Let’s take a break from worrying about the global pandemic to check on the health of your equity incentive plan. While we recommend that clients conduct a checkup every year, it is even more important when the economy is less stable.
The following outlines some of the best practices in reviewing equity incentive plans maintained by privately held companies. Publicly traded companies should engage in the same exercise, but are advised to consider slightly different issues in light of the impact of Institutional Shareholder Services (ISS) and/or Glass Lewis, securities regulations, and listing requirements.
Review delegation provisions in the plan document to confirm that the document is consistent with your company’s practice. Has the Board of Directors delegated authority to a committee or individual? If so, was that delegation lawful under corporate law?