Navigating Equity Awards During an M&A
In the complex landscape of corporate mergers and acquisitions (M&As), executive compensation arrangements—especially "golden parachutes"—play a critical role in ensuring that executives are fully aligned with the company and can focus their efforts on the company's best interests. The accelerated vesting of equity awards is typically the most valuable benefit to an executive — comprising ~60% to ~70% of the total value of all golden parachute benefits.
This article by A&M's J.D. Ivy and Ryan Wells published by World at Work's Workspan Magazine delves into key equity award design elements that can have significant impacts in the context of a transaction – in terms of the economics of the award and potential golden parachute excise taxes. This article explores best practices, current market trends, and design considerations aimed at optimizing executive compensation in the M&A context.
With M&A events posing specific challenges, understanding these elements ensures that equity award provisions align with company goals, while also managing executive compensation in a way that fosters long-term success.
