Phantom Stock as a Way to Get 'Equity Compensation' from Family Businesses

On September 6, 2017, CEOWorld magazine published an article I wrote on “Getting the Benefits of Equity Compensation from Family Businesses through Phantom Stock.”

Photo credit: dotshock

 
This article was designed for CEOs, C-suite executives and other senior executives who currently work in a family business or are offered a position in a family business and receive now or are offered NO equity compensation because most family businesses do not issue equity to non-family members.

My article discusses the use of Phantom stock as a mean to give the executive a substitute to equal for him or her all the benefits that stock, options or RSUs would provide to the executive in a non-family business.

Techniques used in the past and offered to the reader can produce a true “win-win” by providing key benefits to the family business as well as to the CEO or other senior executive, including the following

• For the Family Business: Creates key executive recruitment tool to offer stake in growth and effectively compete with equity offered by non-family businesses, plus “golden handcuffs” to retain the services of senior executives over the years

• For the Family Business: Provides this tool with no usage of actual stock or options and no rights as stockholder of company

• For the Family Business: All payments made under the plan are fully tax deductible to the family business.

• For the Executive: Gives executive a meaningful stake in the growth of the business, a true share of what the executive achieves for the business

• For the Executive: Provides a liquidity feature often missing in stock plans of private companies.

• For the Executive: Phantom Stock Plans can be structured to replicate options or RSUs, and can also be structured to offers the possibility for capital gains level taxation, in after tax income achieved

My article includes a hypothetical example, where a 55-year-old executive is to take the CEO position as successor to the 75-year-old family CEO.  In this example, the successor CEO negotiates for the establishment of a phantom stock plan as a condition to taking the position.  The intention is that the successor CEO receive phantom stock under the phantom stock plan as an important part of his (her) executive compensation package and that the plan would continue after that to enable the successor CEO to use phantom stock to recruit other non-family senior executives to further bolster management of the family business.

To see my full CEOWorld magazine. article, please go to my website:
https://www.executiveemploymentattorney.com/articles-section/getting-the-benefits-of-equity-compensation-from-family-businesses-through-phantom-stock/

With more than 12.4+ million-page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.

It is my hope that this article will be helpful to (1) CEOs and senior executives working in family businesses, (2) CEOs and senior executives considering taking positions in family businesses, and (3) leaders of  family businesses seeking to recruit non-family members as the new CEO or other senior executives.

If you or any colleague of yours has a need in this area, please do reach out to me, your executive employment lawyer, at radelson@engelschultz.com or call 617-875-8665.

Pitfalls of and Techniques to Surmount Non-Compete Agreements for Executives

Last Thursday, on August 10, 2017, CEOWorld magazine published an article I wrote on “Pitfalls of and Techniques to Surmount Non-Compete Agreements for Executives.” This article was designed for CEOs, C-suite executives and other senior executives who are asked to sign non-compete agreements with their company.  My article deals with both the coverage and pitfalls of non-competes but also offers key techniques for the CEO and senior executives to surmount non-competes and protect your career.

Techniques used in the past and offered to the reader include negotiation of the following

• Fully “Paid up” non-compete to make the Executive whole,
• Planning to navigate around the shoals of the non-compete terms,
• Use of an indemnity from the new employer.

My article also discusses key terms for the executive to negotiate in covenants for non-solicitation of customers and clients, non-solicitation of employee and contractors, confidentiality and NDA agreements, and assignment of inventions.

To see my full CEOWorld magazine article, go to http://ceoworld.biz/2017/08/10/pitfalls-of-and-techniques-to-surmount-non-compete-agreements-for-executives/
or my website at http://www.executiveemploymentattorney.com/articles-section/pitfalls-surmount-executive-non-compete-agreement/

With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.

It is my hope that this article will be helpful to senior executives who are navigating the shoals of non-compete, non-solicitation agreements and going into a new position or change of control.  If you or any colleague of yours has a need in this area, please do reach out to me at 617-875-8665 or email radelson@engelschultz.com.

Restricted Stock And Other Equity Options For Your Executive Compensation Package

On July 10, 2017, CEOWorld magazine published an article I wrote on  “Restricted Stock And Other Equity Options For Your Executive Compensation Package” This article was designed for CEOs, C-suite executives and other senior executives who are negotiating stock, options, RSUs or other equity as part of their compensation package. 

