Asset Management, Investing, Professional Services & Advisory

Employee Performance, Investor Cash Flows, IRR (Internal Rate of Return), Private Equity

Common practice stock options plan for companies and company managers.

Companies owned by institutional financial investors (private equity or infrastructure funds) often offer company managers incentive plans in the form of stock options.

This model includes a common practice option plan allowing to do sensitivities by changing main inputs in order to be used as negotiation tool and as an annex to the managers’ contract.

This returns analysis model is intended to calculate potential proceeds that could be payable to managers with a stock option plan. The model has two tabs, one with calculation example and another with the relevant text to be included in the managers’ stock options contract.

The model compares the Stock Options vested amount to be paid to the managers with a standard carry to be received by the fund managers and calculates a dilution for fund managers in terms of basic points conceded to Managers. This is a relevant indicator observed by funds when signing stock options plans with managers.

The model includes the relevant information to serve its purpose in a manageable format.