Syndicate Legal Advisory Services prepares the complete set of documents required for a corporation to adopt an equity incentive plan providing for the grant of restricted stock units — together with the options, restricted stock, and other awards most plans also authorize — and to make the first grants under it, in any U.S. state. A restricted stock unit is an unfunded promise to deliver one share (or its cash value) when the unit vests and settles; unlike restricted stock, the recipient owns nothing until settlement — no shares, no vote, no dividends except as dividend equivalents the plan may provide — and unlike an option, the recipient pays no exercise price and receives full value at settlement regardless of the share price. That structure makes RSUs the preferred award for public companies and later-stage private companies, and it makes two things the central drafting concerns: the timing of settlement, which Section 409A regulates closely (RSUs are deferred compensation unless settled within the short-term deferral period), and the withholding of ordinary income tax at settlement, which a private company without a market for its shares must fund or share-withhold. Private companies also commonly use “double-trigger” RSUs that vest on service but settle only on a liquidity event, so that no tax is due before shares can be sold. Working from the client’s answers to a structured intake and from the corporation’s charter, capitalization records, and valuation, we draft the plan and award documents to satisfy Section 409A and the securities, accounting, and state-law rules that apply, together with the approvals, the share reserve, and the administration tools the corporation will use for every grant that follows. State securities notice-filing fees, valuation fees, and other third-party charges are not included in the flat fee and are the sole responsibility of the client.
Scope of work includes:
Plan design planning and intake — a structured intake and written summary confirming the corporation’s state, charter, authorized and outstanding shares, and capitalization; the size of the share reserve and any evergreen increase; the award types the plan will authorize — RSUs, performance stock units, options, restricted stock, and stock appreciation rights — and the eligible participants for each; the plan administrator and its authority; the vesting design — time-based, performance-based, or both, and, for a private company, whether a liquidity-event condition will be added as a second trigger; the settlement timing and the short-term deferral or compliant deferral structure under Section 409A; the settlement form (shares, cash, or either at the administrator’s election); the dividend-equivalent policy; the treatment of unvested units on termination of service, death, disability, and retirement; the acceleration and treatment on a change of control; the withholding method at settlement (share withholding, sell-to-cover, or cash) and, for a private company, the funding of withholding; the company’s repurchase right, right of first refusal, and lock-up on settled shares; the fair market value determination method; and the securities-law exemption the grants will use.
Review of existing documents — review of the charter and bylaws (including any supermajority or investor-consent provisions on equity plans), the capitalization table and ledger, any existing plan, awards, or promises of equity, the investor-rights and voting agreements that restrict the reserve or require investor approval, the employment and offer agreements promising equity, and prior approvals, with a written summary of the approvals required and the provisions the plan must accommodate.
Equity incentive plan — drafting of the plan in full, addressing: the purpose, definitions, and eligibility; the share reserve, the counting of shares, the return of forfeited units, the share-withholding treatment, and the adjustment for stock splits, dividends, recapitalizations, and other changes in capitalization; the administration provisions and the administrator’s discretion; the RSU provisions — the grant, the vesting conditions and the liquidity-event trigger where used, the settlement date and form, the dividend equivalents, the forfeiture on termination, and the Section 409A provisions governing settlement timing, the six-month delay for specified employees of a public company, the treatment of a change of control as a payment event only where it qualifies, and the prohibition on acceleration or deferral except as the regulations permit; the performance stock unit provisions and the performance-goal and certification mechanics; the optional option, restricted stock, and stock appreciation right provisions; the tax withholding provisions and the methods permitted; the change-of-control provisions — assumption, substitution, cash-out, or acceleration; the market-standoff, repurchase, and right-of-first-refusal provisions on settled shares; the clawback and recoupment provisions; the plan’s term, amendment, and termination; and the governing-law, no-right-to-employment, unfunded-status, and data-privacy provisions.
Award agreements and forms — the form of restricted stock unit agreement and notice of grant, with separate forms for employees and for non-employee directors and consultants, and the double-trigger form for a private company; the form of performance stock unit agreement; the settlement and withholding election forms; the dividend-equivalent election where offered; the deferral election form where the plan permits a 409A-compliant deferral of settlement; and the form of award amendment.
Approvals — the board or compensation committee resolutions adopting the plan, reserving the shares, approving the forms of award agreement, and delegating administration; the shareholder approval where the charter, an investor agreement, exchange rules, or state law requires it; the investor consents required under existing agreements; and the resolutions approving the initial grants.
Valuation and securities-law documentation — the documentation of the fair market value determination used for grant-date accounting and settlement-date withholding, and the coordination of an independent valuation where required; the Rule 701 exemption documentation and the disclosure package required when grants exceed the Rule 701 threshold, or the Form S-8 coordination for a public company; the state notice filings; and the state-law compliance provisions some states require.
Administration toolkit — the RSU ledger and capitalization-table integration, the grant-approval checklist, the vesting and settlement calendar, the settlement and withholding procedures with the share-withholding and sell-to-cover mechanics, the performance-goal certification procedure, the 409A settlement-timing checklist, the Form W-2 and 1099 reporting procedures, the Rule 701 aggregate-sales monitoring, and a one-page summary for the administrator of the steps required for each grant, vesting event, settlement, and termination.
Deliverable: a complete, indexed equity plan file (electronic and hard copy) containing the written summary of the review, the executed plan, the forms of award, settlement, and election agreements, the approvals and investor consents, the initial grant resolutions and award agreements, the valuation support, the securities-law filings, the RSU ledger and administration toolkit, and the compliance calendar, with a signature-ready version of each document for execution by the directors, shareholders, and participants.