Stock Rights That Protect the Value of Your Executive Equity Compensation

On Thursday September 1, 2022, 2022, CEOWorld magazine published an article I wrote on “Stock Rights That Protect the Value of Your Executive Equity Compensation.”

This new article is designed for CEOs, C-level and senior executives, who have recently received a job offer or expect to receive a job offer and will be negotiating terms of executive compensation which will include executive equity. 

In those negotiations, executive equity is often a very significant and often a major part of the executive compensation and a often a driver to accept a job offer.  This is so because executive equity offers the prospect of greater financial upside value than from your fairly fixed and limited cash compensation.  This special upside potential for executive equity arises from three different factors: (a)  Appreciation – with your service the stock price or value might rise significantly, (b) Liquidity Event – a potential acquisition or an IPO  might also significantly increase value, (c) Favorable Taxation – with appropriate structuring, appreciated equity on cash out may be taxed at a much lower rate than cash compensation for much greater take home pay. 

Thus, given the high importance of equity in the CEO’s or C-level executive’s compensation package the focus of my article then moves to discuss these five (5) critical areas of stock rights and terms you want to be sure to give proper attention in your negotiations to give you the best chance to achieve the potential value from the equity you are granted: 

• Meaningful Level of Equity – to be sure that sufficient equity is granted so that if success is achieved, it will be impactful for you,
• Tax Favorable Structure – negotiation over the form of your equity at the outset is quite important because in tax law – “form is substance” – different forms produce very different tax results and you want tax-favored equity if possible,
• Severance Protection – if midway through the buildup you are forced out, you want your severance buy-out to embrace your equity as well as less important cash components of your comp package,
• True Up Adjustment – especially if you are brought in to secure a financing raise, you don’t want to be a victim of your own success and seeking a level anti-dilution protection is a fair ask,
• Cash-out protections – if after a number of years, no liquidity event is on the horizon, it is helpful to have a put option with the company to assure at some point you can tap into the value you achieved.

To see my full CEOWORLD magazine. article, go to LINK: https://ceoworld.biz/2022/09/01/stock-rights-that-protect-the-value-of-your-executive-equity-compensation/

Or on my website at https://www.executiveemploymentattorney.com/stock-rights-that-protect-the-value-of-your-executive-equity-compensation/

This was my 38th article published in CEOWORLD since 2016.  Previously, the editor advised that I can use “Featured in the CEOWORLD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.  

On its own initiative, CEOWORLD magazine created on their website a library of Robert Adelson published articles.   You can peruse this library and/or read as many of my 38 published articles as you wish.  See https://ceoworld.biz/author/robert-adelson/

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. https://www.linkedin.com/company/ceomagazine/

Are You Getting the C-Suite Executive Salary You Deserve?

On January 26, 2022, the career advice website Ivy Exec published under executive “Leadership” an article  I wrote on “Are You Getting the C-Suite Executive Salary You Deserve?

This new article is designed for designed for CEOs, C-level and senior executives, who are negotiating new job offers where, in my view, the normal metrics a Gartner or Mercer surveys are just not appropriate for the CEO or C-level executive compensation package, and I am called upon to suggest, design and then lead the negotiations for a custom executive compensation package.

My article first suggests three situations well suited to justify development and deployment of a custom executive compensation package:

• Start-up and early stage company CEOs,
• Turnaround CEO situation, and
• Special needs executive recruitment – where a CEO or C-level executive has special attributes that fill a critical need for the company. 

The article then concludes with my suggestions for how the executive can achieve company “Buy-in” – how do you sell the custom CEO or C-level executive compensation package to a skeptical employer?  This last part shares there of my best “sales” techniques:

• You (employer) want and need an “A” team player and one who will attract more A team players to the company.
• You want alignment and this custom package greatly magnifies alignment, and
• Success for my executive, even with this full custom package, means vastly greater success to the company’s stockholders, often 10x, 15x and even 20x pay back return for the company’s stockholders, if the CEO or C-level executive succeeds in his or her mission, and costs little or nothing if he or she does not succeed.

