I am looking for specific information on design considerations and options/practices in developing a long term incentive plan for a privately held company. Any anonymous examples would also be helpful. Your assistance is greatly appreciated!

Dan Walter’s Answer:

I think I can provide some help. This is a bit of a specialty of mine.  First I will need some clarification. “Long-term incentive plan” is a broad term. Do you know if the intent is to provide a cash or equity compensation plan? Some of the design considerations overlap, but many are unique. The resources I have listed below are focused on equity compensation. If you are looking to put a cash-based LTI in place please let me know and I will post additional resources.

Here’s is a link to initial considerations for en equity compensation plan for a private company (free download): http://www.slideshare.net/performensation/performensation-private-co-template-top-11-considerationsemail

I would also be happy to send you a document titled “Equity, Ownership and Related Incentive Compensation Instruments for Private Companies.” It is three pages long and provides an overview of Restricted Stock Shares, Restrocted Stock Units, Phantom Stock, Stock Options (ISO and NQ), Stock Appreciation Rights, ESOPs, Direct Purchase Plans and more.

If you are looking for more detailed information I would recommend “The Decision Makers Guide to Equity Compensation” from the NCEO. It provides detailed information on design, tax, legal and other issues for a wide array of equity compensation instruments. Full disclosure: I am a co-author of this book.

If you would like to provide additional details on your needs I would be happy to provide additional resources.  Of course you can always contact me directly by phone (415)-625-3406 or email dwalter@performensation.com