Orosur Mining Inc. H1 2017 Risultati: 3.7M profitto, 7.0M di cassa operativo e Nuova San Gregorio UG miniera messo in produzione 16 gennaio 2017 02:35 Eastern standard Tempo SANTIAGO, Cile - (BUSINESS WIRE) - Orosur Mining Inc. (Orosur o la Società) (TSXAIM: OMI), il produttore d'oro sudamericano incentrato, sviluppatore ed esploratore è lieta di annunciare i risultati per il primo semestre del suo esercizio 2017 (H1 17) e il secondo trimestre terminato il mese di novembre, 2016 (Q2 17 o trimestre) e un aggiornamento delle sue attività di esplorazione e sviluppo in Uruguay. Il San Gregorio occidentale della metropolitana (SGW UG) miniera iniziata la piena produzione dal cantiere d'abbattimento inaugurale il 24 novembre 2016 Progetto completato il budget e nei tempi previsti a seguito di una transizione sicura ed efficiente delle attrezzature e del personale da Arenal Edilizia inclusi oltre 883m di sviluppo orizzontale e circa 663 milioni di tamponamento perforazione del diamante da 13 fori sotterranei che comprende la maggior parte delle zone di essere estratto all'interno del piano FY17 SGW miniera esistente Un ulteriore 90.000 tonnellate a 1.4 GT Au non precedentemente nella miniera a pianta sono state prodotte in Arenal UG mia prima del suo previsto chiusura alla fine del Q2 17, rinviando la produzione di grado superiore da SGW UG produzione per il trimestre 6852 oncia è stato, come precedentemente guidata, influenzata dal passaggio da Arenal UG alle nuove miniera di cassa trimestrale i costi operativi SGW UG erano 914 once, in linea con le aspettative (Q2 16: 858 once) Guidance per l'esercizio 17 rimane 800 a 900 once ulteriore sviluppo investimenti legati alla contruction della miniera SGW UG in Uruguay ha provocato All-in-sustaining costi (AISC) per il trimestre 1345 once (2T 16 : 1095 once) transizione da Arenal UG alla nuova miniera SGW UG ha portato ad un aumento degli investimenti di capitale (capex) a 3.8M (Q2 16: 0.9M) di cassa generato dalle operazioni è aumentato in Q2 17 a 2.2M (Q2 16: 0.9 M). saldo di cassa totale alla fine del periodo di 5.4M, è aumentato da Q1 17: 5.0M, e FY 16: 4.3M Q2 17 L'utile netto dopo le imposte di 0.9M (Q2 16: perdita di 0.9M) Prezzo medio dell'oro per il trimestre è stato di 1.252 oz (Q2 16: 1100 once) esplorazione di perforazione dentro e intorno alla zona di San Gregorio UG ha dato risultati positivi, si intersecano con successo mineralizzazione oro in ogni buco, che si prevede di migliorare in modo significativo l'economia delle miniere e aumentare le riserve e le risorse nel breve e medio termine . Ulteriori perforazione è in corso Durante H2 FY17, la Società prevede di accelerare l'esplorazione di obiettivi a cielo aperto in tutto l'impianto di San Gregorio, dopo aver ricevuto diversi permessi e di perforare sette fori RCDD (1.600) nel corridoio Arenal-SG per verificare la presenza di quello che potrebbe essere un relativamente grande deposito In Colombia, l'azienda sta mettendo a punto un modello geologico del suo progetto oro progetto di alta qualità Anz per determinare il potenziale esplorativo con l'assistenza di miniera Development Associates (MDA) di Reno, Nevada. I risultati di questo lavoro dovrebbero essere annunciati a breve Ignacio Salazar, CEO di Orosur, ha dichiarato: Operazioni restano sani e redditizio, con 7M di cassa generato nella prima metà del nostro bilancio 2017. La transizione di successo a San Gregorio UG come Companys fonte primaria di alimentazione del minerale alla pianta in Uruguay, è stato un risultato significativo per Orosur. La miniera SGW UG ha iniziato con successo la produzione dal suo primo cantiere d'abbattimento, il 24 novembre in tempo e nel budget. La transizione, ha raggiunto in un modo professionale di sicurezza, rappresenta una significativa realizzazione tecnico-operativa e sono soddisfatto della capacità tecnica e l'esecuzione dimostrata dal nostro team. E 'stato finanziato interamente con il flusso di cassa operativo aiutato dal trasferimento efficiente di attrezzature e personale tra i due miniere in sotterraneo. In parallelo, più attivo e aggressivo lavoro di esplorazione in Uruguay sembra avere un buon likelikood di valorizzare il progetto di metropolitana di San Gregorio e avanzando progetti a cielo aperto in tutto l'impianto. In Colombia, stiamo facendo buoni progressi nella interpretazione geologica e modellazione del nostro progetto oro di alta qualità Anz e aspettiamo di essere l'aggiornamento del mercato a breve. amp operativa rendiconto finanziario 1 1 I risultati si basano su IFRS e sono espressi in dollari USA 2 Prima di movimenti di capitali non monetari di lavoro costo di cassa operativo 3 è totale royalties costo di attualizzazione e imposta sul capitale delle attività di produzione. Q2 17 Operazioni e Sviluppo SGW Q2 17 produzione era 6.852 once d'oro, rispetto a 8.172 once in Q2 16. La riduzione è dovuta alla realizzazione del piano strategico già annunciato nel mese di luglio 2015, in risposta all'ambiente prezzo dell'oro basso. Inoltre, in questo trimestre, la società transizione dal suo funzionamento sotterraneo Arenal alla nuova miniera a San Gregorio, che ha portato in produzione trimestrale inferiore, come annunciato in precedenza e guidato. La Società ha definito ed elaborato ulteriori 90.000 tonnellate di classificazione 1,4 gt dalla Arenal UG, che non erano in precedenza nella miniera-piano o di riserva di base. L'assenza di costi di sviluppo e il mio fortificazione a Arenal nelle sue fasi finali ha permesso l'estrazione economica di minerale con gradi inferiori. A breve termine, questo ha rinviato gradi superiori precedentemente previsti per Q2 17 per il futuro, ma la gestione ritiene che sia economicamente positivo per la Società nel medio e lungo periodo. La costruzione della miniera SGW UG è stato completato in tempo e budget per consentire prima produzione cantiere d'abbattimento per iniziare il 24 novembre. Lo sviluppo comprendeva un totale di 883 m di sviluppo orizzontale, così come la perforazione di un camino di ventilazione 103 m. Il lavoro di sviluppo di ventilazione è stato condotto da imprenditore peruviano, Tumi, con un 3,1 m di diametro rilancio piralide. La tecnologia rilancio Borer è stata scelta per svolgere il lavoro condotto di ventilazione a causa della sua produttività, affidabilità e vantaggi di costo. Nel corso del trimestre, per un totale di 13 fori diamantati sotterranei sono stati perforati, pari a 663 m di perforazione tamponamento in SGW UG. Questa campagna di perforazione è stato progettato per consentire una valutazione più thourough della geometria e il grado del corpo mineralizzato livelli da 35m fino a -5m, entrato in produzione alla fine del Q2 17 e comprende la maggior parte della linea in FY 17 produzione da la miniera SGW UG. Q2 17 rendiconto finanziario dei costi operativi di cassa media erano di 914 once, rispetto alle 858 once in Q2 16. Come già annunciato, l'azienda aveva precedentemente preventivato e attesi più elevati costi unitari in Q2 17, a seguito dello spostamento del proprio personale e le attrezzature di metropolitana dal l'operazione Arenal UG nei suoi ultimi mesi di produzione per la nuova miniera SGW UG. Nel corso del trimestre, l'azienda ha investito 3.8M in capex e 0.6M in esplorazione rispetto a, rispettivamente, 0.9M e 0,7 M, in Q2 16. Nel corso Q2 17, la società ha aumentato il suo investimento nella costruzione della rampa SGW UG e l'accesso e finalizzato la costruzione del pozzo di ventilazione. Inoltre, la Società avanzato la costruzione della 4A fase diga sterili. A partire dal risultato del capex addizionale, AISC erano 1.345 oncia rispetto ai 1.095 once in Q2 16. Il prezzo medio dell'oro realizzato per il trimestre è stato 1.252 once (Q2 16: 1.100 once). L'utile ante imposte del trimestre è stato 1.0M rispetto ad una perdita di 0.9M in Q2 16. L'utile netto dopo le imposte è stato 0.9M rispetto ad una perdita di 0.9M in Q2 16. Il flusso di cassa operativo prima di lavorare variazioni di capitale è stato 2.2M rispetto a 0.9M in Q2 16. da inizio anno il flusso di cassa operativo prima delle variazioni di capitale circolante era 7.0M rispetto al 1.1M per l'anno precedente a causa di miglioramento della performance operativa e maggiori ricavi. Il saldo di cassa alla fine del trimestre è stato 5.4M rispetto a 4.3M al 31 maggio 2016. Il saldo del debito Companys è stato 0,2 M rispetto al 0.4M al 31 maggio 2016 relativa a contratti di locazione di attrezzature minori. FY17 Outlook amp Guidance Il Companys guida previsioni di produzione per il FY17 rimane tra 35.000 a 40 mila once di oro a costi di cassa operativi compresi tra 800 - 900 once Come in passato, si prevede variazioni dei costi di produzione e unità a verificarsi, su base trimestrale, il piano di miniera attinge da diverse fonti a gradi variabili, stadi di sviluppo e dei fattori di stripping. Come già annunciato, la Società ha sostenuto maggiori costi unitari in Q2 17 a causa della transizione dalla Arenal UG alla miniera SGW UG, che dovrebbero diminuire gradualmente durante il resto del FY17 Companys. Uruguay sotterranei progetti di esplorazione - potenziale di espansione significativa del SGW UG miniera di SGW UG è una continuazione, in profondità, il San Gregorio deposito storico a cielo aperto che ha prodotto circa 536,000 oz a una media di 2,12 gt. Durante FY17, la Società intende aggiungere riserve ed espandere i potenziali operazioni SGW UG entro tre progetti sotterranei vicini. Questi progetti sono il San Gregorio Oriente metropolitana, SGW UG estensione profonda e la zona di San Gregorio della metropolitana centrale. Gli ultimi due progetti riguardano settori che non sono stati precedentemente considerati nei piani minerari SGW UG e rappresentano nuove opportunità con un forte potenziale di risorse a breve termine e riserva delineazione. Una campagna completa e vasta di perforazione è attualmente in corso a San Gregorio. Durante FY17, per un totale di 9,000m di foratura sono previsti, al fine di confermare e aumentare le riserve ed estendere la miniera SGW UG. Alla fine del quarto, alcuni 4,250m sono già stati perforati, con risultati positivi. Per visualizzare un PDF completo del rilascio con le immagini, cliccare qui. San Gregorio centrale (SGC) Un nuovo mineralizzate Area nel Nucleo di SG Nuove risorse vengono scoperto a San Gregorio centrale che dovrebbero avere un impatto positivo sull'economia del progetto SGW UG. San Gregorio Central è una continuità orientale della corrente SGW UG mineralizzato minerale corpo. Un totale di dodici fori (2,252m) sono stati perforati nella zona. Dieci di questi dalle stazioni della metropolitana di perforazione (1,514m) e due dalla superficie (738m). Tutti i fori fino ad oggi hanno gradi intercettate considerato al momento di essere mineralizzazione economica. Le ultime cinque buche (1,381m) sono stati perforati durante il Q2 17 e le loro intercettazioni minerali sono riportati di seguito. Q2 17 intercettazioni da sottoterra: Il potenziale di delineazione di nuove riserve in profondità sotto SGW UG foratura per una più profonda estensione mineralizzato del corpo di San Gregorio occidentale UG è attualmente in corso. Un potenziale orebody è stato provvisoriamente definito da due storicamente forato fori e allo stato attuale, un foro destinate a una profondità di 450 metri è in corso. Si prevede che questo foro intercetterà corpo mineralizzata in profondità circa 400m. Un altro buco 450m è prevista durante il Q3. Uruguay Open Pit progetti di esplorazione La strategia di produzione che ha lavorato con successo per la Società per gli ultimi 4 anni, è composto da un nucleo miniera sotterranea che fornisce 50 - 70 del minerale alla pianta, integrato con la produzione da uno o più pozzi vicino mare aperto. L'alimentazione minerale cielo aperto offre una maggiore flessibilità operativa e consente la metropolitana per essere meglio ottimizzato con un design più rigido guidata da efficienze operative. Come parte di questa strategia, la società sta accelerando una campagna aggressiva per identificare e valutare nuove riserve suscettibili di diffusione tramite i metodi di miniere a cielo aperto, che possono essere velocemente rintracciati e inseriti nel suo piano di produzione a medio termine. Per visualizzare un PDF completo del rilascio con le immagini, cliccare qui. Allo stato attuale, la superficie per ha definito riserve per un valore 5.389 once (65,010 tonnellate 2.58 gt Au). Esplorazione ad oggi ha incluso la perforazione di 110 fori circolazione inversa (RC) di perforazione pari a 8,974m di trivellazione, di cui 64 fori intercettato mineralizzazione. Come parte di una strategia in corso per meglio valutare la fattibilità tecnica ed economica di questa mineralizzazione, quattro fori diamantati supplementari pari a 313m sono stati perforati nel corso del trimestre con conseguente seguenti intercettazioni: Prossimi passi nella campagna comprendono la perforazione di 120 fori Pantera poco profondi ( 1800 m) per il resto del corrente anno fiscale. Il cielo aperto Veta Rey ha prodotto alcuni 18k once nel corso degli ultimi due anni. Nel corso del trimestre, l'esplorazione prosegue verso l'estremità meridionale della corrente fossa Veta Rey, dove esistono forti indicazioni di continuazione del corpo mineralizzato. Un'estensione iniziale del pozzo viene definito e qualche 900m supplementari, per un totale di 12 fori RC, sono previsti per il Q3 con l'obiettivo di riserve ulteriormente in crescita. Los Naranjos è la naturale continuità di nord-ovest della orebody Argentinita. Argentinita Zapucay è una zona mineraria si trova a 27 km a sud-est dello stabilimento di San Gregorio con circa 100.000 ml di produzione storica. A seguito della recente approvazione del suo permesso di ricerca in Q2 17, una campagna pantera perforazione di 1500 m insieme a 500m di RCDD di perforazione sono in programma per testare le destinazioni disponibili durante la Q3. Il Sobresaliente dominio La società possiede tre progetti nel settore Sobresaliente (Don Tito, Las Pampas e Mantos Verdes), circa 6 km a nord di San Gregorio. Questa zona ha lavorazioni artigianali storiche, con il che si verificano in oro vene di quarzo ospitati in granito simile ai corpi minerale estratto in precedenza a Sobresaliente, in funzione nel corso del 2011 al 2013, la produzione di 21,667 mila once di oro a una media di 1,04 gt Au. I permessi sono stati concessi per Don Tito in Q1 e lavoro di esplorazione completato 5 fori diamantati, 7 fori circolazione inversa, e 7 trincea con risultati promettenti (annunciati il 12 ottobre. 2016). Il progetto contiene una zona anomala con intercettazioni di alta qualità. Anche se i controlli strutturali rimangono poco chiari, vi è una zona di oro anomala circa 600 metri in sciopero e 50 mm, che rimane aperto lungo sciopero e in profondità. Su 11 gennaio. 