Published on: February 27, 2021
Topics: Severance and Change in Control
- The typical CIC arrangements cover a company’s CEO and direct reports.
- Limited to between 5 and 20 executives.
- 76% of companies provide for the payment of the bonus if the departure is mid-year.
- 95% of those companies pay the bonus on a pro rata basis (typically based on target).
- 71% of companies continue health care benefits for a defined period.
- 22% of companies pay a lump sum amount, in lieu of continuation of health care benefits.
- Double-trigger vesting requirements for stock have risen about 15% in prevalence since 2017 – from 80% to 95%.
- Vesting performance-based awards at target remains the most common provision (42%), but the survey notes this level is declining.
- An emerging practice is to vest performance share awards based on the greater of actual performance or target (27%).
- 20% of companies now pro-rate the payout of performance-based equity.
- 62% of companies include a restrictive covenant in CIC agreements.