Phantom Equity Arrangements And IRS Section 409A

Law360, New York (August 27, 2012, 11:56 AM EDT) -- While stock options made up the lion’s share of equity-based compensation for several decades, recent changes in accounting rules and increasing investor demand for a correlation of pay with company performance have led to a proliferation of performance-based “full-value” incentive awards, most commonly in the form of restricted stock units.

In contrast to actual shares restricted stock, which are forfeitable if they do not vest, restricted stock units represent an unsecured promise from the company to deliver stock (or the equivalent value in cash) in the...
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