Issue link: https://digital.shearman.com/i/1019978
Shearman & Sterling LLP Change in Control Arrangements | 93 PERFORMANCE-BASED EQUITY AWARDS Depending on the performance criteria and the acquirer's integration strategy, it is often not possible to continue performance-based equity awards following a change in control. In addition to electing between single-trigger and double-trigger vesting, companies must determine how to treat the performance criteria applicable to these awards at the time of the transaction. Provisions can vary significantly from company to company and among grants at the same company. HOW ARE PERFORMANCE-BASED EQUITY AWARDS VALUED? What portion of the performance-based equity award will vest? Full vesting Pro rata vesting based on years of service Not specified Other 51 41 20 49 Double Trigger* Single Trigger* Single Trigger, unless successor or surviving entity assumes the award No acceleration/ not specified/ no performance- based awards What are the performance-based equity award triggers? 2 years‡ 1 year Not specified 2 3 12 Target performance Maximum performance Actual performance Combination of target performance and actual performance (based on closing date) Greater of actual performance and target performance Not specified Other Seventeen of these companies provide that the awards will vest if the employee is terminated within a specified period following the change in control. The relevant time periods are as follows: ‡ One Top 100 Company will also accelerate vesting if the executive is terminated six months prior to the change in control. * One Top 100 Company provides for both single- and double-trigger vesting depending on the award. One Top 100 Company provides that 50% will vest on the change in control and 50% will vest one year following the change in control. 46 22 23 7 27 3 6 7 11 5 16