Long-Term Incentives and Non-Qualified Plans for Privately Held Companies – Trends and Challenges

With Baby Boomers retiring rapidly, companies are focusing on retaining key talent, especially in General and Operations Management roles. Despite only half of Baby Boomers having left the workforce, projections indicate more will follow in the next 5-7 years. The US market has seen steady growth since the Great Recession, prompting businesses to prioritize innovation, flexibility, and human capital management. As variable compensation models gain traction, attention on executive compensation has surged, highlighting the crucial role of long-term incentive programs in attracting and retaining top talent.

The primary vehicle for rewarding executives in publicly held companies is stock, either through stock options or restricted stock. However, stock is not always available in privately held companies. Nonetheless, privately held companies must develop a sound long-term compensation program to attract, retain, and motivate high-quality executives and key managers.

In this guide, we will discuss the benefits of using Long-Term Compensation Plans, as well as the Design, Implementation, and potential Pitfalls of these plans.

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