Cash Awards: A Solution to Equity Award Challenges?
We are often asked whether some of the difficult tax and legal issues associated with granting equity awards could be avoided by granting cash awards instead. The answer to this question is not straightforward - it depends on which particular issues are under consideration and the applicable company's priorities.
In some cases, a cash award may avoid some of the complicated issues that are associated with equity awards, but in other cases a cash award may not avoid such issues and may in fact trigger different issues.
This paper summarizes the considerations for granting cash awards and explains how such awards may or may not address the challenges associated with equity awards.