DealLawyers.com Blog

WTW recently released the results of its 2024 Acquirers’ Incentive Plan Survey and reported that 56% of respondents provided special, one-time compensation to employees involved in M&A. But these companies typically did not formalize their approach to these special incentives through a policy or written guidelines. Only 16% reported that they had a policy. 45% had a history, past practice or guidelines, but no formal policy, and 39% had no policy or guidelines before doing so.

These awards are generally not provided to top execs, and the target value ranged substantially by employee level. Employees in shared services functions were most likely to be included. More than half of the companies waited until after closing to communicate the awards.

The alert concludes that companies could improve their approach to these special awards to ensure they are delivered strategically. It notes the following “improvement opportunities” identified by survey respondents:

– Set clear objectives from the start against which to measure

– Include different principles/parameters for successful vs. unsuccessful M&A

– Better communicate any changes

– More formal/consistent process for acquisitions

– Reserve bonuses for larger divestitures/integration executive

– Use a more robust framework for varying deal sizes/effort

– Look for a dedicated/more meaningful incentive plan

– Having a checklist/process for bringing on oversees employees

– Align discretionary policies at senior levels

– Ensure alignment of strategic objectives

– Meredith Ervine