To see my full IvyExec  article, go to LINK: https://www.ivyexec.com/career-advice/2021/executive-equity-structure/

Or on my website at https://www.executiveemploymentattorney.com/are-you-getting-the-c-suite-executive-salary-you-deserve/

IvyExec hosts articles and webinars from experts in the career, leadership, and business spaces who wish to share their knowledge with our audience.  In April 2021, I was invited to write for IvyExec since it seeks original content on the topics of career development, leadership, and business strategy as it applies to senior-level and C-Suite professionals.  IvyExec blog posts and webinars are shared with its community of more than 2 million members on its website, in its newsletter, and on its social media channels.  https://www.ivyexec.com/career-advice/write-for-us/

IvyExec claims a “Community of 2.5M+ Leaders”.

It is my hope that this article will be of benefit to C-level and senior executives who are considering job offers in situations where a custom executive compensation package of salary, bonus, and equity is appropriate.  Feel free to tweet or share this article. If you or any colleague of yours has a need in this area, please do reach out to me.

Executive Stock Options, Restricted Shares and Restricted Stock Units – What’s Best for You

 One week ago, on Tuesday August 3, 2021, the website Ivy Exec published under “Career Advice” an article I wrote on “Executive Stock Options, Restricted Shares and Restricted Stock Units – What’s Best for You”. 

This new article is designed not only for C-level and senior executives, but even for many directors and mid-level executives, where a major part of executive compensation involves executive equity in the employer company.   This article is intended to assist executives in those negotiations by setting out key things to look for in your equity package, including the level, tax structuring and terms of equity compensation. 

The article discusses the merits and issues among the four main choices for structure of equity:

• ISOs – Incentive stock options, qualified under the tax code,

• Non-quals – Non-qualified stock options,

• Restricted Stock – where you are actually issued shares and might want to make a tax election to take unvested shares into income, and

• RSUs – Restricted Stock Units, where stock is also issued and taxed as it vests. 

My article first discusses where equity might achieve its highest value for you using important favorable tax leverage, and then the level of equity to seek appropriate to your position.  The remainder of my article goes over the different circumstances under which each of the four main equity choices can be beneficial to you, to help you determine which structure is best for you in your case.

To see my full IvyExec Career Advice website article, go to LINK: https://www.ivyexec.com/career-advice/2021/executive-equity-structure/

 Or on my website at https://www.executiveemploymentattorney.com/executive-stock-options-restricted-shares-and-restricted-stock-units-whats-best-for-you/

IvyExec hosts articles and webinars from experts in the career, leadership, and business spaces who wish to share their knowledge with our audience.  In April 2021, I was invited to write for IvyExec since it seeks original content on the topics of career development, leadership, and business strategy as it applies to senior-level and C-Suite professionals.  IvyExec blog posts and webinars are shared with its community of more than 2 million members on its website, in its newsletter, and on its social media channels.  https://www.ivyexec.com/career-advice/write-for-us/

It is my hope that this article will be of benefit to C-level and senior executives who have the opportunity or should have the opportunity to gain an equity stake in the company that their management skills and efforts or helping to build, so that you along with the investors can share in the benefits of that company growth.  This article discusses the merits of the four main choices among equity structures.  Taxation and financial benefits differ among them.  As I tweeted… One size does not fit all.  So, I hope this article will be instructive for you.   Feel free to tweet or share this article. If you or any colleague of yours has a need in this area, please do reach out to me.

Using Career Advancement Covenants to Safeguard Non-Financial Executive Pay

Last month, on May 26, 2021, CEOWorld magazine published an article I wrote on “Using Career Advancement Covenants to Safeguard Non-Financial Executive Pay”.

This new article is designed for CEOs, C-level and senior executives, who, on occasion, may accept less in salary, bonus and equity in favor of non-financial compensation that is sometimes more important. Some of the examples of such non-financial compensation listed in the my article are:

• Assignments in a new field where you have little prior experience,
• Face time with valued contacts,
• Exposure for your work, showcasing your skills in your industry,
• Basing your work in a desired location,
• Access to technology or markets, back license of technology.

