The McGuire Law Firm encourages business owners to think beyond traditional compensation plans for its employees when appropriate and possible. The business may flourish when the employees benefit from its success and feel vested in its future. Many business owners, however, want to maintain complete ownership of their entity.
Our business attorneys can assist your business with a few different options, including giving an employee a bonus based on the business’ appreciation. The employee does not receive stock in the entity, but the business must decide when to grant this additional right, when to cut-off this additional right, and how to make payment.
Another option includes a performance share plan. This plan provides the employee incentive based on a certain measure, like gross or net profits. Furthermore, the business maintains more flexibility on timing the expiration date and of the business’ ability to redeem the employee’s rights under this type of plan.
Another plan to motivate employees includes a performance unit program, in which the employees receive units of a specific dollar value. As the business meets performance targets, the units vest. The business then pays the dollar value of the units in cash. Performance indicates the unit value, which the business establishes and does not fluctuate with the business’ share value.