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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.
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.
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.