Join Davis Polk’s Executive Compensation partners Adam Kaminsky and Veronica Wissel, along with Carta’s Chief People Officer Nick Avery, for the third installment of our PE compensation series. This session is a deep dive into the technical and market-driven mechanics of management equity arrangements within private-equity-backed deals.

A well-structured management equity incentive plan is a critical component of any PE transaction, ensuring alignment of the sponsor and the management team from the outset.

The panel will go beyond high-level trends to analyze the specific levers that shape today’s market. Topics will include:

• Management rollover mechanics: Differentiating "true" equity rollovers from reinvestment of proceeds, noting tax implications for C-Corps vs. Partnerships.

• Market standards for rollovers: Analysis of typical rollover sizes and when pari passu treatment with the sponsor is, or is not, standard.

• Incentive pool economics: How pool sizes (typically 8–15%) are set, with a growing preference for tax-efficient profits interests over stock options.

• Vesting, call rights, and leaver scenarios: Addressing consequences of departure, including "Bad Leaver" call rights and the use of "cap and hold" alternatives.

• Restrictive covenants and employment terms: Aligning non-compete/non-solicit periods with equity forfeiture and severance triggers.

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