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Meet Stock Ownership Guidelines with Nonqualified Deferred Comp Plans

Many public companies have stock ownership requirements for senior management. Most requirements are expressed as a multiple of salary that often range from one times salary for vice presidents to five or more times salary for CEOs.

This article describes how deferring Restricted Stock Units into a company’s Deferred Compensation Plan can help an executive meet these requirements by eliminating the need to sell shares to pay taxes due upon vesting. The article addresses some of the traditional concerns executives have add with deferring equity awards, and how contemporary DCP plan designs can mitigate these concerns

By deferring RSUs an executive does not need to sell 40% of the award upon vesting to cover tax bills. This allows stock ownership guidelines to be more easily met.