2017, i permessi sono stati concessi sugli altri due progetti, Las Pampas e Mantos Verdes. Alcuni esplorazione è stata condotta storicamente a Las Pampas con fori sotto lavorazioni antiche, che hanno restituito alcuni risultati incoraggianti. Lungo sciopero a sud-est, Crystallex forato alcuni tratti poco profondi anche con risultati promettenti. Una vasta zona di oro anomala è evidente e, nella zona, ci sono una serie di grado superiore intersezioni strette. Con permettendo disponibile in tre progetti, l'azienda è in grado di ottimizzare durante H2 FY17 il lavoro di esplorazione nel quartiere Sobresaliente con l'obiettivo di aggiungere riserve a cielo aperto a breve termine. Greenfield esplorazione a Isla Cristalina OMI è attivo nella sua ricerca di depositi più grandi a Isla Cristalina, simili per dimensioni a Arenal o San Gregorio, ciascuna avendo prodotto in eccesso di 500.000 once fino ad oggi. Attualmente la Società ha individuato due aree chiave che hanno gli indicatori di tale potenziale essendo l'Arenal San Gregorio Corridoio e Nueva Australia. L'attuale reinterpretazione geologica del corridoio San Gregorio Arenal, se dimostrata vincente, potrebbe sbloccare una superficie di circa 25,000m per nuove esplorazioni. La Società prevede di perforare sette fori RCDD (1.600 m) nel corridoio Arenal-SG durante H2 FY17 per verificare la presenza di un numero relativamente grande di deposito. Nueva l'Australia è pensato per essere il nord-est sfollati continuità della zona di taglio San Gregorio principale lungo la quale Arenal, San Gregorio, Santa Teresa e altri depositi storici. Poco esplorazione sistematica è stata effettuata nella zona in cui le caratteristiche geologiche indicano la presenza di una zona altamente prospettico. lavorazioni minerarie storiche e recenti di suolo e di campionamento rock chip anomalie dimostrano il potenziale per vicino mineralizzazione superficie. Le licenze di esplorazione in Nueva Australia sono stati concessi in Q2 17 e la società sta attualmente preparando gli obiettivi per la foratura durante la priorità H2 FY 17. La Companys al momento è quello di ottenere rapidamente permessi di ricerca, al fine di avviare una campagna di perforazione al suo progetto Veta Madre nel sud Uruguay. L'azienda continua avanzando il progetto oro di alta qualità no. La Società è in fase di finalizzazione di un modello geologico per capire meglio la mineralizzazione oro. Sulla base di questa interpretazione geologica, un obiettivo l'esplorazione e le raccomandazioni al progresso vengono formulati con l'assistenza di miniera Development Associates (MDA) di Reno, Nevada. I risultati di questo lavoro dovrebbero essere annunciati a breve. Qualificato Persone Dichiarazione Le informazioni tecniche relative alle attività correnti di Orosur Mining in questa presentazione è stato recensito da Miguel Fuentealba, un ingegnere minerario che è considerato essere una persona qualificata ai sensi NI 43-101 linee guida di rendicontazione. Mr. Fuentealba si è laureato in Ingegneria Mineraria presso l'Università di Santiago del Cile ed è un AusIMM membro e persona qualificata della cilena Mining Commissione. Mr. Fuentealba ha 20 anni di esperienza professionale nel campo della ingegneria mineraria, sviluppo della miniera e della gestione. Dichiarazioni previsionali Tutte le dichiarazioni diverse dalle affermazioni di fatti storici, contenute o incorporate per riferimento nel presente comunicato stampa, comprese le informazioni in merito alla futura performance finanziaria o operativa della Società, costituiscono dichiarazioni previsionali ai sensi di alcune leggi in materia , comprese le disposizioni di porto sicuro della legge Securities (Ontario) e gli Stati Uniti private Securities Litigation Reform Act del 1995 e si basano sulle aspettative stime e proiezioni a partire dalla data del presente comunicato stampa. Non ci può essere alcuna garanzia che tali dichiarazioni si dimostreranno accurate. Tali dichiarazioni sono soggette a rischi e incertezze significativi, ei risultati effettivi e gli eventi futuri potrebbero differire materialmente da quelli previsti in tali dichiarazioni. Le dichiarazioni previsionali includono, senza successo limitazione delle attività di esplorazione che permettono linee di tempo il fallimento di attrezzature o processi impianto ad operare come incidenti attesi del lavoro controversie requisiti per ulteriori controversie titolo di capitale o reclami e limitazioni sulla copertura assicurativa. La Società declina qualsiasi intenzione o impegno ad aggiornare o rivedere le dichiarazioni previsionali come risultato di nuove informazioni, eventi futuri e tali dichiarazioni previsionali, tranne nella misura richiesta dalla legge applicabile. A proposito di Orosur Mining Inc. Orosur Mining Inc. è un produttore d'oro completamente integrato, sviluppatore ed esploratore focalizzato sull'identificazione e avanzando progetti oro in Sud America. La Società gestisce la miniera d'oro solo la produzione in Uruguay (San Gregorio), e ha riunito un portafoglio esplorativo di asset di alta qualità in Uruguay, Cile e Colombia. La società è quotata in Canada (TSX: OMI) e Londra (AIM: OMI). Per ulteriori informazioni, si prega di visitare il sito orosur. ca Orosur Mining Inc. Bilancio consolidato intermedi tra la posizione finanziaria migliaia di Dollari USA, eccetto dove indicatedNavigating Stock Option e altri diritti di archivi Darryl Ott e Robert Lew discutere tecniche previste beneficenza per il sempre più popolare ( e complessi) beni conosciuti come stock option di incentivazione, stock options non Qualifed e azioni vincolate in questo articolo informativo. L'articolo comprende una serie di casi di studio che illustrano le tecniche di pianificazione di beneficenza che possono essere utilizzati con tali attività. Pubblicato il apr 2001 da Darryl Ott e Robert Lew Darryl D. Ott di Morgan, Miller amp Blair a Walnut Creek, California, è stato coinvolto con la pianificazione trasferimento di ricchezza per gli individui high net worth per 30 anni, e con caritatevole pianificato dando per oltre 10 anni. Lui è un ex membro del consiglio di amministrazione e ex presidente della California del Nord pianificato Dare Consiglio, ed è stato un presentatore per NCPG, e di altre organizzazioni nazionali e locali su una varietà di argomenti trasferimento di ricchezza. Ott ha una laurea JD presso la University of California, Hastings College of the Law, San Francisco, ed è uno specialista certificato di legge sulla tassazione con la California State Bar. Robert Lew è il proprietario di pianificazione e consulenti finanziari, una società specializzata in servizi di pianificazione immobiliare e di assicurazione Situato a San Francisco, California. Prima della sua posizione attuale, ha lavorato per oltre sette anni per le organizzazioni senza scopo di lucro, come la Croce Rossa Americana. Lew è stato attivo nel dare previsto per oltre otto anni. Lui è un ex membro del consiglio di amministrazione della California del Nord Planned Giving Consiglio e attualmente fa parte del consiglio del Comitato Nazionale sul dare pianificato. Lo scopo di questo articolo è quello di fornire assistenza ai progettisti di beneficenza regalo e altri consulenti professionali nella comprensione dei complessi molto regole imposte sul reddito e gli altri requisiti di legge di incentivazione stock option, stock options non qualificato, e azioni vincolate. Inoltre, è importante per i pianificatori regalo di beneficenza per essere esposti a specifici casi di studio che illustrano le modalità di integrazione di doni previsti caritatevoli con questi importanti strumenti di costruzione di ricchezza, e per capire come opzioni e altri diritti misura azione nella pianificazione generale trasferimento di ricchezza per questi potenziali molto importanti donatori. C'è un presupposto che sta alla base l'intera discussione per quanto riguarda le stock option. Il presupposto è che, alla data di esercizio dell'opzione, il valore di mercato delle azioni della società è superiore al prezzo di esercizio specificato nell'opzione. Mentre ci possono essere alcune circostanze in cui un concessionario di un'opzione potrebbe voler esercitare stock option se il prezzo di esercizio è superiore al valore di mercato del titolo, è estremamente improbabile. Tutti i riferimenti in questo articolo per specifiche fiscali e requisiti di legge per le stock option e la azioni vincolate sono limitati a quelli richiesti dalle leggi federali. I requisiti fiscali e legali per qualsiasi stato devono essere indicati in modo specifico. Definizioni 2 e 1 regola. Il quot2 e 1 Rulequot è una regola che riguarda solo incentivazione stock option e che è applicabile solo dopo che l'incentivo di stock option è stata esercitata, e dove il concessionario-dipendente è il proprietario del magazzino del datore di lavoro. Affinché il concessionario-dipendente di essere in grado di riportare la plusvalenza derivante dalla cessione delle azioni come plusvalenza, e non come ordinario reddito compensativo, la Regola 2 e 1 richiede il concessionario-dipendente di possedere il titolo prima della vendita per un periodo che è il più lungo di una due anni dopo la data di concessione dell'incentivo di stock option, o un anno dopo la data di esercizio del piano di stock option. Questa regola ha implicazioni molto importanti per la capacità del beneficiario-dipendente di utilizzare qualsiasi danno gli strumenti previsti. Inoltre, la Regola 2 e 1 non è più applicabile dopo il decesso del beneficiario-dipendente. fiscale alternativo minimo. Il calcolo di quotalternative incomequot tassa minima (AMTI) è del tutto distinta e, a parte il calcolo del reddito imponibile ai fini dell'imposta sul reddito regolari. AMTI è calcolato nello stesso modo come reddito imponibile ai fini fiscali regolari, ad eccezione di: 1) alcune voci di reddito e deduzioni utilizzati nel reddito imponibile regolare vengono regolati e 2) alcune voci di preferenza vengono aggiunti nuovamente al reddito imponibile per arrivare a il AMTI. Il tentativo taxquot minima quotalternative (AMT) è pari al 26 della base alternativa imposta minima fino a 175.000 e 28 della base imponibile minima alternativa sopra 175.000. La base imponibile minima alternativa è la AMTI ridotto di vari importi di esenzione. L'AMT così calcolato viene quindi confrontato con i contribuenti normale imposta sul reddito, e se l'AMT è maggiore, l'AMT è l'importo che deve essere pagato per questo anno fiscale. Ai fini del presente articolo, l'importo di cui il valore di mercato delle azioni acquistate al momento dell'esercizio di un'opzione di incentivazione azionaria superiore al prezzo di esercizio, è un elemento di preferenza fiscale che deve essere incluso nel AMTI. Base. Prezzo di esercizio più l'importo realizzato come reddito all'esercizio. stock option compensative e di compensazione limitati magazzino. I termini quotcompensatory magazzino optionsquot e stockquot limitato quotcompensatory significano tutte le opzioni per l'acquisto di azioni di una società concesso sia per un dipendente, come le opzioni di incentivazione azionaria, o per dipendenti, amministratori e consulenti, come stock option non qualificato, e qualsiasi azioni vincolate rilasciato a dipendenti di una società come una forma di compensazione. Questi termini sono molto generiche. Queste opzioni su azioni di compensazione devono essere distinte dalle opzioni quotinvestment, quot come quelli negoziati in Consiglio di Options Exchange di Chicago, dal momento che gli effetti dei redditi con opzioni di investimento sono molto diversi da quelli con le opzioni di compensazione. Da squalifica disposizioni. Un dispositionquot quotdisqualifying è un'applicazione inverso della Regola 2 e 1. Se, dopo l'esercizio della ISO, il titolo viene venduto, scambiato, data, o altrimenti trasferiti entro due anni dalla data di concessione della ISO, o entro un anno dalla data di esercizio della ISO, il dipendente deve segnalare l'quotgainquot (la differenza a partire dalla data di vendita fra il ricavo di vendita e il prezzo di esercizio) come reddito compenso ordinario e non come plusvalenza. data di esercizio. Il datequot quotexercise dell'opzione è la data della consegna del esercizio dell'opzione. Esercizio di opzione. Il quotexercise di optionquot è generalmente una comunicazione scritta alla società da parte del concessionario della possibilità della sua intenzione di acquisire un determinato numero di quote di azioni della società ai sensi della concessione dell'opzione. Prezzo dell'esercizio. Il pricequot quotexercise è il prezzo che il concessionario deve pagare alla società alla data di esercizio per acquisire il magazzino della società. Il prezzo di esercizio deve essere specificato nella concessione dell'opzione. Stessa data di sciopero quotStrike Priceprice. quot Grant. Il datequot quotgrant è la data che la società dà (sovvenzioni) la possibilità di acquistare azioni della società, sia come opzione di incentivazione azionaria o come stock option non qualificato, per il concessionario. I diritti del concessionario di acquisire il magazzino sono regolati dalle condizioni di concessione dell'opzione. Concessione di opzione. Il quotgrant di optionquot è generalmente un documento scritto dato al concessionario dell'opzione che specifica tutti i termini dell'opzione, come il prezzo di esercizio, la durata dell'opzione, il calendario di maturazione, il numero di azioni del companys che può essere acquistato, se l'opzione è trasferibile, se è cedibile, per chi può essere trasferito, e se l'opzione può essere esercitata da un beneficiario designato dopo la data della morte beneficiari. stock option di incentivazione. Un'opzione di incentivazione azionaria (ISO) è un'opzione emessa in virtù di un piano adottato dalla società datore di lavoro che è conforme a tutti i requisiti di legge di Internal Revenue Code (IRC) 421 attraverso 424 quando scontato. Conosciuto anche come opzioni di legge. IRC 83 (b) elezione. Un quotIRC 83 (b) electionquot è fatto per quanto riguarda azioni vincolate, e in alcune circostanze molto particolari potrebbe essere fatto a partire dalla data di esercizio di un'opzione di incentivazione azionaria per tentare di limitare l'imposta minima alternativa. L'elezione, che deve essere depositata presso l'IRS per il periodo d'imposta nel corso del quale il dipendente prima riceve il trasferimento della azioni vincolate, consente al lavoratore di segnalare una minore quantità di reddito compensativo ordinaria nel corso di questo anno di ricezione del titolo, con il la speranza che nei prossimi anni, quando il dipendente vende il titolo ad un valore superiore, il dipendente sarà quindi in grado di segnalare questo apprezzamento come reddito plusvalenza anziché reddito compensativo come ordinario. periodo minimo di detenzione. La quantità di tempo che un dipendente deve detenere azioni ricevuto a seguito dell'esercizio di una ISO per ottenere un trattamento di legge favorevole, e cioè: 1) due anni dalla data l'opzione è stata concessa e 2) un anno dalla data in cui l'opzione è stata esercitata. stock options non qualificato. Una stock option non qualificato (NQSO) è un'opzione per acquisire azioni di una società che non, per uno qualsiasi di una serie