Meridian Compensation Partners, a leading executive compensation and corporate governance consulting firm, has completed a comprehensive Study on the prevalence of executive change-in-control ("CIC") arrangements among 200 component companies of the S&P 500® index ("Study Group") and the benefits provided under such arrangements.
Key findings of the Study include the following:
75% of Study Group companies reported maintaining CIC arrangements that provide cash severance benefits to one or more Named Executive Officers ("NEOs").
100% of these companies condition the payment of cash severance upon the occurrence of a double-trigger event (i.e., involuntary termination without "cause" or voluntary termination for "good reason" that occurs within a specified period following a CIC (i.e., "protection period").
76% of companies define protection period as the 24-month period following a CIC.
Nearly all companies determine cash severance based on a "multiple" of the sum of an NEO’s base salary and "annual bonus."
Cash severance multiples are trending down for all NEOs.
― For CEOs, a 3× cash severance multiple remains the majority but declining practice, while a 2× multiple is growing in prevalence.
― For all NEOs (other than the CEO), a 2× cash severance multiple is the majority practice.
Approximately 95% of Study Group companies vest time-based and performance-based equity awards either upon (i) a double-trigger event or (ii) a CIC to the extent that a successor entity fails to assume or replace such awards.
About Meridian Compensation Partners
Meridian Compensation Partners is a leader in charting the course for executive compensation and corporate governance success. With eighty-five partners and associates in ten offices in the U.S. and Canada, Meridian provides executive compensation consulting and corporate governance services to over 700 major publicly traded and privately held corporations. Core services include board level advisory services, compensation program design, research and competitive market intelligence on executive pay, and corporate governance matters.
For more information, please visit www.meridiancp.com.
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