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

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

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 Tuesday, August 9, 2022

Recorded event now available

or call 1-800-926-7926

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


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 vital items. IRS guidance is limited on many 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.



  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


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


Howell, David
David Howell, MBA, ASA

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.

Morse Barnes-Brown & Pendleton

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

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