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Lawful Citizen

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  1. Agreed. Unfortunately, at this stage, it is not even clear that the company is going to honor what they offered Jane to entice her to join. I'm hoping it doesn't end up becoming a cautionary tale like many others.
  2. Thanks EBECatty! 1. The definition used for change of control appears to be in alignment with 409A 2. Correct, payment would only be triggered on change of control, period. 3. Thank you for highlighting this aspect
  3. Hi everyone, great to be here and apologies in advance if I haven't put this question in the correct place. I'm trying to provide a family member with some guidance on a compensation issue they are having with their employer. The short background is that my family member (who I'll refer to as "Jane") has played a key role in building a company from $0 to a significant current day value. Because of early-stage company challenges, it never executed Jane's equity agreement when she first joined the company. Because she generally operates in good faith, she didn't push for the issue to be dealt with (until now). The company is now proposing a change of control bonus (% of sale proceeds) to fix the situation. Jane is receiving conflicting information on the following aspects of the agreement and I'd appreciate any thoughts on these issues - 1. Does Jane need to be actively employed by the company when it sells for any 409A or other tax/compliance reasons? Technically she would have already 'vested' the right to this bonus if it were equity and so doesn't seem right that she be held hostage for an unknown amount of time for something she has technically earned/vested. 2. Given that there is some possibility she may not be at the company when it sells (let's say in 3-4 years), does this have the characteristics of a top hat agreement and therefore touch on ESIRA? 3. Are there any other concerns/considerations from a tax, compliance or other perspective that she should be considering?
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