Structuring Profits Interests as Equity Incentive Compensation for Key Employees and Service Providers

Distribution Threshold, Vesting, Company Repurchase Rights, 83(b) Election, Rights of the Profits Interest Holder

Note: CPE credit is not offered on this program

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


Conducted on Wednesday, August 11, 2021

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will guide attorneys and advisors on critical legal and tax considerations for granting profits interests to key employees and service providers. The panel will discuss key issues regarding participation thresholds, vesting, repurchase rights, Section 83(b) election, rights of holders of a profits interest holders, financial reporting requirements, and other key items essential to structuring an effective profits interest program.

Description

Profits interest incentive compensation arrangements present corporate and executive compensation counsel with complex design, structuring, and tax challenges. In addition, counsel must consider current tax law to effectively structure compensation for key executives and service providers and avoid unintended tax liability, both at the time of grant and on a go-forward basis.

Counsel must consider various issues stemming from profits interest arrangements, such as participation thresholds, waterfall provisions, vesting, repurchase rights, financial reporting requirements, and other key items. IRS guidance is limited on many of these issues, including how Section 409A applies and when to make 83(b) elections.

Listen as our authoritative panel offers solutions and strategic approaches for structuring profits interest arrangements and avoiding common pitfalls that can lead to disastrous tax consequences.

READ MORE

Outline

  1. Profits interest vs. capital interest
  2. Options to acquire profits interests
  3. Phantom arrangements
  4. Income tax consequences, advantages, and disadvantages
  5. Design, structuring, and implementation considerations

Benefits

The panel will review these and other key issues:

  • How does a capital interest differ from a profit interest, and what tax ramifications result from the type of equity interest granted?
  • How does Section 409A apply?
  • How does the Section 83(b) election apply?
  • What issues arise for repurchase rights, vesting, and rights of the profits interest holder?
  • How to establish safe-harbor thresholds
  • Financial reporting and valuation

Faculty

Howell, David
David Howell, MBA, ASA

Principal
Plante Moran

A significant part of Mr. Howell's practice is in private equity and venture capital-funded companies, and he...  |  Read More

Hunt, Joseph
Joseph E. Hunt, IV, J.D., LL.M.

Attorney
Morse Barnes-Brown & Pendleton

Mr. Hunt has eight years of advisory and legal experience, counseling startup, emerging, and middle-market companies...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download