The article then highlights two examples of C-level and senior executive clients of mine, who in recent representations chose non-financial compensation to advance their careers, building their resumes for future rewards, the first becoming CFO and Chief Accounting Officer for a company to go public, the other for my client to become a first time CEO.

Finally, my article discusses how, in each case, special covenants and agreement terms were included and are mentioned in my article to assure my clients that either they got the experience or resume value they were seeking or could resign for good reason and trigger severance.

To see my full CEOWorld magazine. article, go to LINK: https://ceoworld.biz/2021/05/26/using-career-advancement-covenants-to-safeguard-non-financial-executive-pay/

Or on my website at https://www.executiveemploymentattorney.com/using-career-advancement-covenants-to-safeguard-non-financial-executive-pay/

This was my 34th article published in CEOWORLD since 2016. Previously, the editor advised that I can use “Featured in the CEOWORLD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.

On its own initiative, CEOWOLRD magazine created on their website a library of Robert Adelson published articles. You can peruse this library and/or read as many of my 34 published articles as you wish. See https://ceoworld.biz/author/robert-adelson/

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who at some point in their career might be considering an opportunity to advance their career that might involve financial sacrifice or other risks and may want to consider review of their executive employment contract to give the best assurance of gaining those career for which a price will be paid. So, my hope is that this article will offer insights on these important matters. Feel free to tweet or share this article. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.

Don’t Let Misalignment in Executive Compensation Create Your Own “Black Sox Scandal”

 Last Wednesday, on March 31, 2021, the day before Major League Baseball’s Opening Day for the 2021 baseball season, CEOWorld magazine published an article I wrote on “Don’t Let Misalignment in Executive Compensation Create Your Own “Black Sox Scandal”.

This new article is designed for CEOs, C-level and senior executives, who may face misalignment in the structuring of their executive compensation, incentive and performance-based compensation.

The article first discusses misalignment as commonly mentioned that can harm the interests of investors, owners and shareholders, where executive compensation incentives revenues and earnings per share that can encourage acquisitions that can benefit CEOs but not add long term value and might actually harm the interests of the investors.

My article then moves to discuss the less often recognized issue of misalignment that can harm CEOs, C-level and senior executives. Major misalignment of executive compensation is discussed in the three circumstances, as follows:

• Added performance targets are set even after liquidity occurs as approved by the investors,
• A major portion of equity is tied to remaining in the position until liquidity occurs, and
• Tying an entire bonus to the achievement of a single fixed objective, where the owners have significant discretion to limit or even eliminate the executive’s ability to achieve that sole objective.

I timed publication of this article to coincide with Major League Baseball’s Opening Day, because the 3rd and last example of misalignment harmful to executives, and certainly one of the most flagrant, was the root cause of the biggest scandal in American sports history, when Chicago White Sox players accepted bribes from gamblers to intentionally lose the 1919 World Series. This “Black Sox Scandal” offers a vivid demonstration how such executive compensation misalignment can harm both executives and players in this case and also the company, owner and other stakeholders (in this case the fans) as well.

My article then ends with recommendations for executives to adopt in their executive compensation negotiations to avoid harm from such destructive misalignment,
To see my full CEOWorld magazine. article, go to LINK: https://ceoworld.biz/2021/03/31/dont-let-misalignment-in-executive-compensation-create-your-own-black-sox-scandal/

Or on my website at https://www.executiveemploymentattorney.com/dont-let-misalignment-in-executive-compensation-create-your-own-black-sox-scandal/

This was my 32nd article published in CEOWORLD over the last five years. Previously, the editor advised that I can use “Featured in the CEOWOLRD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.
See: https://ceoworld.biz/author/robert-adelson/

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.
CEOWORLD magazine | LinkedIn

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who are engaged or will soon engage in negotiations over the terms of their executive compensation, incentive compensation and performance compensation. It is my hope that this article may be helpful to you to avoid executive compensation misalignment potentially harmful to the executive. Feel free to share this article. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.