di ragioni, soddisfano tutti i requisiti IRC per le opzioni di incentivazione azionaria. Conosciuto anche come opzioni non statutari. Opzione. Il termine quotoptionquot come quello usato in questo articolo è il diritto di un individuo per l'acquisto, per un prezzo stabilito, un determinato numero di quote di azioni da una società in virtù di un'offerta della società che continua per un determinato periodo di tempo. azioni vincolate. azioni vincolate è azione che ha tutte le restrizioni contrattuali o di legge titoli imposte sul trasferimento di azioni. Data di vendita. Il datequot quotsale è la data in cui il proprietario del magazzino della società (sia a seguito dell'esercizio di un'opzione, o l'acquisizione di azioni vincolate) in realtà vende lo stock e dispone di suo interesse per il magazzino. La data di vendita è a volte indicato come data di disposizione. Maturazione. quotVestingquot è il momento in cui il concessionario di un'opzione (secondo i termini della concessione dell'opzione) o il proprietario di azioni vincolate (in conformità con i termini del contratto di azioni vincolate) diventa irrevocabilmente il diritto di acquistare (con una opzione) o di mantenere la proprietà di (con azioni vincolate) lo stock della società. La maturazione è generalmente sparsi su un periodo di anni a percentuali crescenti, ma non ci sono requisiti di legge particolari per quanto riguarda la velocità con i diritti per il magazzino devono gilet. Incentivazione azionaria Opzioni Un'opzione di incentivazione azionaria (ISO) è un'opzione emessa in virtù di un piano adottato dalla società datore di lavoro che è conforme a tutti i requisiti di legge di IRC 421 attraverso 424 quando scontato. Alcuni dei requisiti di base sono che: 1) gli azionisti devono approvare il piano 2) la ISO deve essere concesso a un dipendente della società (non un direttore o consulente) e, in fondo, l'individuo deve rimanere un dipendente fino alla data di l'esercizio 3) il prezzo di esercizio (strike) per lo stock deve essere uguale o superiore al fair value delle azioni companys a partire dalla data della concessione 4) l'opzione deve essere concessa entro 10 anni dalla data di adozione del piano e deve essere esercitato entro 10 anni dalla data l'opzione è concessa 5) il fair value del titolo ISO che è il primo esercitabile nel corso di un anno non può superare i 100.000 in base al valore dello stock companys a partire dalla data della concessione e 6 ) un individuo già in possesso di oltre il 10 dello stock companys deve pagare almeno 110 del fair value come l'esercizio (strike) prezzo e l'opzione deve scadere entro cinque anni rispetto ai 10 anni per gli azionisti minori. In conformità con le disposizioni di IRC 422, una ISO non è trasferibile. A causa di tutti questi requisiti e restrizioni, si ISOS (in contrapposizione al magazzino acquisito con l'esercizio della ISO) non si prestano a molto, se del caso, prima di pianificazione trasferimento di ricchezza, la pianificazione imposta sul reddito, o la pianificazione regalo caritatevole. Non ci sono conseguenze fiscali sul reddito per il concessionario-dipendente l'opzione a partire dalla data di concessione dell'opzione. In generale, non ci sono effetti delle imposte sul reddito regolari con ISO a partire dalla data di esercizio dell'opzione da parte del concessionario-dipendente. However, the difference, as of the date of the exercise of the ISO, between the fair value of the stock, as of the date of the exercise, and the strike price for the stock is an item of preference for purposes of the alternative minimum tax (AMT) calculations. The possibility of the imposition of the AMT can create a very difficult cash management situation for the grantee-employee after the exercise of the ISO, and, therefore, after the acquisition of the stock because the donor may have AMT to pay to the IRS as a result of his or her exercise of the ISO, but may not have any cash with which to pay the AMT. An obvious solution to this cash dilemma is to sell some of the stock acquired by the exercise of the ISO at least up to an amount that creates regular tax equal to the AMT. But such sales of too much of the stock would then lead to other adverse income tax consequences. One of the other requirements of an ISO is to enable the grantee-employee of the ISO (and now owner-employee of the stock of the company) to obtain long-term capital gain treatment upon a sale of the stock known as the quot2 and 1 Rule. quot The 2 and 1 Rule will permit the owner-employee to report the gain on the sale of the stock as capital gain if, after the exercise of the ISO, the stock is not sold within two years of the date of the grant of the ISO, or not within one year of the date of the exercise. A disposition (whether a sale, exchange, gift, or other transfer of legal title) of the stock that occurs after the expiration of the 2 and 1 Rule time periods is referred to as a qualifying disposition. A disqualifying disposition is a reverse application of the 2 and 1 Rule. If, after the exercise of the ISO, the stock is sold, exchanged, given, or otherwise transferred within two years of the date of the grant of the ISO, or within one year of the date of the exercise of the ISO, the employee must report the quotgainquot (the difference, as of the sale date, between the sales proceeds and the strike price) as ordinary compensation income and not as capital gain. The difference in federal income tax rates between those for ordinary income and those for capital gains can be significant. The difference in the combined rates for federal income taxes can be as much as 19. Needless to say, if the owner-employee needs the cash to pay the AMT, or otherwise is just wanting to diversify, or simply feels that the stock has reached its peak in value, the owner-employees advisors, including gift planners, must understand and be able to explain the difference in the income tax treatment to the owner-employee. There are a few limited exceptions to the disqualified disposition rules, such as the transfer of the stock by a decedent by bequest or other form of inheritance. However, it is this 2 and 1 Rule that causes the owner-employee of the stock to report any gain as ordinary income on a transfer by gift of his or her ISO-created stock to a charitable remainder trust before the satisfaction of the 2 and 1 Rule. There are now a multitude of methods related to the exercising of an ISO that in some instances provides some income tax and cash flow assistance to the grantee-employee in the exercise of the ISO, and the ownership of the stock of the company resulting from the exercise of the ISO. These methods are generally variations that provide financing assistance to the grantee-employee. A detailed explanation or analysis of these methods is clearly beyond the scope of this article. However, some of the methods are: 1) using stock of the employer to pay for the exercise of the ISOs 2) under certain limited circumstances exchanging ISO stock for similar company stock 3) granting a quotreloadquot option when company stock is used to pay for the exercise price for the company stock then being acquired 4) providing tandem stock appreciation rights (SARs) so long as the SARs meet certain requirements and 5) providing financing through a broker for a quotcashless exercisequot of the ISOs. Following the death of the grantee-employee, if the ISO plan permits the beneficiaries of the grantee-employee to exercise the ISO, then as long as the option was an ISO as of the date of the grantee-employees death, the beneficiaries of the ISO will receive the same tax treatment on the exercise of the option as would have been realized by the grantee-employee. The transfer of the ISO to the beneficiaries, or the transfer of the stock of the employer to the beneficiaries that has not yet satisfied the 2 and 1 Rule is not a disqualifying disposition of the stock. Moreover, the estate or heir who receives the ISO does not have to comply with the 2 and 1 Rule at all with respect either to ISO stock received by the beneficiaries from the grantee-employee, or stock received by the beneficiaries following their exercise of the ISO. The death of the grantee-employee eliminates the need to comply with any of the ISO holding period requirements. However, the date of death of the grantee-employee will be the starting date for the measurement of the capital gain holding periods that will be used to determine whether any post-death appreciation is either short-term or long-term capital gain. In addition, the ISOs receive a full step up in basis just like any other asset of a decedent, and no ordinary income or capital gain will be reportable on the stepped-up basis portion on a later exercise of the ISOs or disposition of the ISO stock by the beneficiaries. Also, due to this step up in basis of the ISO, the death of the grantee-employee eliminates the occurrence of any AMT on the subsequent exercise of the ISO by the beneficiaries, at least with respect to the pre-death bargain element in the ISO. The fair market value of the ISO, as of the date of the death of the grantee-employee, is an asset that will be includable in the taxable estate of the grantee-employee. The fair market value of an ISO is basically the difference between the fair value of the stock of the company, as of the date of the death of the grantee-employee, and the strike price. Generally, the plans for the ISOs permit the recipient from the grantee-employee to exercise the ISOs in the same manner as the grantee-employee, and to receive the same income tax treatment on exercise, and on any subsequent disposition as would have applied to the grantee-employee if heshe would have lived. If the deceased grantee-employee was employed by the employer as of the date of his or her death, there is no statutory requirement that the recipient must exercise the ISO within three months of the grantee-employees death. Even though a transfer of an ISO upon the death of the grantee-employee is permitted by the statutes and is not a disqualifying disposition, and even though the recipient of the ISOs, following the death of the grantee-employee, is entitled to the special income tax reporting rules discussed above as would have been available to the grantee-employee, the recipient is also still subject to the same reporting requirements as would have applied to the grantee-owner. And, in addition, the ISOs still are not otherwise transferable by the recipient. So, the limitations on the planning possibilities for the recipient and on the transfer of the ISOs to charities still apply. Again, it is only after the exercise of the ISO, and the ownership of the underlying stock itself, that traditional gift planning possibilities will arise. In fact, the net effect of all of the post-death rules for ISOs is that the ISO stock is to be treated by gift planners no differently from any other asset in an estate of a decedent. Non-Qualified Stock Options A non-qualified stock option (NQSO) is an option to acquire a companys stock that does not, for any number of reasons, satisfy all of the IRC requirements for incentive stock options. Unlike incentive stock options, the issuance of an NQSO is not limited just to employees of the company, but they may be granted to employees, directors, and consultants to the company. Also, unlike the requirements for incentive stock options, NQSOs can be transferable at any time, either before or after exercise of the option if the plan adopting the NQSOs or the grant of the option permits the transfer. This transfer possibility does provide some additional planning opportunities for allied professionals and charitable gift planners. IRC 83 is involved in the analysis of the income tax effects of non-qualified stock options. Generally, the grantee of the NQSOs will not recognize taxable income on the date of the grant of the option. The tax reason is simply that, pursuant to the provisions of IRC 83, the option does not have a quotreadily ascertainable fair market value. quot In effect, the compensatory aspects of the option are held quotopenquot until the option is exercised. Since, at the time of the grant of the NQSO there is not a tax event, the income tax effect in the future is to treat the appreciation in the value of the property underlying the option between the date of the grant and its exercise as compensation income and not capital gain. Under these circumstances, the grantee of the NQSO would generally want to treat the value of the option, as of the date of its grant, as compensation income rather than as of the date of the exercise of the option. The reason for this preference is that the amount of ordinary compensation income that would be reportable, as of the date of the grant, would generally be less than the reportable ordinary compensation income as of the date of the exercise of the option. And, therefore, the ultimate capital gain that would be reported upon the eventual sale of the stock would be greater. However, the IRC specifically and purposefully makes it difficult, for this very reason, for the grantee of the NQSO to report any ordinary compensation income, as of the date of the grant, of the NQSO. If an NQSO is not actively traded on an established market, which is highly likely, then IRC 83 has four rigorous tests that must be met for the NQSO to have a readily ascertainable fair market value. The effect of these requirements is to force the taxation of the value of the NQSO to the date of its exercise. However, from a non-tax standpoint, an NQSO is still a very attractive compensation device for executives and employees of a company. The options are generally granted without requiring the grantee to make any payment for it as of the date of the grant the income tax effects are delayed, and the NQSOs also offer significant upside if the company quottakes offquot as is generally expected. On the date of the exercise of the NQSO, the grantee will be required to recognize ordinary compensation income in an amount equal to the excess of the fair market value of the stock, as of the date of the exercise, over the exercise (strike) price paid for the stock on such date. There are issues from the companys standpoint concerning the companys obligations to report this inclusion of income by the grantee to the government and, therefore, the obligation of the company to withhold income taxes from the grantee as of the date of the exercise of the NQSO. Unlike incentive stock options, there is not any concept of a quotqualifyingquot or quotdisqualifyingquot disposition of the stock. Following the exercise of the NQSO and the acquisition of the stock of the company and, additionally, the reporting of the ordinary compensation income at such time, the stock will be treated in the same manner as any other investment stock of the grantee-owner. The holding period for the determination of future capital gain recognition (more than 12 months) commences as of the date of the exercise of the NQSO. The basis of the stock