November 2, 2023
The Stats on Special M&A Synergy Awards
WTW’s Global Executive Compensation Analysis Team recently conducted a study of the 100 largest U.S. mergers from 2018 to 2022 focused on the use of special synergy awards. Of the companies surveyed:
– 14% granted special synergy awards to NEOs
– Of that 14%, 5% granted special synergy awards to NEOs and had synergy goals in their STI programs
– 23% only included synergy goals in their STI programs
The WTW team stressed that these special awards are only appropriate in limited circumstances — the annual executive compensation package should generally provide sufficient alignment with long-term strategy. When used, the disclosure of these awards needs to clearly articulate their purpose and highlight that they are non-recurring. With respect to the circumstances and structure of these awards, when used:
– 79% were granted in mergers that exceeded the median deal value of the survey ($13.8 billion)
– They were typically in the form of PSUs, but performance shares, performance stock options, performance cash awards or a combination were also used
– The vesting periods were typically between three and four years
– 57% included synergy and financial goals and 43% used only synergy goals (cost reduction or revenue improvement)
– Meredith Ervine
Blog Preferences: Subscribe, unsubscribe, or change the frequency of email notifications for this blog.
UPDATE EMAIL PREFERENCESTry Out The Full Member Experience: Not a member of CompensationStandards.com? Start a free trial to explore the benefits of membership.
START MY FREE TRIAL