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Keeping owners, managers, and stakeholders up to date on issues affecting their businesses.

Reporting Nonqualified Deferred Compensation for Year of Merger or Acquisition

When negotiating a merger or acquisition, reporting the acquired company’s payments of nonqualified deferred compensation (NQDC) or other reportable payments made before closing likely is not one of the key deal terms. However, if the acquiror will require the acquired company to terminate and pay out its NQDC plans before closing, particularly to non-employees (such as independent directors of the acquired company who will not continue with the acquiror), the parties should consider addressing who will be responsible for reporting those payments come tax reporting time.

Staying Single (Member LLC)

This post discusses some of those consequences. In short, the added costs and responsibilities of adding another member should be considered carefully before switching from a single-member LLC to a multi-member LLC.

Specific Types of Equity Compensation: Incentive Stock Options and Non-Qualified Stock Options

Employee stock options are a type of equity compensation that provides the employee with the right to buy employer stock at a specified exercise price at the end of a specified vesting period. The exercise price of a stock option is typically the fair market value of the share of stock at the time the option is granted. The vesting is commonly time-based (or, less often, performance-based). Options are exercisable for a specified exercise period after the option vests, typically for five to ten years.

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