Double-Trigger RSUs and Stock Options in Private Companies: Key Provisions, Tax Implications, Risks, and More

Note: CPE credit is not offered on this program

A live 90-minute premium CLE video webinar with interactive 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.

Thursday, December 15, 2022 (in 6 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST

(Alert: Event date has changed from 11/30/2022!)

or call 1-800-926-7926

This CLE webinar will provide attorneys with an in-depth analysis of utilizing double-trigger restricted stock units (RSU) and stock options in private companies. The panel will discuss key provisions in structuring RSUs and stock options as part of a compensation plan, the differences between RSUs for private versus public companies, tax implications to employees, and risks associated with holding RSUs in private companies.

Description

Double-trigger RSUs and stock options are popular forms of equity compensation for private companies. Executive compensation and benefits attorneys must have a clear understanding of applicable federal tax rules and restrictions regarding the inclusion of RSUs when structuring compensation plans and how the inclusion of double-trigger provisions are significant for private companies.

RSUs represent a contractual right to a certain number of stock shares, or cash payment of equal value, to an employee subject to a vesting schedule. The shares, or the cash equivalent, are not delivered until vesting and forfeiture requirements are satisfied, and the holder has no voting rights during the vesting period.

For private companies, a double-trigger vesting structure provides significant advantages. This RSU award design requires that vesting be conditioned on both the continued employment or service of the holder and the occurrence of the company's IPO within a specified award term.

RSUs are taxed as regular income at settlement, making the terms of any vesting schedule a key item to consider for both employers and employees. However, the taxation of RSUs can be deferred even after vesting, allowing employers to coordinate the timing of tax recognition to a liquidity event.

Listen as our panel discusses the challenges of incorporating double-trigger RSUs in compensation plans for private companies, available planning techniques, restrictions under Section 409A, and other critical structuring considerations.

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Outline

  1. Incorporating RSUs in compensation plans
  2. Double-trigger RSU characteristics and risks
  3. Tax issues
  4. Best practices for attorneys representing the employer or employee

Benefits

The panel will review these and other key issues:

  • What are the key items to consider for incorporating RSUs when structuring compensation plans?
  • How do double-trigger RSUs compare to stock options for private companies?
  • What are the key tax issues and available planning techniques to minimize them?
  • What are the restrictions under Section 409A?
  • What are the key provisions of award agreements for double-trigger RSUs and stock options?

Faculty

Galligan, Lynda
Lynda T. Galligan

Partner
Goodwin Procter

Ms. Galligan is co-chair of Goodwin’s Business Law Department. She practices in the area of executive...  |  Read More

Palao-Ricketts, Francisco
Francisco (Cisco) Palao-Ricketts

Partner
Goodwin Procter

Mr. Palao-Ricketts is a partner in the firm’s Business Law Department and ERISA/Executive Compensation practice....  |  Read More

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You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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