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Designing Equity Compensation and Employment Agreements for Startup and Emerging Growth Companies

Drafting Confidentiality and Nondisclosure Provisions; Structuring Employee Stock Options, Restricted Stock, and Deferred Comp

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, January 11, 2024

Recorded event now available

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This CLE course will provide benefits counsel with guidance on structuring and negotiating equity compensation arrangements and employment agreements for startups and emerging growth companies. The panel will offer strategic approaches for using these vital tools to attract talent to build and grow companies while avoiding common pitfalls that can hamper progress.

Description

Several alternatives are available to startups and emerging growth companies to provide equity compensation to their employees when the company may not be able to offer high salaries. Employee stock options, restricted stock, restricted stock units, and deferred compensation arrangements can help startups attract the talent needed for success. However, these arrangements present intricate design, structuring, and tax challenges for benefits counsel, including how to structure equity arrangements, avoid the pitfalls of Section 409A, and make 83(b) elections.

Startups should also strategically use employment agreements to protect the company's interests during the critical early years. Termination clauses and restrictive covenants are among the most effective and vigorously negotiated provisions of executive employment agreements. Recently proposed federal rules will, if enacted, drastically change the landscape for enforceability of such covenants.

Listen as our experienced panel of executive compensation practitioners discusses best practices for structuring and negotiating equity compensation arrangements and employment agreements for startups and emerging growth companies. The authoritative panel will offer strategic approaches for using these vital tools to build and grow companies while avoiding common pitfalls that can hamper progress.

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Outline

  1. Equity compensation alternatives available to startups
    1. Design, structuring, and implementation considerations
    2. Tax implications and accounting treatment
      1. Section 83 elections
      2. Section 409A considerations
  2. Negotiating and drafting executive employment agreements
    1. Restrictive covenant provisions
    2. Termination provisions
    3. Section 409A considerations for severance agreements

Benefits

The panel will review these and other high priority issues:

  • How does IRC Section 409A impact the drafting of employment agreements, equity agreements, and severance plans?
  • What are best practices in drafting termination provisions that minimize post-employment disputes?
  • What are the most effective restrictive covenant provisions to maximize enforceability?
  • What are the common pitfalls in deferring compensation?
  • What are common constraints in converting cash incentives (e.g., salary, bonus) into equity awards?

Faculty

Lampron, Shawn
Shawn E. Lampron

Partner
Fenwick & West

Ms. Lampron focuses her practice on executive compensation and employee benefits for emerging growth businesses, public...  |  Read More

Mort, Marshall
Marshall Mort

Partner
Fenwick & West

Mr. Mort focuses his practice on representation of public and private technology and life sciences companies in a wide...  |  Read More

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