acquired by the exercise of the NQSO is the amount paid by the grantee for the stock (the strike price) plus the amount of the ordinary compensation income reported by the grantee as of the date of the exercise. As a result, the basis of the stock is generally its full fair market value as of the date of the exercise of the NQSO. So, on a future disposition of the stock by the grantee-owner, any increase in value of the stock over its value, as of the date of the exercise of the NQSO, will be taxed as capital gain income. And, if the disposition occurs more than 12 months after the date of the exercise of the NQSO, then the appreciation will be treated as long-term capital gain, and will qualify for taxation at the lower capital gain income tax rates. Due to the fact that NQSOs can be transferred if the plan adopting the NQSOs, or the grant of the option permits the transfer, this possibility opens up some charitable and non-charitable planning opportunities. Most importantly for the planned giving community, the IRS, in private letter ruling (PLR) 200002011 (and subsequently reinforced in PLR 200012076), reached several favorable conclusions concerning a transfer by a decedent of NQSOs, to a charitable organization at the time of her death. The IRS concluded that the decedents estate would be entitled to a full charitable deduction for the fair market value of the NQSOs passing to the charity, and that when the charity exercises the NQSOs, the charity and not the estate of the decedent will be required to report the income. Also in this PLR, the IRS concluded that the transfer of the NQSOs, and the reporting of the income upon the exercise of the NQSOs, were quotincome in respect of a decedent, quot which is the same conclusion used for the disposition of qualified retirement plan accounts and individual retirement accounts. See case study 3 for a discussion of the gift planning possibilities with testamentary transfers of NQSOs. There is a different tax result, however, with lifetime, non-arms length transfers of NQSOs. In PLR 9722022, the grantee transferred NQSOs to an irrevocable trust for the benefit of family members. The IRS concluded that the transfer of the NQSOs to the trust did not cause the grantee to recognize income as of the date of the transfer and, most importantly, that upon the subsequent exercise of the NQSOs by the trust, the grantee and not the trust would recognize taxable compensation income equal to the excess of the fair market value of the shares received as of the date of the exercise (determined as of the exercise date) over the option price paid for the shares. The word quotcharityquot could be substituted for the word quottrustquot in PLR 9722022 with a similar result. And, with a further conclusion that the grantee would receive a charitable income tax deduction, as of the date of the exercise of the NQSOs, by the charity in the same amount as the amount of the taxable compensatory income to be reported by the grantee as of such date. See case study 4 for a discussion of the gift planning possibilities with lifetime transfers of NQSOs. Following the death of the grantee-employee, if the NQSO plan permits the beneficiaries of the grantee-employee to exercise the NQSO, and if the NQSO was not taxed at the date of the grant thereof, then the NQSO will pass to the beneficiaries of the grantee-employee with the potential taxation of the compensation income element left open. So, after the date of the death of the grantee-employee when the beneficiaries engage in a transaction that quotclosesquot the option transaction (an exercise of the option), it will be the beneficiaries who will report the ordinary compensation income (see Treas. Reg. 1.83-1(c) and (d)). The quotopenquot income tax treatment of this asset applies the same rules with the same income tax effects as with any other assets that involve quotincome in respect of a decedent. quot Most notably, these rules and the tax treatment are the same as those involved with qualified retirement plans and individual retirement accounts. These IRD rules provide planning opportunities for gift planners that will be discussed in more detail in case study 5. The fair market value of the NQSO, as of the date of the death of the grantee-employee, is an asset that will be includable in the taxable estate of the grantee-employee. The fair market value of an NQSO is basically the difference between the fair value of the stock of the company, as of the date of the death of the grantee, and the strike price. The possibility for testamentary planning with NQSOs is much better than with ISOs. As discussed in case studies 3, 4, and 5, there are more quotpre-exercisequot planning opportunities with NQSOs than are available for ISOs. Restricted Stock The area of quotcompensatoryquot transfers of property using restricted stock is governed by IRC 83. For purposes of this article, the term quotpropertyquot will mean stock of the employers company. When an employer quottransfersquot stock that is quotrestricted, quot and that is subject to a quotsubstantial risk of forfeiturequot to an employee quotin connection with the performance of services, quot then the analysis of the income tax effects to the employee are not too dissimilar to those discussed above with respect to incentive stock options and non-qualified stock options. Perhaps the best way to explain quotrestricted stockquot is by way of an example. On July 1, 2000, Dotcom Corporation transfers 1,000 shares of its common stock to its employee, Ms. Technonerd (Ms. T), who does not pay anything for the stock. On the date of the transfer, the shares have a value of 1.00 per share. The agreement between Dotcom and Ms. T specifies that if Ms. T leaves the employ of Dotcom before July 1, 2002, she will forfeit all rights to the stock that must then be returned to Dotcom without Ms. T receiving any payment for the stock. In addition, Ms. T is prohibited by the employers restricted stock plan from transferring the stock during the period that the quotsubstantial risk of forfeiturequot (the employment condition) continues to apply other than on her death or to a limited class of permitted transferees such as her family members and charities. A legend to this effect is stamped on Ms. Ts stock certificate. Assume that the value of the stock on July 1, 2002, which is after Dotcoms IPO, will be 50.00 per share. Assume also that Ms. T remains in the employ of Dotcom past July 1, 2002. For purposes of the following discussion, July 1, 2000, is the date of the quottransferquot of the quotpropertyquot (the stock), and July 1, 2002, is the date that the stock is transferable and no longer subject to the substantial risk of forfeiture. Contrary to the rules discussed above with respect to incentive stock options and non-qualified stock options as of the date of the grant of the options, the date of the quottransferquot of the restricted stock to the employee is significant. Depending upon what course of action the employee takes on the date of the transfer, the employee may, or may not, have an income tax reporting event as of that date. In the example set forth above, Ms. T will not have any income to report if she does nothing because the stock that she received is subject to a quotsubstantial risk of forfeiture. quot However, see below for the income tax effects to Ms. T, as of the date the stock is no longer subject to the substantial risk of forfeiture, if she does nothing as of the date of the transfer. The effects later will be quite severe. Ms. T does, however, have a choice as of the date of the transfer of the property (July 1, 2000, in our example). Ms. T can file an IRC 83(b) election with the IRS. If she does file this election, then Ms. T will be required to report, as ordinary compensatory income, the value of the stock as of the date of its transfer to her (July 1, 2000). In our example, this amount will be 1.00 X the 1,000 shares or only 1,000 of ordinary income. Her basis in the stock will be 1,000, and the holding period for capital gain considerations will commence as of the date of the transfer of the stock to her (July 1, 2000). Then on July 1, 2002, when the substantial risk of forfeiture expires, Ms. T will not have any further income to report to the IRS. And even more importantly, if Ms. T were to sell the stock on July 2, 2002, the 49 of appreciation realized after July 1, 2000, will be reportable by Ms. T as capital gain. The income tax effects, as of the date that the stock is no longer subject to the substantial risk of forfeiture, depends on the course of action that the employee took as of the date of the transfer of the stock to her by the employer. If the employee did nothing, as of the date of the transfer of the stock, which means that the employee did not file an IRC 83(b) election, and did not report any income to the IRS in year 2000, then the employee will have to report, as ordinary compensatory income in the year that the substantial risk of forfeiture lapses, the full value of the stock as of such date. So, in our example, by doing nothing on July 1, 2000, and reporting no income to the IRS in year 2000, Ms. T will have to report to the IRS, as ordinary compensatory income for year 2002 (the year that the substantial risk of forfeiture expires), 50.00 X 1,000 shares or 50,000. Her basis in the stock will be 50,000, and her holding period for capital gain considerations will commence as of the date that the substantial risk of forfeiture lapses (July 1, 2002). So, Ms. T will have to wait until July 2, 2003, to sell the stock if she wants to report any further appreciation in value as long-term capital gain. If the employee does file an IRC 83(b) election when she receives the restricted stock, then in the later year when the substantial risk of forfeiture lapses, the employee will not have any further income to report to the IRS. In our example, if Ms. T files the IRC 83(b) election, then on July 1, 2002, she will not have any further income to report. Her next tax event will be when she sells the stock. If the employee fails to satisfy the condition of the restrictions and, therefore, the substantial risk of forfeiture actually occurs, the employee will lose the ownership, and the company will regain the ownership of the stock. Regardless of whether or not the employee has filed an IRC 83(b) election, there will not be any income tax effect to the employee on the forfeiture and transfer of the stock back to the company, i. e. the employee will not be able to report a taxable loss of any nature on the transfer of the stock back to the company. Before the employee has reported the income to the IRS with respect to the transfer of the stock, which means that the employee did not file an IRC 83(b) election at the time of the transfer of the stock to her, and the substantial risk of forfeiture has not yet lapsed, a disposition of the stock by the employee, which can occur by reason of the employees death and by reason of any other disposition so long as the substantial risk of forfeiture remains in effect, will create rather complex income tax results to the employee. In an arms length disposition, the employee reports the amount realized through the disposition as compensation income, and IRC 83 has no further application to the transaction. If, however, the stock is disposed of in a non-arms length transaction (such as a gift to a family member or to a charity), there are two potential tax events to the employee--the disposition and the lapse of the restrictions. The disposition does not terminate the application of IRC 83 to the employee rather IRC 83 continues to apply until the restrictions lapse. If the employee is not paid anything for the stock, as of the date of the disposition (in a true gift situation), then there will not be any income for the employee to report at that time. And, then on the lapse of the restrictions, the employee (not the transferee) will report the same amount of ordinary compensatory income at that time as if the employee had not previously disposed of the stock. If the non-arms length disposition is to a charity, and if the disposition occurs before the restrictions lapse, then the employee-donor will report the compensatory ordinary income and receive a charitable income tax deduction only in the year that the restrictions lapse. After the employee has reported the income to the IRS with respect to the transfer of the stock, either as of the date of the transfer (by filing an IRC 83(b) election), or as of the date that the restrictions lapse (by previously not filing an IRC 83(b) election), the ownership of the stock for income tax purposes will be treated in exactly the same manner as the ownership by any individual of similar stock that was not previously restricted stock. The primary issue will then be whether or not, on a later sale of the stock, the owner will be entitled to report any further appreciation as long-term capital gain. The planning choices for gift planners will also then be the same as with any other stock investments based primarily on whether or not the stock is a long-term capital gain asset. There is, however, one significant remaining non-tax issue if the stock is disposed of before the substantial risk of forfeiture lapses, even if the employee has filed the IRC 83(b) election. That issue is that if the forfeiture condition occurs (in our example if Ms. Ts employment terminates before July 1, 2002), the transferee (the family member or the charity) will no longer be the owner of the stock and, generally, will not be paid anything for the stock as of the date of the forfeiture. Currently, there do not appear to be many planning opportunities, if any, to assist the employee-donors to avoid the imposition of the ordinary compensatory income during their lifetimes with restricted stock. There is one testamentary planning opportunity with restricted stock that is discussed in case study 6. If the employees death occurs after the transfer of the stock and before the restrictions lapse, and if the restricted stock plan of the employer permits a transfer to the deceased employees family members or other beneficiaries without a triggering of the forfeiture restriction, then the employees death itself does not close the compensation element of the transaction. Treas. Reg. 1.83-1(d) specifies that the compensation element in the restricted stock that remains unreported as of the date of the employees death is to be considered as quotincome in respect to a decedent. quot This is the same treatment that is imposed upon any balances remaining in any qualified retirement plans (like 401(k) plans) and individual retirement accounts (IRAs). Hopefully, most gift planners are becoming familiar with the severe tax (both estate tax and income tax) consequences that these assets are subjected to upon the death of the employee. Hopefully, also, most gift planners will also be familiar with the testamentary planning considerations that are available with IRA