Part 19 · Chapter 3

Equity Compensation Overlays: Securities Law and §4960

Law stated as of October 3, 2026 · Equity and Incentive Compensation

Scope and status

This chapter covers the two cross-cutting overlays on equity and incentive compensation: the federal securities framework (Rule 701 for private companies, Form S-8 for reporting companies, Section 16 for insiders, and the resale rules) and the §4960 excise tax on tax-exempt employers' compensation — including the OBBBA covered-employee expansion effective for post-2025 taxable years and Notice 2026-36's interim guidance, the live currency item. The securities units state the compensation lawyer's working layer for the grant and insider-transaction side. The public-company disclosure and clawback layer — Item 402 of Regulation S-K, pay versus performance under Item 402(v), say-on-pay under Exchange Act §14A, and the Dodd-Frank §954 / Rule 10D-1 compensation recovery listing standards — is covered in this Part's companion Public Company Executive Compensation Disclosure and Clawbacks. Filing mechanics, vote administration, exchange correspondence, and disclosure-liability questions remain with securities counsel throughout.

Citations are to primary authority (Securities Act Rule 701; Form S-8; Exchange Act §16 and Rules 16a-1 through 16b-3; Rule 144; Code §4960; T.D. 9938; Notice 2026-36). Related questions are treated elsewhere: award-type tax mechanics in this Part's companion chapteri; and §457(f)/NQDC design for tax-exempts in Part 18 (Nonqualified Deferred Compensation, 409A, 457, and Executive Compensation).

Sections

The opening sections of Part A are shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Rule 701 (private companies)

A1.The exemption and its math

Part 19, ch. 3, § A1

Offers and sales of securities under a written compensatory plan or contract by a non-reporting issuer to employees, directors, general partners, trustees, officers, and qualifying consultants/advisors (natural persons providing bona fide non-capital-raising services) are exempt from Securities Act registration under Rule 701. Sales in any consecutive 12 months may not exceed the greatest of: $1 million, 15% of total assets, or 15% of the outstanding class; options are measured at grant (exercise price), other awards at sale. Rule 701 offerings do not integrate with other exempt offerings. Agency guidance — formal: Securities Act Rule 701 (17 C.F.R. §230.701).

A2Disclosure and the $10 million triggerSubscribers

Part B — Form S-8 (reporting companies)

Part C — Section 16 and Insider Mechanics

Part D — §4960: the Tax-Exempt Employer Excise

D1The base framework (final regulations)Subscribers
D2The OBBBA covered-employee expansion and Notice 2026-36 (central currency item)Subscribers
D3Equity-adjacent applicationSubscribers

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.