Executive Employment Agreements and Change in Control Arrangements

Structuring for M&A Transactions, Withstanding Shareholder Scrutiny, Avoiding Adverse Tax Consequences

Note: CPE credit is not offered on this program

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


Conducted on Wednesday, January 6, 2021

Recorded event now available

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Course Materials

This CLE course 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 CIC agreements that minimize employee taxes and protect employer deductions while furthering company and shareholder interests.

Description

CIC agreements 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, the IRS and the SEC closely scrutinize excessive golden parachutes that far exceed salaries or don't reflect performance.

Counsel should be mindful of shareholder expectations, market practice, and the legal landscape when structuring these CIC agreements. Notably, Section 409A (which regulates deferred compensation) and Section 280G (which penalizes certain golden parachutes in M&A transactions) often must be carefully navigated to avoid adverse tax outcomes, all while reaching the business intent of the parties. Counsel should also be careful to analyze how the investing public might view certain of the compensation elements and how those could trigger adverse disclosures under SEC reporting rules. 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, and may ask them to be waived or modified.

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. Drafting and negotiating strategies

Benefits

The panel will review these and other key issues:

  • Common features of a CIC Agreement or Policy
  • 280G Constraints and solutions
  • 409A Constraints and solutions
  • Re-negotiating the arrangement in an M&A Transaction
  • What CIC issues should buyers conducting M&A due diligence consider?

Faculty

Eppert, Anthony
Anthony J. Eppert

Partner
Hunton Andrews Kurth

Mr. Eppert's multi-disciplinary legal practice focuses on executive compensation, ESOPs and employee benefit...  |  Read More

Mort, Marshall
Marshall Mort

Partner
Fenwick & West

Mr. Mort focuses his practice on representation of public and private technology and life sciences companies in a wide...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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