accounts and charitable remainder trusts. The testamentary planning considerations for restricted stock are discussed in case study 6. The fair market value of the restricted stock, as of the date of the employees death, will be includable in the employees taxable estate for federal estate tax purposes. In determining the fair market value of the restricted stock, the existence of the substantial risk of forfeiture must be considered. As previously discussed, the open compensation element in restricted stock, as of the date of the death of the employee, will be treated as quotincome in respect of a decedentquot under the IRC. By analogy, the private letter rulings that permit the testamentary transfer of IRD assets contained in qualified retirement plans and individual retirement accounts to charitable remainder trusts following the death of the participant-donor, it seems appropriate, if the employers restricted stock plan permits transfers, for the employee-donor to transfer the restricted stock (for which no IRC 83(b) election was filed and that is still subject to the substantial risk of forfeiture) to a charitable remainder trust for the benefit of the members of the employee-donors family and for the benefit of the donors favorite charities. This planning opportunity will be illustrated in detail in case study 6. Gift Planning Strategies For Stock Options And Restricted Stock Transfer of ISO stock to a charitable remainder trust. The first gift planning strategy involves a transfer of the stock acquired through the exercise of an incentive stock option as contrasted with a transfer of the incentive stock option itself. After the donor has exercised the incentive stock option, and after the donor has satisfied the 2 and 1 Rule, the donor establishes a charitable remainder trust, gives the shares of the ISO stock to the CRT and then the CRT sells the stock. This strategy provides nothing new or unusual from a planned giving standpoint except for the emphasis on the fact that the donor had owned the stock long enough to satisfy the 2 and 1 Rule. This strategy is illustrated in case study 1. Transfer of ISO stock to a charitable lead trust. This gift planning strategy also involves a transfer of the stock acquired through the exercise of an incentive stock option as contrasted with a transfer of the incentive stock option itself. The donor has exercised the incentive stock option and currently owns the stock. The donor wants to establish a charitable lead trust to benefit hisher favorite charity. The donor can establish the charitable lead trust and transfer the ISO stock to the CLT only after heshe has owned the stock long enough to satisfy the 2 and 1 Rule. This illustrates two planning principles involving ISOs: 1) the inability to provide any planning suggestions or opportunities with regard to the incentive stock options that by the very terms of the enabling IRC sections are non-transferable and 2) the need for the donor to satisfy the 2 and 1 Rule before any gift planning strategies are implemented. See case study 2. Transfer of NQSOs to a charity. This gift planning strategy is simply an illustration of the fact situation found in PLR 200002011. In this situation, the employers plan for its non-qualified stock options allows the options to be transferred prior to their exercise to family members and to charities. The grantee-donor, therefore, transfers, at hisher death, some NQSOs to hisher favorite charity before the options are exercised. After death, and after the receipt of the options by the charity, the charity exercises the NQSOs and becomes the owner of the stock. The charity then sells the stock to obtain the cash. The income tax and estate tax effects on the donors family are illustrated in more detail in case study 3. Transfer of NQSOs to a charitable lead trust. This gift planning strategy is an extension of the facts considered by the IRS in PLR 9722022. The donor, during her lifetime, establishes a charitable lead trust and transfers a portion of her options into the CLT. The plan established by the donors employer for the NQSOs allows such a transfer prior to the exercise of the options. See case study 4. Testamentary transfer of NQSOs to a charitable remainder trust. This gift planning strategy is believed to be more innovative and relies on the Treasury Regulations that require the beneficiaries of the deceased grantee-employee to report the compensation income in the NQSOs as quotincome in respect of a decedentquot when they, the beneficiaries, exercise the NQSOs after the grantee-employees death. This IRD characterization, and the prior IRS private letter rulings that allow the IRD from qualified retirement plans and IRAs to be quottransferredquot to a charitable remainder trust following the death of the IRA participant, seem also to be applicable to NQSOs. After the donors death, the donors will (or living trust document) simply requires that a charitable remainder trust be set up following the donors death and that the NQSOs or some part of them are to be transferred to the CRT. (Obviously it is imperative that the employers plan for the NQSOs allows such a transfer.) The CRT then exercises the NQSOs, and the CRT reports the IRD rather than the donors estate or the donors estate beneficiaries. See case study 5. Testamentary transfer of restricted stock to a charitable remainder trust. This last gift planning strategy is similar to the strategy discussed above except that it involves the testamentary transfer of restricted stock rather than NQSOs. In this strategy, the employers restricted stock plan allows the restricted stock to be transferred following the death of the employee, subject to the continuing restrictions. Since Treas. Reg. 1.83-1(d) categorizes the compensation element in the restricted stock after the employees death to be quotincome in respect of a decedent, quot the deceased employee-donor can direct that, following death, the restricted stock is to be transferred to a charitable remainder trust. The existing private letter rulings that allow the IRD from qualified retirement plans and IRAs to be quottransferredquot to a charitable remainder trust following the death of the IRA participant seem also to be applicable to restricted stock. See case study 6. Case Studies And Specific Applications For Stock Options And Restricted Stock The six case studies that follow will provide insights into some of the alternative ways that gift planners can assist their potential donors who are the owners of stock options with the structuring of gift transactions that provide, in each case, significant benefits for the donors or their families and for the charities of their choice. In each of the six following case studies, the assumptions set forth below have been used with additional assumptions being stated in each particular case study itself when necessary. 1 In this situation, the 141,224 of income tax savings are used to purchase a single premium, second-to-die life insurance policy, on the lives of the donors. The insurance policy was designed to perform under adverse conditions including a 10 reduction from the current earning rate. 2 In the interest of simplicity, these figures ignore the opportunity and the strong likelihood that the donors will be able to re-accumulate a significant amount of wealth over their lifetimes by using the CRT alternative, due to the fact that they will receive a significantly higher after-tax income stream from the CRT for a very long time. Case Study 2 Stock from incentive stock options, after the satisfaction of the 2 and 1 Rule, charitable lead trust. Mr. PropellerHead (PH) is an employee of a corporation, WebSite Corporation, which is a quotless maturequot business entity than Dotcom Corporation. However, WebSite has just recently successfully completed its IPO, and the future for WebSite looks very promising. In fact, some of PHs stock in WebSite, which he acquired just over two years ago from the exercise of some of his incentive stock options, has a current value of 2,000,000 and is expected to be valued 10 years from now at 8,000,000. PH and his wife have two very young children who seem destined for Harvard and Stanford in several years. Mr. and Mrs. PH have listened to the planned giving officer at their college alma mater and are ready to set up a charitable lead annuity trust (CLAT) with a portion of the WebSite stock. The charitable lead annuity trust will have a term of 10 years (to tie-in to when their oldest child will be ready for college), and their alma mater will be the recipient of the annual quotleadquot payments from the CLAT that will be set at 90,000 (4.5 X 2,000,000) for the full 10 years. The financial results shown below assume that PH and his wife both die in year 10 following the establishment of the CLAT, so that an overall comparison of the alternatives can be properly evaluated. In fact, however, PH and his wife actually live long and healthy lives, enjoy being with their family, and since they had such a positive experience with this first CLAT, they become significant philanthropists in their community. 1 This adjustment is the gift tax of 683,938 paid in the charitable lead trust example invested at 4.8 after tax for 10 years, which is then reduced by 50 for the estate tax that otherwise would be payable. 2 This adjustment is the difference between the 1,000,000 of gift tax paid in the quotgift nowquot example and the 683,938 of gift tax paid in the quotcharitable lead trustquot example invested at 4.8 after tax for 10 years, which is then reduced by 50 for the estate tax that otherwise would be payable. Case Study 3 Non-qualified stock options, transfer of the options at death, and prior to exercise directly to a charity. In addition to receiving her incentive stock options from Dotcom Corporation, Ms. Technonerd also was granted an even greater number of non-qualified stock options (NQSOs) in Dotcom. These NQSOs actually form a very significant portion of Ms. Ts overall wealth. The various tranches of the options, all of which are now vested, are exercisable over differing periods of time, at different prices. The top echelon at Dotcom are actually very enlightened, and they have amended all of their NQSO plans to allow the options to be transferred to members of the families of the grantee-employees, or trusts for their benefit, and to charities. During one of Ms. Ts conversations with her favorite planned giving officer at her favorite local charity, Ms. T came to understand the devastating income tax and estate tax effects on her family after her death when her family exercises her NQSOs. Ms. T believes that she can provide a very significant gift to her favorite charity at a very low quotcostquot to her family by amending her living trust to make a gift at her death of some of her NQSOs directly to the charity. Ms. T does make that amendment to her living trust. Her gift includes the NQSOs and enough cash for the charity to be able to exercise the options after the charity receives the options. Fair market value of option Exercise price for the stock No planning: death now Direct gift at death of the non-qualified stock option to charity Fair market value of option at death Additional cash for exercise of the option Total assets for family or charity Total estate taxes Total income taxes on IRD Net after-tax wealth received by the family of the donors Benefit to charity Case Study 4 Non-qualified stock options, transfer of the options during lifetime, and prior to exercise to a charitable lead trust. WebSite Corporation has been very interested in retaining its valued employees. So, in addition to the adoption of incentive stock option plans, WebSite has also created a number of NQSO plans. Mr. PropellerHead (PH) is one of the employees who now owns vested NQSOs. The plans for these NQSOs allow the options to be transferred to members of the families of the grantee-employees, or trusts for their benefit, and to charities. Since PH and his wife had such success with the charitable lead annuity trust that they established to provide for their childrens education in case study 2, they also immediately establish a second CLAT with a long-range view for their children. And, instead of funding the CLAT with stock, PH and his wife transfer some of the NQSOs to the CLAT instead. The NQSOs that are transferred to the CLAT have a relatively small value at the time of the transfer, and the exercise price for the NQSOs is very insignificant. Mr. and Mrs. PH understand, however, that they must also transfer enough cash to the CLAT, in addition to the NQSOs, so that the CLAT will have the liquidity to make the payments to their college over the 10-year term of the CLAT. PH again expects the value of the stock to be 8,000,000 at the end of the term of the CLAT. After the end of the 10-year term of the CLAT, the trust does not immediately distribute to the children, but the assets in the trust are then held for the benefit of the children for a number of years. As in case study 2, the financial results shown in the financial results table below assume that PH and his wife both die in year 10 following the establishment of the CLAT, but, as before, they continue to live a long, full, and philanthropic life. Fair market value of option today Fair market value of stock in 10 years Exercise priceincome tax basis in the stock in year 10 Charitable lead annuity trust payout rate Charitable lead annuity trust term No planning: death in 10 years option exercised just after donors death Gift now of the option through a charitable lead annuity trust option exercised just after donors death Value of option today Additional liquid assets transferred to the charitable lead trust Adjustment due to transfer of additional assets to the charitable lead trust Reportable taxable gift today Gift tax paid today by donors Adjustment due to early payment of gift tax Value of option in 10 years Total estate taxes Total income taxes at ordinary income tax rates Adjustment for donor estates payment of the income taxes after death in the charitable lead trust Value of additional assets remaining in the charitable lead trust Net after-tax wealth received by the family of the donors Benefit to charity 1 This adjustment is the additional assets of 200,000 paid into the charitable lead trust invested at 4.8 after tax for 10 years, which is then reduced by 50 for the estate tax that otherwise would be payable. 2 This adjustment is the gift tax of 115,717 paid in the charitable lead trust example invested at 4.8 after tax for 10 years, which is then reduced by 50 for the estate tax that otherwise would be payable. 3 This figure is the ordinary income tax at a rate of 40 of 3,200,000 paid in the charitable lead trust example by the donors estate after his death. 