Equity Valuation Services

The Equity Valuation Services practice at Aon Hewitt and Radford works with top HR and finance leaders at technology, life sciences and general industry companies to design, value and communicate equity awards and other complex compensation programs. With a team of valuation and actuarial professionals across the US and global markets, the practice provides a full suite of advisory services covering equity expensing, financial reporting assistance for ASC Topic 718 and IFRS2, relative TSR plan design, proxy advisor policy modeling, golden parachute calculations, sabbatical plan valuations and more.

Governance and Technical Services

The governance consulting practice at Aon Hewitt works with business leaders at companies of all sizes in all industries to understand and assess their potential exposure to the multitude of corporate governance and executive compensation guidelines maintained by shareholder advisory groups and institutional investors to analyze proxy ballot items. The practice provides a wide range of advisory services, including annual governance audits, pay-for-performance modeling simulations, share modeling, stock and incentive plan drafting, and CD&A assistance.

Unlocking Hidden Value

The number of companies adopting mandatory holding periods after equity awards vest is on the rise. Holding periods require award recipients to maintain ownership of vested awards until additional requirements are achieved. While most companies adopt holding periods with governance aims in mind, holding periods carry significant additional value that most firms never fully realize. Our team works with clients to unlock the hidden value of holding periods in the following ways:

  • Explicitly Define a Pathway for Meeting Ownership Guidelines
    Most C-level executives are required to maintain corporate equity holdings valued at between 2x and 5x of their annual base salary. Mandatory post-vest holding requirements, when designed correctly, can directly contribute to and accelerate the achievement of required ownership levels.
  • Improve Tax Positions for Executives
    Mandatory post-vest holding requirements can also help executives improve their tax qualification status for Incentive Stock Options (ISOs) and Employee Stock Purchase Plans (ESPPs) under IRC Section 423. In both cases, the period of time that vested awards are held impacts tax treatments.
  • Reduce Compensation Expense Under ASC718 or IFRS2
    Current accounting requirements in the US and abroad require companies to reflect post-vesting conditions (i.e., mandatory holding periods) in the initial grant date valuation of awards. Applying a discount for the lack of marketability (DLOM) to award valuations is a common technique with both empirical and theoretical backing that firms can use to reduce compensation expense.
  • Create a Pathway for the Recovery of Awards via a Clawback
    In light of forthcoming Dodd-Frank requirements, the adoption of clawback policies, designed to recover compensation in the event of governance or financial failings, is on the rise. Mandatory post-vest holding requirements for vested equity awards provide one of the few practical mechanisms to recover incentive payouts in the event a clawback is triggered.
  • Improve Your Governance Ratings with Proxy Advisory Firms
    Institutional Shareholder Services (ISS) recently updated its equity plan evaluation methodology to include positive scoring for mandatory holding periods. Additionally, ISS views the use of holding periods as a risk mitigating pay practice for its say-on-pay evaluations. Similarly, Glass Lewis & Co. also rates the presence of equity holding periods positively in their equity plan evaluation framework.


Often, our clients tell it best. See what some of our valuation services clients have to say about the work we've done to help them manage complex compensation programs and reduce plan costs.

"Aon Hewitt and Radford's design recommendations were critical for CareFusion when rolling out our first performance equity program with a market condition. The ideas they suggested were innovative and met our objectives of balancing compensation expense with employee perceived value. Further, the concept of adding mandatory holding restrictions not only helped achieve this goal, but also aligned with and bolstered our aim of promoting long-term employee ownership. In addition to introducing innovative concepts like this, Radford was able to ensure that our auditors supported and signed off on the accompanying valuations with confidence."


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"We chose to work with Aon Hewitt and Radford when we first adopted FAS 123(R) because we felt they would offer a combination of strong technical expertise and customer service. Terry and his team have not only provided timely quality information, they have also provided guidance on a variety of equity-based topics and given us access to other resources within their organization as specialty knowledge was needed."

Christine Komola, Senior Vice President and Corporate Controller

Contact Us

Whether you'd like to learn more about designing mandatory post-vest holding requirements, calculating potential illiquidity discounts, or any other strategic approaches for mitigating your equity compensation expense, we're here to help.