Spring 2016 issue of Horizons

LIFE SCIENCES & TECHNOLOGY

Obtaining Top Talent with the Help of Equity Compensation Plans by Jason Mannello, CFA, CLP

W hen it comes to talent, both mature and emerging companies face challenges: ∙ Aligning employee performance with company vision

compensation is owed. The IRS defines equity compensation as including “any compensation paid to an employee, based on the value of specified stock…” To put it simply, equity compensation supplements or replaces cash based compensation. It is typically utilized for executives and key personnel within an organization. Equity compensation can be stock options, restricted stock, restricted stock units, phantom stock and stock appreciation rights. Deferred compensation plans, incentive (also called qualified or statutory) stock option plans and non-qualified (or non- statutory) stock option plans are also forms of equity compensation.

∙ Improving employee retention

∙ Attracting and compensating top talent

Equity compensation can help, at least in part, in attracting, retaining and incentivizing talent. Explaining Equity Compensation Equity compensation, also known as equity- based or share-based compensation, is compensation in the form of or tied to the performance of ownership interests.

Typically, ownership interests are in the company receiving the service for which

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