Alvarez and Marsal

2021/2022

Executive change

In control report


ANALYSIS OF EXECUTIVE CHANGE
IN CONTROL ARRANGEMENTS OF
THE TOP 200 COMPANIES

INTRODUCTION


In recent years, stakeholders, regulators, and advisory groups have
continued to advocate for more transparency and change with respect
to executive compensation. One area of executive compensation that
is often embattled with criticism is change in control provisions.

DOWNLOAD REPORT

2021/2022 Change in Control Survey

Alvarez & Marsal’s Compensation and Benefits Practice has again partnered with Equilar and is pleased to provide this latest edition of our study on change in control arrangements among the top 200 publicly traded companies in the United States.

Timeline of CEO and CFO CIC Benefits from 2015 to 2021

  • CEO
  • CFO
$30,263,623
$27,871,606
$27,886,556
$39,339,956
$11,801,706
$10,627,357
$9,880,993
$12,271,927

2021/2022 Change in Control Survey

Alvarez & Marsal’s Compensation and Benefits Practice has again partnered with Equilar and is pleased to provide this latest edition of our study on change in control arrangements among the top 200 publicly traded companies in the United States.

Timeline of CEO and CFO CIC Benefits from 2015 to 2021

2015
2017
2019
2021

CHANGE IN CONTROL
BENEFIT VALUES

The purpose of Change In Control (CIC) arrangements is to ensure that executives evaluate every opportunity, including an acquisition, with an eye toward maximizing shareholder value without considering how such an event will affect their personal circumstances. By addressing CIC provisions in executive compensation packages, Boards can be assured that executives will be more likely to approach the intricacies of negotiation without the distraction of personal considerations. Explore common CIC benefits below:

Severance

Severance is typically defined as a multiple of base salary and bonus.

The most common cash CIC severance multiple for CEOs is between 2 and 2.99 times compensation.

Long-Term Incentives

Accelerated vesting of long-term incentives is a common CIC benefit but is most often provided only when the executive is terminated in connection with the CIC (“double-trigger vesting”), as opposed to being provided upon a CIC alone (“single-trigger vesting”).

Other Benefits

Companies routinely provide additional CIC benefits to executives.

Excise Tax Protection

CIC benefits that are deemed excessive under the Golden-Parachute rules can result in a 20% excise tax on certain payments. Companies choose to address potential excise tax in a variety of ways.


CHANGE IN CONTROL
BENEFIT VALUES

The purpose of Change In Control (CIC) arrangements is to ensure that executives evaluate every opportunity, including an acquisition, with an eye toward maximizing shareholder value without considering how such an event will affect their personal circumstances. By addressing CIC provisions in executive compensation packages, Boards can be assured that executives will be more likely to approach the intricacies of negotiation without the distraction of personal considerations. Explore common CIC benefits below:

Severance

Severance is typically defined as a multiple of base salary and bonus.

The most common cash CIC severance multiple for CEOs is between 2 and 2.99 times compensation.

Long-Term Incentives

Accelerated vesting of long-term incentives is a common CIC benefit but is most often provided only when the executive is terminated in connection with the CIC (“double-trigger vesting”), as opposed to being provided upon a CIC alone (“single-trigger vesting”).

Other Benefits

Companies routinely provide additional CIC benefits to executives.

Excise Tax Protection

CIC benefits that are deemed excessive under the Golden-Parachute rules can result in a 20% excise tax on certain payments. Companies choose to address potential excise tax in a variety of ways.

While change in control (CIC) arrangements face increased scrutiny from regulators, shareholder activists, and others, additional strategic reasons exist for management and compensation committees to provide and benchmark executive CIC benefits.


CIC Benefits by Industry

Change-in-Control benefits can vary widely by industry. A&M’s 2021/2022 CIC Survey includes data from the top 20 companies in the following industries:

Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Information Technology
Materials
Telecommunications
Utilities

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

Telecommunications

Utilities


CIC Benefits by Industry

Change-in-Control benefits can vary widely by industry. A&M’s 2021/2022 CIC Survey includes data from the top 20 companies in the following industries:

Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Information Technology
Materials
Telecommunications
Utilities

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

Telecommunications

Utilities


The Compensation and Benefits Practice of Alvarez & Marsal assists companies in designing compensation and benefits plans, evaluating and enhancing existing plans, benchmarking compensation and reviewing programs for compliance with changing laws and regulations. We do so in a manner that manages risks associated with tax, financial and regulatory burdens related to such plans. Through our services, we help companies lower costs, improve performance, boost the bottom line and attract and retain key performers.

Connect With Us










    Alvarez & Marsal is committed to protecting and respecting your privacy, and we’ll only use your personal information to administer your account and to provide the products and services you requested from us.