Coming up on Wednesday, October 9th is the next episode in our Comp Talks series, during which Cooley’s Rama Padmanabhan and Michael Bergmann – with Ali Murata moderating – will discuss the recent trends, special issues and considerations relating to executive compensation and employee benefits in the context of mergers, acquisitions and similar transformative corporate events. Register now.
Here are four practice pointers from Ali to get you started:
- Start early and involve the appropriate people: Reviewing and addressing compensation and benefits considerations early in the deal process will ensure management and board members are aware of compensation arrangements that could be affected by an M&A transaction – including equity awards, severance, retention, etc. – and how they will work in alternative transaction scenarios.
- Evaluate alternative deal structures to optimize company value: Asset deals, carve out sales, spinoffs, earnouts and options to acquire – each structure choice can produce unique compensation consequences that warrant consideration.
- Year-end deals present special challenges and opportunities: In the rush to sign, remember to consider 280G “golden parachute” mitigation techniques and assess the need for an additional year of S-K Item 402 disclosure on a tight time frame.
- Interim matters matter: Don’t overlook restrictions on ordinary course of business operations during the pre-closing period (e.g., paying out bonuses or implementing pay increases), particularly if the pre-closing period could be long or extend beyond the beginning of a new compensation measurement period.
Authored by
Broc Romanek