Whether you are designing a new incentive plan, granting awards with stock return hurdles or renegotiating an employment agreement, there will be complex technical issues that need to be addressed. We can assist with these issues or review your work to make sure nothing was inadvertently overlooked.

Some of the services we can assist with include:

Equity Incentive Valuation

• Monte Carlo simulations for awards that contain stock price hurdles or shareholder returns
• Lattice valuations for stock options to consider exercise decisions
• Black-Scholes valuations for stock options that do not contain additional market conditions
• Barrier option valuations to consider stock price hurdles
• Employee stock purchase plan valuations that consider look-back features

Share-Based Accounting

• Recognition of cost over the requisite service period
• Modifications of awards, option repricings, changes to performance or market conditions
• Recapitalizations, special dividends and corporate transactions
• Impact of accounting rules on proxy disclosure

Executive Compensation Disclosure

• CD&A reviews and drafting assistance
• Tabular disclosure assistance
• Pay versus performance disclosure
  • Determine Compensation Actually Paid
  • Valuations of outstanding awards (e.g., relative TSR awards, stock options)
• Pay ratio determination and disclosure
• Application of the SEC's latest guidance from its Compliance & Disclosure Interpretations
• Assist in replying to SEC comment letters
• Reconcile accounting treatment of equity incentives with disclosure requirements
• Post-termination disclosure including excise tax treatment of parachutes

IRC §280G Parachute Modeling

• Determine potential excise tax implications of change-in-control payments
• Scenario testing of different excise tax strategies
• Valuation of non-compete covenants as reasonable compensation
• Proxy disclosure assistance for existing plans and agreements

Incentive Plan Design, Modeling and Testing

• Target and range setting using statistical, financial and investor expectations analyses
• Review risk and leverage implications of plan design
• Conduct pay-for-performance analyses
• Consider accounting and tax implications

Regulatory, Tax and Governance Issues

• Assistance with Dodd-Frank issues, including:
  • Say-on-pay
  • Clawbacks
  • Pay-for-performance analyses
  • Pay ratio analysis
• Assist with the development of tally sheets and wealth-accumulation analyses
• Review of plan documents for IRC §409A compliance
• Tax treatment of share-based compensation
• Governance issues including ISS modeling and red flags

Litigation Support and Expert Witness

• Consulting and testifying expert witness for litigation or administrative proceedings
  • Reasonable compensation
  • Stock option valuations
  • Valuation of reasonable compensation absent legal obligations to partnership precluding competition
• Shareholder settlement valuations
• See list of experience

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