The article first discusses the key ways to assure value in your executive equity compensation package –

• What will be the strike price?  Is there opportunity for considerable appreciation within the given time horizon.

• Did you receive enough equity to make this worth it?  In the article, I give an example where the executive with a base salary of $400,000, has an equity award of $2 million vesting over 4 years, and then state that because the executive started with equity whose aggregate strike price was $2 million, 3x appreciation translated to an appreciation of $4 million.  Had the aggregate strike price been $200,000, then even with 3x growth, the potential gain for 4 years would only have been $400,000.

• Type of equity and its tax treatment is important.  There are many choices in how to structure equity.  The executive in a high potential growth or turnaround situation should seek the structure for his or her equity that offers the best prospect for capital gains on the appreciation.

The article then goes on to discuss the merits of Stock Options both, non-qualified and incentive stock options, Restricted Stock and Restricted Stock Units (RSUs).
The article indicates that in the high growth and turnaround situations, the much better choice is to get all or a significant part of your equity structured as Restricted Stock, which offers these. significant advantages:

• Avoiding the strike price. CEO and executive restrictive stock grants often grant the stock at zero cost so there is no payment of the strike price.

• Retention of value on termination. ISOs must expire within 90 days of employment termination, and though the tax code does not require that for Non-quals, those options are typically written the same way. With restricted stock, once you vest, you own and retain it. The company cannot cancel your stock on termination unless there is a buy-back provision.

• Capital Gains Tax Treatment. Typically, an IRC Section 83(b) election is made within 30 days of the grant of restricted stock.  This is accompanied by payment of the value of the stock issued (For true startups, the stock may be worth little at founding and a nominal payment is made which is fair market value at the time). After that, if the stock is held more than a year, all appreciation will be taxed at capital gains rates and that tax will fall only on sale of the shares.

My article also discusses how  RSUs structure is quite desirable in companies where high growth is not expected and the executive wants to be assured of equity that will have value.  For more information on RSUs, see my February 2017  CEOWorld article focused entirely on RSUs – LINK:  http://www.executiveemploymentattorney.com/articles-section/the-advantage-of-rsus-in-your-ceo-compensation-package/

My article on “Restricted Stock And Other Equity Options For Your Executive Compensation Package”   was published July 10, 2017 by CEOWorld magazine.
To see my full article, go to http://www.executiveemploymentattorney.com/restricted-stock-and-other-equity-options-for-your-executive-compensation-package/

With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.

It is my hope that this article will be helpful to senior executives who are negotiating equity terms as part of their compensation package going into a new position or in connection with a raise, promotion or change of control.  If you or any colleague of yours has a need in this area, please do reach out to me, your executive employment lawyer, at radelson@engelschultz.com.

Getting Executive Severance Rights and Compensation When You Choose to Quit Your Position

On May 30, 2017, CEOWorld magazine published an article I wrote on  “Getting Executive Severance Compensation When You Choose to Quit” This article was designed for CEOs, C-suite executives and other senior executives who for reasons beyond their control want to quit their current position and ought to be able to get appropriate executive severance compensation in connection with their separation.

My article takes up four main areas:

• Circumstances when you want to quit
• Issues governing Severance when you quit your position
• Key contract terms:  Termination for Good Reason in your Job Offer
• Circumstances of Constructive Discharge
• Severance rights and compensation to seek for in Constructive Discharge
• Getting what you deserve if you terminate your position

To see my full article, go to LINK:  http://ceoworld.biz/2017/05/30/getting-executive-severance-compensation-when-you-choose-to-quit/

or on my website at http://www.executiveemploymentattorney.com/articles-section/getting-executive-severance-compensation-when-you-choose-to-quit/

With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.


It is my hope this article will be helpful to senior executives who are considering quitting their current position or feel they are now being forced out, and deserve severance and the change to start anew while keeping their careers on the upward trajectory.  If you or any colleague of yours has a need in this area, please do reach out to me at radelson@engelschultz.com.

Executive Employment Contract Terms for Women CEOs

One week ago, on April 25, 2017, CEOWorld magazine published an article I wrote on  “Executive Employment Contracts for Women CEOs – Terms and Negotiations.”  

Despite significant advances in employment laws, gender inequality remains an area of both concern and controversy. Women continue to lag behind men, even at the CEO, C-suite and senior executive level, when it comes to compensation, opportunity for advancement, job status and equity sharing, to name just a few.

