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Equity Compensation Structures for Venture-Backed Companies Post-Enron
Equity compensation structures at venture-backed start-ups and other private companies have followed a standard pattern for many years ' restricted common stock or time-vested common stock options. The traditional principal structuring considerations for employee equity compensation have been business incentives, accounting impact and tax minimization. Although significant accounting changes have occurred over the last couple of years and perceptions have changed with respect to non-cash compensation, little has changed in equity compensation structures. That is unlikely to continue to be the case, with increasing awareness among sophisticated entrepreneurs and managers of the potential adverse impact on their equity from down-round pricing and deal structures such as multiple liquidation preferences.
Companies and their employees are beginning to explore alternative structures that afford some protection from these events. Among these structures are a) performance-based option vesting tied to achievement of individual or company-wide goals, b) options in which the number of shares varies depending on the return outside investors receive in a liquidity event, c) “make-whole” guarantees entitling the employee to a cash payment on a liquidity event hypothetically linked to a deemed conversion of preferred equity, with or without a minimum percentage equity guarantee, d) options on preferred stock, and e) acquisition/IPO cash bonus pools.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.