Non-quals, those options are typically written the same way. With restricted stock, once you vest, you own and retain it. The company cannot cancel your stock on termination unless there is a buy-back provision.
  

• Capital Gains Tax Treatment. Typically, an IRC Section 83(b) election is made within 30 days of the grant of restricted stock.  This is accompanied by payment of the value of the stock issued (For true startups, the stock may be worth little at founding and a nominal payment is made which is fair market value at the time). After that, if the stock is held more than a year, all appreciation will be taxed at capital gains rates and that tax will fall only on sale of the shares.
  

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 [email protected].