Equity Compensation for Limited Liability Companies (LLCs), 2nd ed.

For many years, the most common advice on sharing equity with employees in a limited liability company (LLC) has been "switch to S corporation status instead." The argument was that it was too complicated to share equity in an LLC. Yet many LLC leaders want to share equity with employees and have very good reasons for retaining their company's status as an LLC. When we at the NCEO asked experts in employee ownership law if it were possible to share equity in an LLC, the usual response was "yes, but it is complicated."; No one seemed to want to go into too much detail about just what these complications were, however.

This book finally makes detailed material available on equity compensation in LLCs. It not only explains all the issues around LLC equity compensation but also includes a set of sample plan documents in digital format.

In the second edition, the book has been substantially revised and expanded. The chapter on equity interests in LLCs was completely rewritten and expanded by a team of experienced attorneys. The same team replaced the single plan document in the first edition of the book with a new, complete set of plan documents. Additionally, chapter 6 has been added, discussing communicating with employees about equity. Finally, the chapter on accounting has been updated.

Teresa Y. Huang is an associate in the Napa, California, office of Jackson Lewis LLP. David R. Johanson is a partner with Jackson Lewis LLP, with offices in Napa and Los Angeles, California. Samuel W. Krause is of counsel with Jackson Lewis LLP in Los Angeles, California. Rachel J. Markun is a partner in the Napa, California, office of Jackson Lewis LLP. Alan A. Nadel is the managing director of Strategic Apex Group LLC, a compensation consulting firm with offices in New York, London, and Los Angeles. Monica R. Patel is an associate in the Los Angeles, California, office of Jackson Lewis LLP. Corey Rosen is the founder and former executive director of the National Center for Employee Ownership (NCEO) and now is its senior staff member.