August 25, 2011

CEO Change-in-Control Cash Multiplies Down in 2011

Equilar has released its latest study, comparing change-in-control strategies in the Fortune 100 between 2008 and 2010. As regulation increases, companies are modifying their change-in-control policies, often making the provisions for payment stricter. Some of our findings:

– Cash multipliers for CEOs are decreasing in size. 2x cash multipliers for F100 CEOs rose in prevalence, from 18.2% in 2008 to 34.9% in 2010, while 3x cash multipliers decreased from 65.9% to 44.2%.

– Over 40% of CEOs receive a cash payment for a change-in-control related termination. 45.3% of F100 CEOs have such a payment in place.

– The majority of terminations require a double trigger. 97.7% of companies that give cash payments upon a termination related to change in control required a double trigger; the remaining 2.3% required a modified trigger.