Change in Control Compensation Planning Checklist
(for potential seller and target companies)
Before merger or sale negotiations begin, potential sellers (or targets!) should get their severance house in order, with the following precautionary steps being worth consideration:
All Plans and Employment-related Agreements
1. __ Create a Pre-closing Protected Period?
2. ___ Hard-wire Post-closing Decision-makers?
Executive Retention and Transitions:
3. __ Lock-in change-in-control (CIC) benefits to assure key employees stay with the company until a transaction closes?
4. __ Evaluate and address Golden Parachute Risks?
5. __ Create a springing rabbi trust in order to signal an intent to deliver deferred compensation and severance without risk that a buyer will dispute or delay payment?
6. __ ERISA-fy plans, in order to minimize the risk and costs of litigating meritless claims?
7. __ Refine noncompetes and other restrictive covenants to reflect CIC considerations, such as enhanced payments or circumstances for their elimination.
Retirement and Welfare Plans:
8. __ Amend plans to require their automatic termination before a CIC closes?
9. __ Assure post-CIC medical coverage rights greater than COBRA requires?
Copyright © Joseph Poerio. All rights reserved.