Executive Equity Plan Design
SUMMARY
A Canadian private equity firm, sought to modernize its long-term incentive plan to better align with its growth objectives and ownership philosophy.
INDUSTRY
Asset Management
SOLUTIONS USED
Background
A Canadian private equity firm, sought to modernize its long-term incentive plan to better align with its growth objectives and ownership philosophy.
Southlea was engaged to design a program that would replace an outdated profit-sharing arrangement with a structure that delivers real ownership and competitive value
Challenges
The company desired a plan that balanced multiple priorities: attracting and retaining top talent, aligning participant interests with long-term company performance, and optimizing after-tax value.
Additionally, the organization wanted to promote a capital contribution from all senior employees, while supporting affordability for participants.
Results
Southlea developed two tailored LTIP model alternatives – an Employee Share Purchase Plan and a Stock Option Plan – supported by scenario modeling and market benchmarking.
The recommended designs provided real equity participation, a clear valuation methodology and termination provisions aligned with best practices.
The organization ultimately adopted the stock option plan, supported by a loan to fund exercises, strengthening alignment between leadership and ownership while enhancing competitiveness in the talent market.