Executive Employment Agreements and Change in Control Arrangements

Structuring Golden Parachutes That Promote M&A Opportunities, Withstand Shareholder Scrutiny, and Avoid Adverse Tax Consequences

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, October 13, 2015

Recorded event now available

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Program Materials

This CLE webinar will provide counsel with guidance on structuring change in control (CIC) arrangements in executive employment agreements. The panel will discuss strategies for negotiating and drafting golden parachute provisions that minimize employee taxes and protect employer deductions while furthering company and shareholder interests.

Description

CIC agreements—“golden parachutes”—are an essential component of executive agreements and compensation packages, encouraging CEOs and executives to pursue opportunities for mergers, acquisitions and other corporate transactions even when those opportunities may result in the loss of the executive’s position. Although CIC agreements are intended to protect companies’ interests, shareholders and the SEC are closely scrutinizing excessive golden parachutes that far exceed salaries or don’t reflect performance—such as $100 million to the CEO of a company that laid off 129 workers, or $46 million for the CEO of a troubled company whose salary was less than $2 million.

Counsel must structure agreements that will pass shareholder muster now that Dodd-Frank requires shareholders approve golden parachutes in advance of proposed M&As and other corporate transactions. Counsel must also navigate IRC Section 280G’s tax on golden parachutes and Section 409A’s restrictions on deferred compensation to avoid adverse tax consequences for the executive and company. Buyers conducting due diligence in an M&A must carefully examine the target company’s executive compensation plans to be aware of CIC triggering events.

Listen as our authoritative panel of executive compensation attorneys provides guidance on structuring CIC arrangements in executive employment agreements. The panel will discuss strategies for negotiating and drafting golden parachute provisions that withstand regulator and shareholder scrutiny and minimize adverse tax consequences while furthering company and shareholder interests.

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Outline

  1. Overview of change in control agreements
  2. Potential compensation upon a change in control
  3. Tax implications
    1. Section 280G golden parachute excise tax
    2. Section 409A restrictions on deferred compensation
  4. Dodd-Frank considerations
  5. Drafting and negotiating strategies

Benefits

The panel will review these and other key issues:

  • What compensation strategies are most effective for meeting 280G’s “safe harbor”?
  • How do Sections 280G and 409A differ in defining “change in control”?
  • What key CIC issues should buyers conducting M&A due diligence consider?

Faculty

Liazos, Andrew
Andrew C. Liazos

Partner
McDermott Will & Emery

Mr. Liazos heads the firm's Executive Compensation Group and regularly represents Fortune 500 companies, public...  |  Read More

Panter, Benjamin D.
Benjamin D. Panter

Member
McDonald Hopkins

Mr. Panter advises clients across a broad spectrum of industries on executive compensation and employment law issues...  |  Read More

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