Securities,
Corporate
Apr. 17, 2013
Restricted stock units present high wire act for companies
Internal Revenue Code Section 409A governs these, and severely limits the ability of issuer to peg vesting to liquidity events like licensing deals or initial public offerings.
As timelines for liquidity have extended, as tax rates have increased, as deferred compensation has become a four letter (or number) word known as 409A, and as employees reach for guaranteed payouts in the face of 3-year boom/bust cycles, everyone wants a perfect equity compensation solution. For the last three years, people have been asking whether restricted stock units (or RSUs) are that solution. The answer: It really depends on who is asking the question.
The original impetus...
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