4 This adjustment is the income tax of 3,200,000 paid in the charitable lead trust example by the donors estate, which is then reduced by 50 for the estate tax that otherwise would be payable. Case Study 5 Non-qualified stock options, transfer of the options prior to exercise, but following the death of the option holder to a charitable remainder trust. Ms. Technonerd wants also to provide benefits for her daughter, following her death, from more of her Dotcom Corporation vested non-qualified stock options and ultimately for her favorite local charity. The planned giving officer suggests the following gift planning strategy to Ms. Technonerd. Ms. T and her husband think that this strategy is so significant and so powerful for their family and the charity that, without any further coaxing, they immediately make an appointment with their equally enlightened attorney who makes the appropriate amendments to their estate planning documents. The estate planning documents for Ms. T and her husband are amended to provide that following both of their deaths, a charitable remainder unitrust will be established for the lifetime of their daughter who is now 35-years old. The CRUT will provide for a payout rate to their daughter of 6. The CRUT will be funded after both of their deaths with some of the NQSOs of Dotcom that have a value of 1,800,000 and a strike price of 200,000. The gift to the CRUT includes cash of 200,000 so that the CRUT will be able to exercise the NQSOs without diminishing the principal of the CRUT. This gift planning strategy provides significantly greater benefits for Ms. and Mr. Ts daughter over her lifetime than if the NQSOs were simply transferred to her by Ms. and Mr. T after their deaths, primarily due to the imposition of the income tax on the quotincome in respect of a decedent, quot which their estate would be required to pay if the NQSOs are transferred directly to their daughter. This strategy, and its financial results, are very similar to those expected from a testamentary transfer of assets in qualified retirement plans and individual retirement accounts to a charitable remainder trust. 1 This adjustment is the exercise price of 200,000 and the estate tax of 892,360 paid from other assets in the charitable remainder trust example, which are then reduced by 50 for the estate tax that otherwise would be payable. Case Study 6 Restricted stock, transfer of the stock prior to lapse of restrictions, but following the death of the stockholder to a charitable remainder trust. This case study is actually quite similar to the strategy shown in case study 5, except that the asset used to fund the 6 charitable remainder unitrust for the benefit of Ms. and Mr. Ts daughter is restricted stock rather than non-qualified stock options. Again, the top management of Dotcom Corporation is to be commended. One of the restricted stock plans that Dotcom adopted (and, of which, Ms. T is a participant) creates quotsubstantial risks of forfeiturequot of the stock based on earnings performance goals for the company rather than the more usual restrictions based on the continued employment of the employee-owner of the restricted stock. The plan also allows the restricted stock to be transferred to members of the families of the owner-employees, or trusts for their benefit, and to charities. So when Ms. T and her husband visit their attorney to amend their estate plan to provide for the creation of the charitable remainder trust following their deaths for some of the non-qualified stock options as described in case study 5, they also include provisions for the establishment of another, but similar, charitable remainder trust that will be the recipient of a portion of the restricted stock. The restricted stock has a value today of 2,000,000. And, in fact, after the deaths of Ms. and Mr. T and the receipt of the stock by the CRUT, Dotcom achieves its earnings goals specified in the restricted stock plan and the stock is no longer restricted. Since, at the time of Ms. and Mr. Ts deaths, the restrictions on the stock had not yet lapsed, the compensation income element quotbuilt inquot to the restricted stock is considered as quotincome in respect of a decedent, quot which is potentially taxable to their daughter at ordinary income tax rates. Similarly, as in case study 5, this gift planning strategy provides significantly greater benefits to their daughter when compared simply to allowing their daughter to receive the restricted stock directly. And, of course, there is ultimately a significant benefit to the favorite charity of Ms. and Mr. T. Last time around you learned all about how to break into corporate development from getting interviews to answering questions to following up successfully. But just as with sales amp trading. the more interesting part is what you do on a daily basis in corporate development . what the lifestyle is like, how much you get paid, and what you do afterward. So lets get started with part 2 of this interview and dive into all of those plus how this interviewee got a unique experience in China out of his role. Q: What do you spend most of your time doing at the pre-IPO tech startup youre working at Partnerships MampA deals Due diligence Modeling Bottling A: Most of my work has been for MampA deals and partnerships. I mentioned that there was corporate strategy and competitive analysis as well. but I dont spend nearly as much time on those and most of my work is figuring out which products are hot and how competitors are performing in each area. Most of the deal work consists of reading through documents, modeling (mostly merger models, valuation, and also looking at deal structures such as earnouts ), and doing due diligence. Ive also been to China several times to meet with companies there and learn about our market abroad even though the company hasnt gone public yet, theyve been looking for ways to expand more quickly. As part of that Ive also had to analyze industries outside of our core business and create presentations for the senior management team here. They8217re concerned with growth because its difficult to have a successful IPO without at least double-digit growth, and if you look at the biggest and most successful tech companies out there right now, theyre often closer to triple-digit growth. MampI Note: An earnout is a deal structure where some of the payment is contingent on the performance of the acquired company. So lets say youre paying 100MM for another company if you include a 10MM earnout, you would pay 90MM in cash upfront and then the remaining 10MM later on if the company hits certain performance goals (20 revenue growth, 5MM EBITDA, etc.). Q: Right. So it sounds like you dont do much sourcing A: Not really unlike, say, smaller PE firms, they dont make me do any cold-calling and they dont track how many companies I8217ve contacted. Were well-known in the space, so if I have to contact someone I8217ll just email them and usually get a response quickly. I contacted other companies for 1-2 months in the beginning, but after that Ive only been working on deals that were brought to us. Since our market is well-established, its tough to come up with creative new ideas that the executives havent already thought of. Q: So how much time do you spend on deal work vs. competitive analysis vs. researching new markets You mentioned that you spend most of your time on MampA deals and partnerships, but whats the split MampA Deals and Partnerships: 50 Researching Industries and Markets: 25 Competitive Analysis: 25 If youre wondering about travel, Ive been to China 4 times so far in 2 years and Ive traveled domestically about 2-3 times not a huge amount, but once every 2 months or so Ill go somewhere. Q: You lumped together partnerships and MampA deals but Im assuming that theyre at least somewhat different since youre not acquiring 100 of a company in a partnership. How does the work actually differ Most readers are familiar with the MampA process but not partnerships. A: The main difference is that theres less due diligence and more deal analysis with partnerships. When you acquire another company, you really need to know what youre getting into if the books dont look right or they have some kind of random legal problem, you could end up with the next Enron or WorldCom. So you have to be incredibly thorough and bring in outside consultants, lawyers, and other advisors and spend millions to verify everything. With partnerships, though, its more like youre dating someone rather than getting married, so you dont need to scrutinize every single point in their business. But the deals themselves can get very complicated, far more so than the average MampA deal. While some MampA deals can have complex structures a cross-border deal where you acquire a subsidiary of another company or a reverse merger, for example the average deal is pretty simple: you pay a mix of cash, stock, or debt for 100 of the other company. But the average partnership has significantly more complex terms . for example, you might have an upfront payment thats based on referrals or cross-selling one of your products, then you might also get paid a certain amount for back-end or subscription sales, and then you might get some type of fx incentive for certain performance goals. Since theres more variety to the deal structures, you spend more time building models in Excel and figuring out the key assumptions and drivers. Ladders, Hours, Pay, and Culture Q: So if you like modeling, it sounds like working on partnerships might be right up your alley. What about the hierarchy Is it like the investment banking hierarchy where you have a rigid structure and narrowly defined roles How easily can you advance, and is CFO or Group Head the ultimate goal A: The exact ladder depends on the size of your company at mine, it goes something like this: Associate (also called Manager or Analyst, it varies depending on the firm) Manager Director Senior Director Vice President C-Level positions So the titles are somewhat different from banking one key difference is that the Vice President title means a lot more here as its one removed from the top, whereas in banking its more of a mid-level role and Director is usually above VP in the hierarchy. At F50 and F500 companies, there are more levels than this for example, you might see multiple Manager levels and titles like Senior Manager or General Manager in addition to just Manager. The main difference with promotions, compared to banking, is that the timetable is more random and youre not following as strict of an up or out policy. Whereas you could become a Managing Director at a bank in 10-12 years if you start as an Analyst. youre not going to become CEO 10-12 years after you start working in corporate development in fact, that might not even be an option at all. Most likely you could become Head of Corporate Development or VP of Corporate Development, but you wouldnt go beyond that unless you could show a track record of managing large groups of people and doing more than just deal-making. Q: Wait a minute if thats true, then how do you become CEO It sounds like you cant advance to that position organically, so do you have to start a company yourself first A: I wouldnt say you cant advance naturally, but its hard to reach a C-level executive position from corporate development specifically. Our CEO was one of the first investors in the company and was on our Board as an investor long before he took over the CEO role. Before that he had also been the CEO of another company, similar to Tony Hsieh at Zappos . In the tech industry, your best option for becoming CEO is to start the company yourself, do well, exit, and then use your status to leverage your way into other CEO positions. That may not be as applicable in industries like manufacturing where you dont see conventional startups at a company like GE you could advance from within the rank-and-file, but it might take decades to reach the CEO level (see: Jack Welch ). Q: So it sounds like corporate development, or joining a normal company in general, is not the best path to riches. What about the hours Do you have to pull all-nighters and work weekends like in banking A: Overall its a 9-6 job, but occasionally I get rough weeks depending on whether or not there are live deals. So Id say the average is about 40-50 hours per week . which may climb to 60-70 with deals in progress. Ive stayed past midnight before when weve been working on live MampA deals and have been under pressure to get them announced and closed quickly, but I havent yet pulled a true all-nighter. If were not busy they would probably even let me work from home occasionally as I mentioned before, its a very small team so its not as if Id miss dozens of meetings during the day. So far, no weekend work except for when we come up on a tight deadline with a live deal. Q: So you actually get to have a life outside work, how about that are you sure you work in finance The hours sound much better, but doesnt that mean the pay is also much worse If youre not working that much, you cant possibly earn that much, right A: The base salary range for corporate development here is 90-110K USD . We also get a fx, but its much smaller than in banking if youre at a bigger company, you might be looking at 150K all-in compensation as a first-year associate in the corporate development team. That8217s still a great number, but it is less than what youd earn as an associate in banking, PE, or at a hedge fund. Its tough to say how the pay changes as you move up the ladder, because it depends on your industry, the size of the company, and how the group works. In general, you should expect more modest pay increases compared to banking a 2 nd year associate might earn 120K in base salary and a slightly higher fx. People above my level might make around 200-300K all-in, and by the time you get to VP and C-level positions you get into the 500K-1MM range, with some C-level executives earning in the low millions all-in. You will see lower figures at earlier stage companies, with a greater percentage coming in the form of stock grants, options, and Restricted Stock Units (RSUs). Q: Im glad you brought that up, because I was just about to ask you about that one can you tell us about stock-based compensation In banking this is something you never have to think about at the junior levels because your pay is limited to base salary cash fx, but at normal companies you may get paid with stock options as well. How much are they worth, and what are the nuances you need to be aware of A: Ive earned around 30-40K worth of stock options over my first 2 years here that figure is based on my companys valuation in its most recent round of funding. That sounds like a nice fx in theory, but at most pre-IPO startups these options are worthless until you can actually exercise them. That is starting to change with people like Yuri Milner at Digital Sky Technologies. who invest huge amounts in late-stage companies and give founders and employees liquidity prior to the IPO, but if youre at a lesser-known company ( not FacebookZyngaTwitterGroupon) dont count on that. Secondary markets have been growing lately as well, but again, unless youre at a hyped