Equity As Part of Compensation
With LLCs, the operation agreement can define different shares for different kinds of income or equity, and different partners may be treated differently. In essence, you can end up with a different stock class for each partner/member. So you need to read the grant document and the OA really carefully to know what you're getting. You may want to have a lawyer read through it for you. This may be way more complicated than classes of shares in a corporation. At the most basic level, the employee is getting a share of ownership in the company and would get a percentage of the sales price. That said, as littleadv alluded to, different share classes have different priorities and get paid in different orders. In a bankruptcy, for example, some classes almost never get paid in practice because they are so far down the ladder of priority.  The first step you should take would be to try to clarify what you are getting with the company itself. Failing that, contact a financial professional or an attorney in your area who can read the terms and give you a better understanding of the contract before you sign.
It looks like the interest rate on bonds from 1995 is at least 1.41%. If it is from the earlier part of the year, the interest rate is 4%. Even if it is the latter, I'd say it is worth keeping, although you could likely do better in a CD, it would lock your money up. I'd consider it a part of my bond allocation in my investments and up the equity a little. You can use this link to get actual prices and interest rates: http://www.treasurydirect.gov/BC/SBCPrice Is my understanding correct? It's actually higher than that - he exercised options for 94,564 shares at $204.16 and sold them for $252.17 for a gain of about $4.5 Million.  There's another transaction that's not in your screenshot where he sold the other 7,954 shares for another $2 Million. What do executive directors usually do with such profit?  It's part of his compensation - it's anyone's guess what he decided to do with it. Is it understood that such trade profits should be re-invested back to the company? No - that is purely compensation for his position (I'm assuming the stock options were compensation rather then him buying options in the open market).  There generally is no expectation that trading profits need to go back into the company.  If the company wanted the profits reinvested they wouldn't have distributed the compensation in the first place. Accenture has several levels of partner. I'd be really surprised if it topped out at 250k because that's not very much even for a public company and also doesn't fit with the lifestyle of a few partners. I googled around a bit and there was an AMA on (of all places) reddit about a year back from somebody claiming to be a partner at Accenture, who reported 300k for a new partner, up to 1M+ for more senior ones (excluding equity) which actually sounds more reasonable to me.   Second observation: higher partner compensation does not systematically imply higher bill rates. Private companies doesn't pay dividends, for example, and partner compensation is not the only expense. Bankers in public banks can make that much and none of them are partners - viz. UBS &amp; co. (performance-based bonus at Accenture for non-partners - and Senior Executives are not necessarily partners - can reach 20k, no problem. Hell, a consultant might make almost that) Well, reserve requirements concern, as the name suggests, the reserves, e.g. a position on the balance sheet. The price of equity only marginally impacts the balance sheet (via positions in their own stock), not nearly strong enough to be significant. The French banks mainly had trouble with liquidity (this year we witnessed another collapse of the interbank lending market just as in 2007. watch the Libor-O/N-spread.) and solvency through deterioration of the asset side of the balance sheet.   Naturally your ability to raise additional equity is influenced by the historic return of your stock, but sharp price drops in fact can help you to raise equity, simply because your ratios improved (P/E, P/B, in fact any ratio that includes the price part) and the stock became cheaper. See UBS/Singapore GIC and GS/Warren Buffet "IANAL, but no, this is not sound legal advice. There are a few things that stick out to me as fishy. First off: you are calculating the 3% safe-harbor on the 2017 compensation limit of $270k, but limiting yourself to $53k in total contributions which is the 2016 limit. It's hard to tell what tax year you're working in here. If you're planning for 2017, fine, but if you're wrapping up 2016 then you need to use 2016 limits. Secondly (and this is something I think your counsel should know already): you don't take Employer contributions out of gross wages (box 1) on the W-2. They aren't even reported there in the first place! With your base scenario the 2 employees' W-2s would look like this: Employee A's W-2 Gross Wages (box 1) = 280,000 - 14,966.67 = 265,033.33 Employee B's W-2 Gross Wages (box 1) = 280,000 - 0 = 280,000 Elective deferrals are the only thing that should come out of wages. Not the SH 3% or Match. Thirdly: Retirement Plan expenses really aren't an ""above the line"" expense. They are not included in cost of goods sold. Even if you establish a ""pool"" for that expense, it's still not a direct cost attributable to the production of whatever your company sells. Also: Employee B should not have to contribute to the retirement account of Employee A! The only situation I can see where Employee A and B would be required to fund the match equally, were if Employee A & B are both 50% owners and the company has no funds of its own with which to fund the match. The company has obligated itself to fund the match, and if the company doesn't have any money then the money still has to come from somewhere (ie. the owners pony up more funds for the match they promised their employees, it just happens that the employees are also the owners). Even in this situation though, I still stand behind my first 3 points." This really comes down to tax structuring (which I am not an expert on), for public companies the acquiror almost always pays for the cash to prevent any taxable drawdown of overseas accounts, dividend taxes suck, etc.  For a private company, first the debt gets swept, then special dividend out - dividends received by the selling corporate entity benefit from a tax credit plus it reduces the selling price of the equity, reducing capital gains taxes. The reality is that for labor is cheap for software startups. A couple of founders can usually take a prototype to the point where they can get the seed capital to hire labor at market rates, so why would they give up significant equity to employees? Plus, if they need cheap employees, there are always contractors and naive new grads who will gladly take below-market salary for 0.1% of the company. (in options, vested over four years, of course) So thinking on this a little more, I guess it's not completely cut and dried. For example, if the sales position was commission only, a bonus might be a way to ensure the sales team earn a base minimum income. This would allow them to have some level of comfort that they would be able to meet financial obligations like mortgages, kids school etc.