Executive Compensation & Equity Incentives
Private companies use equity and incentive arrangements to retain key people without giving every participant the same ownership or governance rights. The design must align the employee’s economics with the company’s control, tax, valuation, vesting, and separation requirements.
The firm structures and documents phantom equity, profits interests, incentive bonuses, deferred compensation, change-of-control provisions, buy-sell rights, and related arrangements. Section 409A and other tax issues are addressed during design and coordinated with the company’s tax advisors.
Section 409A mistakes can create immediate tax problems, including an additional 20% federal tax. Payment timing and compensation terms should be reviewed before the arrangement is signed.
Services
- Phantom equity, profits interest, and incentive bonus plans
- IRC §409A-compliant deferred compensation and change-of-control provisions
- Employment and executive agreements with equity components
- Buy-sell mechanics and rights of first refusal
- Vesting, forfeiture, and repurchase structures
- Coordination with company agreements and cap table records
Representative Experience
Drafted executive compensation and phantom equity arrangements, including §409A-compliant bonus and change-of-control provisions, buy-sell mechanics, and ROFR structures for private companies.
Representative matters. Prior results do not guarantee a similar outcome.
Process
Design conference
Who is being retained, with what economics, against what exit.
Tax pass
§409A and related analysis before drafting, coordinated with your tax advisor.
Documentation
Plan documents, award agreements, and governance amendments as a set.
Administration setup
Records, ledgers, and amendment procedures.
FAQs
Why phantom equity instead of real equity?
Real economics without ownership dilution, governance rights, or minority-owner exposure — often the right answer for closely held companies. Sometimes it isn’t; the design conference decides.
What is §409A and why does everyone warn about it?
The deferred compensation rules: violations tax the executive on unvested amounts plus a 20% penalty. Compliance is a drafting discipline, not an afterthought.
Can we add this to an existing team member’s deal?
Yes — retrofit awards are common, but they interact with existing agreements and the company agreement, which is why they’re documented as a set here.
From the Resource Center
§409A in Plain English
Executive compensation and phantom equity, designed for §409A compliance before the promise is made.