Executives may find little motivation to remain employed at a company as annual bonus plans become compromised and long-term incentive vehicles (e.g. stock options, restricted stock) become virtually worthless. As a result, it is imperative that an organization implement an alternative compensation arrangement to retain key executive talent and incentivize them toward the level of performance necessary to achieve a successful restructuring.
In this recent article published in AIRA Journal, A&M’s Brian Cumberland and J.D. Ivy discuss the importance of designing incentive and retention plans that are “fair and reasonable,” reviewing the plans in place and evaluating the impact of those plans should the company enter bankruptcy protection, and carefully examining any compensation plans implemented at or near the time the company files for bankruptcy to ensure it meets the requirements under BAPCPA.
This article was originally published in AIRA Journal in August 2019. Copyright © 2019 Association of Insolvency & Restructuring Advisors.
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