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descriptionIssue Brief Posted on: 2/28/2024
DEMYSTIFYING THE DLOM: DISCOUNTS FOR LACK OF MARKETABILITY FOR POST-VEST HOLDING
REQUIREMENTS
Josh Schaeffer, PhD David Outlaw
Post-vest holding requirements on equity awards, and the discount for lack of
marketability that often accompanies such requirements, have become a common
feature of the equity compensation landscape. Our experience and anecdotal
evidence indicate that up to 10% of S&P 500 companies have such a restriction
for their executives.
In this issue brief, we explore how and why post-vest holding requirements are
built into a compensation program, when a valuation discount is allowed, and
some popular and commonly accepted methodologies to estimate a discount.
Download This Issue Brief
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Learn more about the FASB’s proposed improvements to fair value guidance for
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PROS AND CONS OF POST-VEST HOLDING PERIODS
Post-vest holding periods are a way to tighten alignment between executive and
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THE CURIOUS CASE OF MARKETABILITY DISCOUNTS ON PROFITS INTERESTS
Why do profits interests receive a valuation discount for lack of marketability
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