What’s Going to Happen to my Job? Compensating the Executive When a Change-in-Control Looms

In some M&A transactions, pre-existing employment contracts might provide certain employees with rights that must be dealt with in connection with acquisition, in some cases even if such employees will not be retained by the buyer. For example, an officer may be entitled to stock options or other compensation that may be accelerated in connection with a sale or change of control of the company.

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Related Content

• Executive Compensation Issues in Corporate Transactions Involving Public Companies
  Consider the structure of the transaction when reviewing an M&A deal and treatment of executive compensation. Public company transactions can take many forms, including equity acquisitions/dispositions, asset acquisitions/dispositions, mergers, spin-offs, and combinations of the foregoing. One of the most important distinctions between these different deal structures is whether the assets and liabilities will transfer automatically to the buyer or surviving entity as a matter of law.
• Change-in-Control Arrangement Drafting Considerations
  Review key considerations in drafting change-in-control arrangements. When a transaction is on the horizon, or even when key employees fear that one may occur (e.g., a hostile takeover), employers will often enter into change-in-control arrangements with those employees.
• Change-in-Control Agreement
  Use our Change-in-Control Agreement to offer change-in-control bonuses to help ensure the continued services of valuable employees through or beyond the date of a change-in-control. 

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

• Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
  Stay informed on new developments.
  • Retirement Plans. IRS has issued guidance on employer matching contributions on employee qualified student loan payments (QSLPs) which was permitted under the SECURE 2.0 Act effective for plan years beginning in or after January 1, 2024. IRS Notice 2024.63.
  • Health and Welfare Benefits. Department of Health and Human Services (HHS) released a model attestationfor covered entities (including health plans) and business associates to use when they receive requests for protected health information (PHI) potentially related to reproductive health care. HHS, Model Attestation for a Requested Use or Disclosure of Protected Health Information Potentially Related to Reproductive Health Care; HHS, HIPAA Privacy Rule Final Rule to Support Reproductive Health Care Privacy: Fact Sheet. Changes may require plan sponsors to update HIPAA policies and procedures as needed to address prohibited or restricted uses and disclosures. Notices of privacy practices may need to be amended to reflect the attestation form.
  • Executive, Incentive, and Equity-Based Compensation. A Texas district court has postponed the September 2024 effective date of the FTC's nationwide prohibition on noncompetes. Ryan LLC v. FTC, 2024 U.S. Dist. LEXIS 148488 (N.D. Tex. Aug. 20, 2024)
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