December 6, 2023
Severance & Change-in-Control Practices: 86% of Co’s Now Require “Double Trigger”
FW Cook has released its 2023 survey of severance & change-in-control practices, which looks at trends among 200+ companies. We’ve been tracking severance as a shareholder proposal topic this past year or two, so it’s useful to also keep an eye on common practices. Here are the key takeaways:
– About 85% of companies provide CEO CIC severance, while about 75% provide CEO Non-CIC severance
– About 85% of companies providing CIC severance define cash severance as a multiple of salary plus bonus. This drops to about 60% for companies providing Non-CIC severance.
– 90% of companies fully accelerate all unvested time-based equity, while ~70% do so for performance awards (includes both single and double trigger provisions).
– The prevalence of double trigger CIC equity acceleration is 86%, up from 70% in 2016.
– For Non-CIC severance, majority practice is for time-based and performance-based equity to be forfeited (~55%), with only about 10% of companies fully accelerating outstanding equity.
– Liz Dunshee