Private companies seeking to grow their businesses compete for the same talent as their public company counterparts. Many of these private companies have therefore turned to long-term equity incentive compensation to attract and retain key talent. While some provisions of private company equity plans mirror the provisions in public company plans, in the private company context, equity compensation raises special concerns.

The success of any equity incentive plan depends on the company designing a plan that can achieve its objectives. The company should consider:

See Practical Law's Standard Document, Equity Incentive Plan (Private Company) for a sample plan providing for grants of stock options, restricted stock and restricted stock units. This Standard Document contains drafting notes addressing the unique issues that private companies should consider when drafting their plans.