October 23, 2014
M&A: Retention Awards at Acquired Companies
– Broc Romanek, CompensationStandards.com
Here’s something blogged by Towers Watson’s Jacob O’Neill:
The number of mergers and acquisitions announced in 2014 has increased over previous years and includes some of the largest deals in history. Through the third quarter of this year, 73 M&A deals with a total transaction value greater than $1 billion have been announced, including 10 that each had a value greater than $25 billion (three of these deals have since been cancelled). By way of comparison, only nine deals closed in the U.S. with a value of over $25 billion over the four years prior to 2014.
Towers Watson’s Executive Compensation Resources unit tracks and analyzes special compensation arrangements for executives involved in acquisitions on an ongoing basis. For our most recent analysis of retention award practices, we looked at U.S.-based public companies involved in 181 acquisitions with a transaction value greater than $1 billion between the beginning of 2010 and the end of March 2014.
Our analysis specifically reviews retention awards and/or programs put in place at acquired companies in the course of the merger and focuses on awards with executive participation. Our review identified 69 companies (39% of all acquired companies during this period) that offered some form of retention award to employees and/or executives prior to the close of the deal. While we focus on the companies with executive-level retention awards, we also note that there are other considerations involved in retaining and protecting employees during acquisitions, including change-in-control severance agreements as well as retention programs for employees below the executive level./blockquote>