August 29, 2018
M&A: Post-Closing Executive Pay
– Liz Dunshee
This Semler Brossy memo advises on how to structure executive pay before & after a deal closes. To get to the finish line, most deal lawyers & comp consultants know that it’s common to supplement existing bonuses & severance with deal-specific retention & transition incentives – with award size and terms tailored to the deal timeline and executive’s role. But in the post-closing integration phase, things can get trickier. Here’s 4 tips:
1. Adjust or redesign pay philosophy as necessary to reflect new strategic objectives
2. Confirm or adjust peer group and increase pay gradually if executives are handling new responsibilities
3. Consider trade-offs from both companies’ legacy programs
4. Analyze wealth accumulation when evaluating significant post-closing equity awards
For more thoughts, see our blog from last year – “Post-Merger Pay Programs: Better to Optimize Than Harmonize.” And for those of you who are also members at DealLawyers.com, check out the transcript from our recent webcast: “Retaining Key Employees in a Deal.”