company there may not be much of a market for stock or options that you hold. Besides the points above, you also need to be aware of the type of compensation youre getting, the companys valuation . and the vesting period for any options you get. Q: Right, and that information might be very difficult to find depending on the company. I know you could probably write a book on those topics, but can you tell us the key points A: Sure. First, there are a couple different types of stock-based compensation: Stock Grants: You receive x number of shares in the company, which vest over y years. Stock Options: You receive the right to purchase x number of shares in the company for y price, and those rights vest over z years. Stock Awards: You receive x dollar amount of compensation, and the company then uses that dollar figure to purchase y number of shares on a certain date, and those shares then vest over z years. Restricted Stock Units (RSUs): These are similar to normal stock grants, but there are restrictions on when you can transfer or sell the stock and the tax consequences may be different. Lately, RSUs have been getting more popular in the US because the SEC requires private companies with over 500 shareholders to disclose their financial information but if you have RSUs, you dont count as a normal shareholder. So that loophole has allowed companies like Facebook to remain private and not disclose financial information for long time periods. In terms of options, the key point to be aware of is that there are ISOs and NSOs Incentive Stock Options and Nonqualified Stock Options with different tax consequences, namely that ISOs are much better for you since theyre taxed upon stock sale and may receive long-term capital gains tax treatment . The biggest issue here is getting information from your company in the first place theyre not going to share the cap table with you, so at best you might be able to get the most recent valuation from them or the total of options outstanding and the average exercise price. MampI Note: The cap table or capitalization table is a detailed breakout of shares, options, and RSUs owned by each employee and investor in the company and the accompanying grant date, vesting period, and exercise price information. If you had the cap table, you could calculate how much everyone would earn when the company is sold for a certain price. As you can imagine, this is highly sensitive and usually only the CFO and CEO have access to it. Q: OK, enough about stock options Im sure weve confused everyone enough by now. What about the culture at your company Are people laid-back or is it more intense like in banking There8217s still pressure to perform and you cant just slack off and expect to get ahead but since youre not at the mercy of psychotic clients all the time, you dont have as much stress. You still need solid attention detail, but the numbers matter more than the formatting and its not the end of the world if you forgot to change the font size on page 51 of your presentation. Most people here are older than me . so that creates some differences compared to what you see in banking. And since my department is small, Ive mostly hung out with others sitting around me but who don8217t work directly in my group (we have bullpen seating). Overall you dont get to know your co-workers as well as you do in banking, but you do get more social interaction than if you were at a small PE firm where its just you and the Partners. China, Job Satisfaction, and Exit Opps Q: You mentioned before how you had the chance to travel to China and meet with companies there how did that come up Did you jump, or were you pushed A: I never asked about it they brought it to me after I joined. The CEO was very interested in emerging markets and wanted us to look into expanding there. I had no expertise in China and didn8217t have the language skills to conduct business there but at most companies, someone knew English or we had a translator. It was pretty much just the VP of Corporate Development and I finding interesting companies in the region, emailing them to set up meetings, and then traveling there to meet them. We didnt come in with a particular purpose or say we were looking to acquire or partner with them it was more exploratory and we spent most of our time trading information, building the relationship, and seeing if we could help each other out in any way. Whats the best part of your job How do you like it compared to banking A: Overall I like it, and Ive enjoyed the day-to-day stuff more than what I did in IB. If you want to move into an operational role after doing banking, corporate development is the way to go since you work with senior management across different departments. Its a much broader role than being an analyst or associate in IBPEHF and at a startup you really have to be a jack-of-all-trades rather than just an Excel jockey. The 2 best parts of this job: You get to work on something over the long-term and you have a singular focus building your company. In IBPE youre always looking at different deals and youre not really building the business over time in the same way you do at a product-based company. You get a lot of exposure to executives . Until you advance pretty far up the ladder in banking, youre never going to interact with Group Heads or the CEO but I8217ve done plenty of that in my role here. Q: So what8217s next for you Are you going to stick around there or move elsewhere A: I mentioned this in part 1. but Im planning to apply to top business schools in the future. Ive always been interested in investing, so I see myself going to a mutual fund or hedge fund in the future if I can get into a top school and gain access like that. Q: Right, but wouldnt that be like going back to banking in that youre just looking at one-off deals rather than building 8220long-term value8221 A: Yes it would but theres also a disadvantage to working at a normal company, which is that the deals you can do are more limited and they must be related to the companys core business. Overall I definitely enjoyed this experience and if I had to go back, I wouldn8217t do anything differently (i. e. go into PEHF instead) but in the long-term I do see myself as more of an investor than an operator. Q: You mentioned applying to top business schools what are the key challenges you8217re facing vs. the typical bankerPE guy A: Someone who went to an Ivy League school, then worked at a bulge bracket bank, and then a mega-fund has top names on their resume, so its tough to compete there although my current company is well-known, my undergraduate university and bank dont have the same brand-name recognition. So rather than competing with the banker crowd directly, I get around that by positioning myself differently . There arent as many people in my position, and my industry is unique so that lets me tell a story they havent heard a million times before and give different long-term goals compared to what everyone else is saying. Q: Awesome good luck with that, and thanks again for your time. A: Sure, no problem enjoyed the chat I am a first year MBA student at a target European business school however, I was unable to secure an investment banking internship for this summer. I have around 3 years work experience in big 4 MampA advisory (financial due diligence) in the U. S. Will I still have a shot in recruiting for full-time IB positions next year Would you say corp dev would realistically be the best internship I could pursue this summer to continue to build my resume Just to clarify8230 In Europe, the banks rarely tend to recruit 2nd year MBAs for full-time. They mainly hire from the summer intern class. Is this the case in the US or would banks be willing to consider an applicant for full-time that did not complete a summer associate Ib internship If so, would you would agree that a summer internship in the US with a company in a 8220true8221 corp. dev. capacity (gaining dcf, merger model experience) would be the best experience to improve my profile given my prior experience in big 4 TAS. Banks in all regions mostly hire from their intern classes. You could still win an Associate role without a prior internship if you go for off-cycle roles, but it8217s tougher and more random. See some of the examples here: Yes, corporate development is your best option. If my plan was to do banking for 2-3 years, then corp dev for 3-5 years to gain industry experience meet contacts understand capital structure optimization and strategic expansionsamp acqusitions so I could evetually start my own PE firm. however, the opportunity to dive right into corp dev presented itself (wo the banking experience). to what extent would you say banking is even necessary. would the skills picked up in corp dev potetentially compensate for the lack of ibanking experience on the resume(given that I atleast have BIG4 TAS). Or would you say banking makes a huge difference even in the long term and should therefore be my sole focus for full time (given that a summer associate position is likely out of the question at this stage) If you have the opportunity to do corporate development full-time, you should take it. IB won8217t make a difference. It will make a difference if you want to move into an established PE firm eventually (which you would probably have to do before starting your own firm). The most desirable path is IB to PE then to HF. Do u think it would be a great career option if one were to move from ib (after working in IB for 7-8 yrs) to corporate development. i know one would have to take a fx cut but no working for 18 hours and you have time for yourself. fixed pay is also decent so what say How much of the work in corp dev involves modelling I read a guy who described an lbo model and he said the deal he did, out of the total work only 20 of it was modelling. which is too less imo. Which role involves more modelling and analysis It depends on what one is looking for. If you8217re looking for a change in lifestyle, it may be a good idea to move. I am not sure the of work that involves modeling, though the interviewee mentioned that 8220most of the deal work consists of reading through documents, modeling (mostly merger models, valuation, and also looking at deal structures such as earnouts), and doing due diligence8221 so I would imagine around 30-40 of the work is modeling Just a comment8230 I8217m in my 208217s and work in corporatebusiness development at a post-IPO tech startup. I8217ve been there since the pre-ipo days and report directly to the CEO. When I joined the company I basically did everything business8230sales, marketing, bus dev. Now the company is much bigger and has departments for each function. I think a lot of people don8217t realize that the job of a corporate development person is to only execute deals. You should never be the person that pitches a deal internally. This is different from ibanking where you are pitching deals all day. The product marketing person or GM of a business unit should be the one pitching the deal internally. This is difficult for ex-ibankers who are used to pitching deals. All you do in corp dev is run models and negotiate term sheets. This might only apply to the tech industry, but if you really want to run a business and be the person pushing for a deal to get done then product managementmarketing is a much better career path. The highest you can go in corp dev is CFO, which is rare. CFOs never make it to CEO in tech. Just a little forewarning8230the mampa process at a bank is completely different than a company. Corp dev people just maintain databases, models, and negotiate term sheets. You aren8217t really creating revenue for the company, which is what really matters. My advice for bankers who want to go to the corporate side and work for a tech company is to work in product marketing if you can. Doing deals is really easy. Creating a product from nothing and generating revenue out of it is hard. If you really want to climb the ladder, then you need to actually be responsible for a product. If you can generate revenue for your company, then they will let you do whatever you want after that. The best corporate development people I know in the tech industry all came from product management backgrounds, not ibanking. One thing to be careful of in corporate development is that the experiences are highly variable depending on the company. There are tons of middle-market companies with small corp-dev groups (1-3 people) that don8217t actually do any acquisitions, or do maybe one in a blue moon. They keep the corp-dev function around both because it looks good to the markets to be seen as a buyer, because it provides good market and competitive intelligence, and because maybe, just maybe, the perfect deal will come along and they8217ll pounce. Great for the company, not great for your career. So look very closely at the acquisition history of the company before you join, and don8217t believe promises about the future unless you8217ve seen past performance. Also, some really big companies (I8217ve heard that HP is one) have massive corp dev groups but only do really big deals, which means that unlike the interviewee8217s experience you will never get near the deal itself as a junior employee, but rather be stuck churning out excel models. Another downside of corp dev is that you have to deal with corporate culture and corporate politics, which is completely different from the meritocratic, ambition-driven environments you find in top banks and consulting firms. There8217s a lot of Dilbert-style mediocrity out there, and often blazing in w your fancy MBA and BB credentials can make you very threatening to the corporate middle management that has toiled away for decades to get to VP level, and if you are not careful you can get a target put on your back pretty quickly. You can even end up being threatening to the C-level (including the CEO), who at a middle-market firm may not really have any substantial MampA experience, and find Wall Street to be a bewildering and threatening place. I used to think corp dev was the bees knees, and if you hit the right spot 8211 like it sounds your interviewee did 8211 then it definitely has all the right elements to be both incredibly stimulating while preserving some lifestyle benefits. However the reality is often far from this. Obviously I8217m slightly bitter from my own experience, but just wanted to provide a counterpoint to the awesome experience the interviewee had (I have to admit I8217m jealous). Thanks for sharing, those points are definitely true. It is very hit or miss, especially at very big companies much smaller companies as well. Let me counter you Big Companies with small corporate development teams arent really worth it. There wont be much deal activity. and hoping that you will pounce on one is not a great idea. So dont go there. My boss(btw i work at the 5th largest audit firm. in audit. below the big 4) did go to a LARGE blue chip Co in their MampACorp Finance dept