Equity Compensation and Equity Incentive Plans for Dental Practices:
The number one challenge for most growing and established group dental practices is hiring and retaining great doctors (or even good doctors). Equity compensation for dentists and dental team staff is the first thing that comes to mind. Often, doctor-owners will, with all good intentions, promise prospective and current employees "some sort of equity compensation." But what does that mean? Is this a good thing for everyone, let alone the employee? There is far more to developing an equity incentive program than just figuring out how much equity to share and who gets what. That, by the way, is the number one question we get.
A strong word of advice here....DO NOT COPY SOME OTHER DENTAL PRACTICE'S PLAN. State laws are very different when it comes to true equity sharing. Trying to match another group practice's plan can be an economic disaster! You will have a real challenge comparing apples to apples. Compensation studies are almost always misleading and the true economics behind what is presented on the surface can be far from what are the true economics of the equity compensation plan.
The first step is to have a long-term business plan with detailed projections and a basic valuation of your dental practice. How can you know the value of what you are giving until you know what your practice is worth now and what it will be in the long-term?
Here are key things you must consider and understand before you can make a decision on what type of equity compensation plan to have, how much to share and who gets what:
- What is the value of your dental practice today?
- What do you project the value of your dental practice to be in the future?
- What impact does the type of entity your dental practice is have on you and your employee?
- What is vesting and how does it work best?
- How liquidity is the equity and what happens in a liquidity event
- Are you a DSO and where do you share the equity?
- What happens if you want to restructure your practice into a DSO?
- What are the tax consequences of sharing equity?
- Tax Elections
- Should I use fixed percentages?
- How much is earned v granted?
- What are options and how do they work?
- Understanding dynamic modes
- Does phantom stock work better?
- Profits v Capital Interests
- ESOP's v Other Forms of Incentive Plan
- What is the cost of these plans and do I need to file additional tax returns?
- Do you need to share all the financial information now that you have an equity sharing plan?
- Now that I made the promise...now what?
For a more comprehensive understanding of these and many more issues relating to equity compensation and equity incentive plans for dental practices, join us at one of our conferences:
Equity Incentive Plans for Dental Practices
April 24, 2020…. Nashville, TN
June 19, 2020...Chicago, IL
September 18, 2020...Detroit, MI
October 16, 2020... Los Angeles, CA
Seminar Fee - $375
9:00 AM – 12:30 PM
This course starts promptly at 9:00 and will finish at 12:30. Registration and Continental Breakfast 8:30 AM. Dates and times subject to change.
Bonus Lunch and Plan Design Workshop Starts 12:30 PM [Approx 2.5 hours]
Plan Design Workshop - $150 limited to 20 participants.
To register click on the link below