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descriptionIssue Brief
Posted on: 2/28/2024
Demystifying the DLOM: Discounts for Lack of Marketability for Post-Vest Holding Requirements
Post-vest holding requirements on equity awards, and the discount for lack of marketability that often accompanies such requirements, have become a common feature of the equity compensation landscape. Our experience and anecdotal evidence indicate that up to 10% of S&P 500 companies have such a restriction for their executives.
In this issue brief, we explore how and why post-vest holding requirements are built into a compensation program, when a valuation discount is allowed, and some popular and commonly accepted methodologies to estimate a discount.
