Employee Stock Option Plans & 409A Plans

Selling company stock to employees through an Employee Stock Option Plan (ESOP) offers unique benefits to business owners. ESOPs, when properly structured, can provide business owners with unique opportunities for succession, estate planning, shareholder liquidity, raising tax deductible capital, enhanced cash flows, and defer capital gains taxes on the sale of equity under certain design scenarios. It is also an excellent way to compensate employees, enhance employee retention, and motivate employees to contribute to the company’s growth and success.

Similarly 409A Deferred Compensation Plans provide companies with an opportunity to provide employees with incentives, performance rewards, and company loyalty.

In each case there are strict IRS and ERISA rules which have to be followed in order to have these plans  and their respective appraisals qualify under these rules and avoid tax penalties.

Accredited Business Appraisals can assist business owners considering an ESOP or 409A Plan with the following:

  • Provide initial education on potential ESOP & 409A structures and goals and objectives.
  • Providing transaction structure advice and assist in the design of ESOP 409A securities.
  • Prepare preliminary valuation opinions to support various ESOP and 409A feasibility designs.
  • Create working models to assist in the design of key executive incentive plans.
  • Provide required periodic update valuations.