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Non-Equity Based Compensation Plans

Building Comprehensive Non-Equity Compensation Plans

Our most successful clients use well-crafted, non-equity based compensation programs to attract and retain top talent.

We can successfully provide any non-equity compensation program you may need.

After nearly 30 years of focusing strictly on employee benefits law, we can quickly assess employers' needs and work smoothly with their other advisors to design, document and implement executive compensation programs that are tailored to their needs, including:

  • Nonqualified deferred compensation—elective, nonelective or both.
  • Supplemental executive retirement plans (SERPs).
  • Change in control/severance arrangements.
  • Financing arrangements using rabbi trusts.

Starting with Your Goals

We start by listening to what you're trying to accomplish with any program, then build a custom program to achieve your goals. Plans can use a wide range of design features, limited only by certain statutory and regulatory rules. Some common options include:

  • Simple vesting schedules or complex vesting schedules based on performance factors (e.g., tied to EBITDA).
  • Class year vesting, where each year's deferred compensation is subject to its own vesting schedule.
  • Possibility of forfeiture for violation of anti-competition provision or termination for cause.
  • Single-sum distributions or installment distributions, with or without participant elections.
  • An ability to treat each participant differently at the employer's discretion under a single-plan document.

The Value of Experience

Our experienced team knows the pitfalls that any non-equity program may face and how to avoid them. Some of these challenges include:

  • Code section 409A compliance.
  • Determining if the plan is an ERISA "pension" plan and must be limited to the "top hat" group.
  • Code section 280G "golden parachute" penalties.
  • Reasonable compensation concerns for corporate governance.
  • Deductibility of benefit payments.
  • Employment tax issues.

Work with an experienced team to help you ensure the best outcome for your non-equity compensation programs.