Many women still have to prove themselves as trail blazers for their gender in all-male executive management teams that still operate as the “old boys club” with a locker room mentality toward women.

This article discusses hurdles faced today by women with regard to

• Hiring – achieving equal pay, benefits and other key terms in hiring
• Change of Control – achieving equal treatment for contributions made that have brought about a successful exit and change of control for the company
• Harassment & Termination – Circumstances where despite their professional attitude and achievements, women are not judged on merit, but instead face gender-based workplace harassment, threatened and even actual employment termination.

In each instance this article discusses not only these circumstances but also actions for women CEOs and senior executives to take to protect their interests, obtain their proper rights and benefits, and continue their path of career advancement.

My article on this subject was published March 27, 2017 by CEOWorld magazine.
To see my full article, go to Executive Employment Contracts for Women CEOs

With more than 12.4+ million page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business
leaders, and high net worth individuals worldwide.

It is the goal of this article and my work in this field to aid women CEOs and senior executives in facing these special challenges when they arise and overcoming these challenges while keeping their careers on the upward trajectory.  If you or any colleague of yours has a need in this area, please do reach out to me at radelson@engelschultz.com.

The CEO Job Offer Letter: Key Terms and Negotiation

One week ago, on March 27, 2017, CEOWorld magazine published an article I wrote on  “Negotiating Key Terms in Your Next Executive Job Offer.” 
 
When you receive, a job offer letter, how do you evaluate it? Do you accept the terms “as is” or do you negotiate? You do a great job negotiating deals for your company but do you always do as well when representing yourself?
 
This article explores the situations in which you negotiate the employment job offer, the terms you should focus on and their ramifications, and how an executive employment attorney can help you.

Often CEO and senior executive recruits have considerable bargaining power.  The employer wants and needs you.  You may never be in a better position to negotiate further than you are at the moment of the job offer.
 
Assuming you get the salary and target bonus you are looking, there is still an awful lot on the table.  Many of these items may be far more important than salary, including these key items fully discussed in my article:

• Signing Bonus
• Equity terms
• Equity Structure / Taxation
• Relocation
• Reliance
• Severance terms

Even if this is your only job offer, one at you must take, these terms are just too important to accept them “as is” without at least some effort to structure terms that don’t change the essential deal but still offer you important protections.
 
Sometimes just a word here or there, or an extra clause added by a skilled attorney can make an enormous change for you in realizing the benefit of your bargain or enabling you to leave a difficult situation you did not anticipate.
 
My article on this subject was published March 27, 2017 by CEOWorld magazine.
To see my full article, go to http://www.executiveemploymentattorney.com/ceo-job-offer-letter/ or  http://ceoworld.biz/2017/03/27/negotiating-key-terms-next-executive-job-offer/
 
With more than 12.4+ million page views, CEOWORLD magazine is the world's leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.
 
If you or one of your colleagues is a CEO or senior executive who has received or expects to receive a new job offer, I am glad to assist.  Please do reach out to me at radelson@engelschultz.com.

Key Items Every CEO Should Have in His or Her Employment Offer

On January 20, 2015, I gave an invite only presentation for the Vistage community at the conference Center at Waltham Woods, Massachusetts. My topics were -

• 6 Key Points Every CEO should have in his or her Employment Agreement
• What every C-suite executive needs to know about negotiating their next personal services agreement

I presented a case example (based on past client representations) of fictional CEO or C-suite executive Dr. Zhivago negotiating his job offer Dr. Zhivago negotiating his job offer and employment contract with a Massachusetts life sciences company. The case example l illustrated issues of relocation, authority, warranties, signing and performance bonus, equity, vesting, golden parachutes and non-competes. I concluded with the key points needed in all CEO employment contracts and in negotiating C-suite executives' personal services agreements and strategies on how to obtain them. Each attendee received a folder with the presentation outline and two of my published articles on C-suite employment issues.

To view the outline of the “6 Key Points Every CEO should have in his or her Employment Offer”: https://www.slideshare.net/RobertAdelson/6-critical-items-every-ceo-needs-in-his-or-her-employment-offer

If you are a CEO or C-suite executive and would like more information on this presentation or need advice with your own job offer or employment contract, please do contact me at radelson@engelschultz.com