Section 409A of the IRC requires that compensation plans such as employee stock option plans (ESOP) and ESOs vested after 31.12.2004 will be granted with an exercise price equal to the fair market value.

Non-compliance may result in significant tax consequences to the company and option holder that can include Immediate taxation upon vesting of ESO, interest charge at the underpayment rate plus 1% and 20% penalty tax in addition to the income tax.

Our team of certified valuation analysts has extensive experience in valuing private companies, and has performed hundreds of valuations in all fields, from life sciences to internet companies. We invite you to reach out and receive additional information from our Head of 409A Valuations, Roni Birenzweig.

Click here for a quick quote.