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Course Details

Course Information
  • smart_display Format

    Live Online with Live Q&A

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Commercial Law

Date & Time
  • event Date

    Wednesday, June 4, 2025

  • schedule Time

    1:00 PM E.T.

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will discuss the issues relating to the compensation of target management teams in the context of private equity M&A transactions. The panel will address structuring equity-based incentive plans, restrictions on incentives, vesting and forfeiture based on employment status, distributions, repurchase rights, monetization events, and general tax considerations.

Faculty

Sarah McLean
Partner
Willkie Farr & Gallagher, LLP

Ms. McLean is a leading private equity lawyer with over 20 years of experience advising private equity funds and management teams on sophisticated and high-profile deals across the energy sector. Her practice focuses on private equity transactions, particularly portfolio company investments, acquisitions and divestitures of assets and companies, and joint ventures. Ms. McLean has been recognized as a leading dealmaker and influential woman in the energy sector. In 2023, she was recognized by The Deal as a “Top Women in Dealmaking” for Private Equity. She also serves on the Private Equity Editorial Advisory Board for Law360.

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David B. Zelikoff
Partner
Morgan, Lewis & Bockius - Philadelphia

Mr. Zelikoff represents and counsels clients in a range of matters related to employee benefit plans and executive compensation agreements. He advises on the design and implementation of tax-qualified, nonqualified deferred compensation, equity compensation, and health and welfare plans, and he helps clients draft and negotiate executive employment agreements, severance arrangements, and change-in-control arrangements. In mergers and acquisitions and other major transactions, Mr. Zelikoff helps negotiate employee benefit and equity terms and advises on the application of Section 280G of the IRC. He also works with public companies in connection with the disclosure and approval of their equity and executive compensation programs, including issues related to Section 162(m) of the IRC.

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Description

Management teams play a critically important role for the target in M&A transactions and buyers (especially financial buyers) often view management team continuity after closing as a key component of the deal. The terms and structure of incentive compensation plans vary depending on the structure of the target and the buyer's prior practices and are often driven by tax considerations.

Some common incentive equity structures include profit interests, options, phantom equity, and restricted stock grants. These various arrangements have different tax treatment and different treatment for purposes of receiving dividends and distributions. In addition, incentive equity grants are often subject to vesting and performance thresholds and to repurchase rights on termination of employment.

When structuring incentive plans, M&A and management counsel must be aware of the key issues involved with each type of compensation structure including the type of equity or other compensation, vesting and forfeiture conditions, the timing and amount of distributions, monetization events, repurchase rights, and tax considerations.

Listen as our authoritative panel outlines common ways for structuring management incentive plans and provides practice tips for negotiating the terms of these agreements.

Outline

  1. Overview of management incentive compensation plans
  2. Equity-based incentive plans
    1. Rollover equity
    2. Incentive equity
  3. Cash bonuses and other alternatives
  4. Vesting and forfeiture based on holder's employment status
  5. Distributions: timing and amounts
  6. Repurchase rights
  7. Monetization events
  8. General tax considerations
  9. Key takeaways

Benefits

The panel will discuss these and other relevant issues:

  • What are the key factors for determining what employees in the target company will be entitled to incentive compensation?
  • What are the different types of equity compensation and what are the advantages of each?
  • What are some of the common limitations on distributions of incentive equity?
  • When is time vs. performance an appropriate benchmark for vesting of incentives?
  • What are the general tax considerations with regard to management incentive plans?