and there was very little activity. it was recession and they wanted her to do some middleback end work. Needless to say she quit. You said HP they do big deals. but dont allow junior analyst to get deal exposure. But doesnt the same happen in I-Banks at times. read 8216get my coffee8217,which is million times worse than being an excel monkey You said one has to deal with corporate culture and politics. Let me tell you office politics exists everywhere. At i-banks as you said its meritocracy. So the person who brings in the clients and the money for the firm is looked upon (not the people who work under him)The person who brings in the most amount of money is sort of treated as a demi god. as more money means more fx and more analysts to pamper. Doesnt this create a money minded 8216Toxic culture8217 which is far worse than corporate culture (mind you. you can enjoy the latter if youre in the right place) and which is very prevelant in american investment banks. I didnt understand youre point about dilbert style mediocrity till the end of your 2nd para which ends with 8216finding wall street bewildering8217 Could you explain Id rather work in a bluechip Co8217s corp developmentfinance dept which has a good mampA history rather than at a BB. I may have less money but i will have a life, all the basic neccessities and with ability to spend on occasional luxury. id be very happy Just wanted to second J8217s point on lots of things 8211 particularly re the dilbert-style mediocrity (but to be fair also some very bright people as well, not just talking about myself), painful politics, and the rampant inferiority complexes all around. However, I did want to point out that people don8217t join corpdev teams just for nonstop deals. Most of us (at least from other folks I8217ve talked to) wanted operational experience as well. And you definitely get that from all the different projects you can work on. There are pros and cons and for the most part, I8217d say the tradeoff is usually pretty fair. Pay can be highly variable depending on company and industry though. Kudos on the awesome website I8217m interested in breaking into corporate development. I am a former IP attorney currently working in the Finance department (in a non-finance role) at a F500 company. With no finance background, how can I self-educate myself on the ins and outs of corporate development so I8217ll know what I8217m talking about when I approach, say, the VP of Corporate Development about opportunities to transition I know there8217s a lot on this website (which is great, by the way), but much of it is more specific to true banking. The best approach is to contact people (alumni LinkedIn clients co-workers) in corporate development and ask them directly what they do8230 then you get the benefit of networking as well I8217m in a somewhat similar situation. I went to a T20 undergrad in engineering then directly to grad school in Europe since I realized i wanted to break into finance. I did 2 Masters at a T20 Europe school in Int8217l Mgmt and Finance. My grades were about 3.0 average throughout. I8217m now in South America working at a holding group that owns 7 companies related to engineeringconstruction, real estate, infrastructureconcessions, and industrial services. I work in the Infrastructure department where my work is most closely related to project finance. My responsibilities primarily involve due diligence (in the sense of obtaining all the inputs before financial modeling can be done), and should the deal go through, I would also handle execution. My company is beginning to internationalize, and I feel that a formal corporate development department will be formed (or should be) and I8217m figuring out how to get involved in that area should it be formed. In my area i do relate with much of whats mentioned in this article (exposure to C-Level execs, all projects are long-term, partnerships, etc.) I took the job because the opportunity was there, but I still want to break into banking because I feel that I have way too much downtime and I want more exposure to transactions, execution and financial analysis. Now i do financial analysis, but very little as opposed to technical amp legal analysis and coordination. I work similar hours to the ones described in this article. I do also find myself the youngest one by far in my department (I8217m 24, the 2nd youngest person is 29) and while I do have friends, i also find myself wanting for more camraderie in the workplace. I8217ve had this job for 5 months now. For the time being (unless something happens) I8217m planning on sticking around to gain experience. But I do notice that moving up in this company takes a long time. I8217ve already done graduate study (not MBA) but attending top business school is something I am interested in as well if it can facilitate entry into investment banking. I feel my profile and experience are geared towards project finance, but also potentially infrastructure related finance (oil, energy, transportation, etc.) So, question: based on my profile and situation, do you have any advice, comments, insights on my profile and tips on how to move towards my goal of breaking into finance I know that networking helps, but most of my exposure is to industry executives (and not finance), plus I8217m in South America (a ways from NYC and London). Also, I didn8217t mention pay 8230 but in South America pay is shit compared to the numbers I see on this site 8230 so, obviously it8217s a motivating factor to move to NYC or London (I have US Citizenship) 8230 I moved here because of the opportunity for work experience, but the long term goal is to move back to a 1st world country (the novelty of living in a 3rd world country wears off quickly, and you miss things you used to take for granted). I8217m not sure what your question is specifically, but in general your best bet would be to go to NYC or London in-person to network at those places and focus on PE infrastructure funds or maybe larger companies that also do corporate development in those areas. I would not bother with an MBA unless in-person networking fails. Thank you for the response. To clarify, I want to break into investment banking at the associate level. I8217m going to be doing strategy development and financial analysis for my company (I just got word this week). The work and experience I know I will enjoy. However, the pay is still shit. My question is: how long should I do this job to have relatively significant experience to be able to break into investment banking as an associate by networking and not doing an MBA I8217m assuming that experience in something related to finance, like corporate development, is requisite to at least prove that I know my stuff, along with my Masters in Finance to be able to justifiably look to break in as an associate. Is this a logical assumption I don8217t think it8217s possible to network your way in at the associate level without prior IB experience unless the market is frothy. You might actually be better off trying to get into PE from there. Most large banks won8217t hire you unless you do an MBA or you8217ve done banking elsewhere before. Manuel I am very interested in your experience, and was wondering how can I contact you. I am planning to move to South America8217s infrastructure market. From someone who is familiar with the process of recruiting in general and both the world of High Finance and Startups, my question is the following is it slightly easier for someone from a non pedigree completely random background to break into the world of startups vs. investment banking When I say slightly easier, a 1 percent chance of breaking in is still better than a 0.000001 chance of breaking in. Although most of the key employees in startups today have blue chip educational and experience backgrounds, you sometimes read in the histories of both High Tech and Granola product startups of key employees from random backgrounds who manage to get hired at a early to middle stage and later end up winners on IPO day or even key executives twenty years later. I will give some examples: 1. Chris Espiona, a high level product VP at Apple happened to be Steve Wozniaks teenage computer hobby buddy. He didnt have much skill at first and just learned as he went along. He had no college degree and was hired to do grunt work in the garage. 2. One high tech startups hired some former communist, pot smoking hippie, who was willing to work in the garage for stock options as a tech grunt. Of course almost a decade later, he ends up being the CTO with 64 million dollars on IPO day. 3. One organic products company entrepreneur hires his friend from his volunteer days with some leftist third party political campaign because his friend seems detail oriented when the company is run out of his barn in Vermont. Twenty Years later he is a 5 million dollar a year Chief operating officer. 4. One environmentally friendly sporting goods company entrepreneur ( like Patagonia) meets an Australian hippie surfer type on a rock climb in Peru and senses that he is great with people, hires him as the first salesman. Twenty years larter, he is VP of marketing. To sum up, is it still possible today for a person from a random background to break into the world of startups, like the people in the above scenarios, or has the world of startups become as structured and pedigree based as finance The short answer is that it is 10000x easier to 8220get into8221 a startup with no pedigree because no one gives a crap 8211 they just care about results. Think about the 8220pedigree8221 Mark Zuckerberg had in 2003. It definitely helps to know the right people and have connections in places like Silicon Valley but it is not essential as long as you get results. I just saw an ad for this role in a real estate company in SGP, open to fresh grads or those with 1-2 yrs of relevant experience: Job description: 8230provide analytical, corporate finance and general support services to the team which will include high level Group wide interaction 8230.assisting in transaction execution and marketing 8230performing fund analysis 8230conducting market and industry research Does this sound like corp development to you Yes sounds like it I have a question regarding the corporate development part 2. I8217m currently working as an analyst in the corporate development depart at CIBC. I8217m a co-op meaning I8217ll only be here for four months. I8217m wondering if this position will set me up for IBD (in the sense that how will IB recruiters value this internship8230or do they look down on corp dev), which I8217m interested in for full time recruitment come this fall. Grazie in anticipo. John They will value it, but not as much as an IBPE internship when it comes to IB recruiting. Hey, I am going for an interview at cibc corp dev. What was the interview process like Focus on fittechnicaletc Any tips Thanks Hey any chance at a Public Finance DCM interview Or, better yet, since it looks like you have a DCM interview lined up at some point in the future, could you maybe ask how it compares to PubFin Thanks. I love the site Yes both of those will be covered in the future. Have been busy close to dying due to health reasons so haven8217t had much time lately. From the looks of it, Corp Dev work is I-Banking with a lower salary ceiling, and without the banking hourslifestyle. If this is the case, I would assume that this would be a career path that would be highly sought after. I have read in some previous comments on part 1 of the series that it is easier to get a corp dev associate position out of a top B school than it is to get a banking associate position. 1) is this truly the case and if true is that solely about the money 2) if you come into B-school without banker experience trying to get into corp dev, is it better to pursue a banking internship or a consultingstrategy internship for the summer 1) Yes that is probably true, partially money but also prestige. 2) Either one works, banking is probably better for a transactional role though. This may be a stupid question, but why would a company, F500 or otherwise hire someone fresh out of MBA to a corp development role with no banking experience, even out of a HSW, when they can have a banking analyst Supply and demand. Most banking analysts don8217t want to do it, so often times firms have no choice but to hire newly minted MBAs Thanks for the reply. I guess if cash and prestige are the main driving factors that does make sense. What percent of new corp dev associates come from MBA as opposed to from banking analyst programs Not really sure about that one but over 50 probably still come from banking analyst programs. I work in CorpDev. Most people I8217ve meet in the industry went to i-banking after collegeMBA and move later to corpdev. Other than being generally accepted as the way-we-do-things, the bank prestige helps open doors for exit opps. The trade-off between long hoursno life but much more money is more appealing to someone fairly young compared to someone a bit older who wants a family or just a life in general. I recommend a banking internship over consulting. Thanks for your input Does anyone else think that being an operator and creating long term value is useful in investing actually knowing how to do it makes it seem like you8217d have an edge in spotting value accretive things. this would be especially useful if he were to target a mutual fund or a fundamental based value fund. That is a good point, but usually when you8217re investing you don8217t really assess the operations of the company in detail8230 maybe some fundsinvestors do, but most of the time it is more of a financial decision. I agree it could be helpful, but it depends a bit on the type of fund as well. I8217m in a similar situation in terms of backgroundpedigree to date: good undergrad degree (T20), but not HYP etc. and have accepted an offer with a MMMidcap bank. Attending top business school is something I am interested in as well. I8217m curious though, when you say top, do you mean HSW, M7, or top 13 Do you think your experience will be compelling to the top 3 Are you using as consultant Is there anything else you can share in this area MampI, not problem if you can answer this on the interviewee8217s behalf. Speaking for the interviewee, he is really aiming for HSW but might be willing to settle for a top 10 US program since any of those programs would be better-known than his university. He has also done a lot of things outside of work, much more than the usual bankerconsultantPE person and that helps with his story as well. He has a very specific visiongoal that is not that common (i. e. not 8220I want to become a PE Partner8221) and involves what his company is doing the experience in China. I would like to say more but then it would give away where he works. He is not using a consultant but going through friends and others who got into top business schools to get feedback.
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