Pension Meets Profit Sharing: Equity Compensation for Results, Retention, and Retirement

Lorman Education Services

Employers, large and small, struggle to attract, incentivize, retain, and reward employees.

Traditional compensation plans that offer a salary, participation in a 401(k) plan, and access to a medical insurance plan are no longer enough to turn heads. To get and keep the very best, employers have to let employees put skin in the game. When the company is ready to go beyond a company match or a profit sharing feature, it might be time for an equity incentive plan. Equity compensation is not just for executives, employees at every level can benefit from an incentive plan that rewards individual performance, business unit performance, and company performance.

This topic helps employers get familiar with the factors that determine what type of equity compensation plan is right for them and their workforce in order to motivate performance and retain employees. The information also explains how an equity compensation plan with a deferred compensation feature helps employees plan for retirement.

Finally, the material explains the risks created by an equity compensation plan and the complications they can bring to M&A activity.

Learning Objectives:

• You will be able to describe the types of equity compensation plans that public and private companies use to reward employees for company performance.
• You will be able to discuss the advantages and disadvantages of implementing an equity compensation plan.
• You will be able to identify the difference between a company match, a profit sharing feature for a 401(k) plan, and other equity compensation.
• You will be able to recognize the potential impact of an equity plan on mergers & acquisitions.

Faculty: Angela M. Stockbridge, Senior Counsel, Wilkins Finston Friedman Law Group, LLP

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