Developing and Implementing Golden Parachute Agreements

Why Should You Attend:

Change in control agreements between companies and executives, so-called “golden parachute agreements,” have become a ubiquitous part of the executive compensation scene for both public and privately held companies. However, tax code and federal securities law requirements, investor and media scrutiny, and potentially high stakes litigation make the development and implementation of golden parachute plans and agreements one of the most important parts of the compensation process.

This session will show how careful drafting and tax planning of golden parachute plans and agreements can help avoid undue scrutiny and criticism, that will benefit both the company and the covered executive. At the end of this training, participants will have gained the knowledge and understanding necessary to develop and implement golden parachute agreements and provisions that are more acceptable to the Government, investors, buyers, the media and others.

Areas Covered in the Seminar:

• Code Sec. 280G and Code Sec. 4999.
• Compensation Paid as a Result of a Change in Control.
• Calculating the Excess Parachute Payment Amount.
• The Exception for S Corporations and Small-Business Corporations.
• Design Features and Typical Provisions.
• Code Sec. 409A.
• Caps, Gross-Ups and Other Parachute Agreement Terms.
• Litigation Over Change in Control Agreements.

Who will Benefit:

This webinar will provide valuable assistance to:

• Human resources professionals
• Executive compensation, tax and federal securities law professionals
• Attorneys working in labor and employment, executive compensation, tax or federal securities law
• In-House Counsel
• Members of the compensation committee of a board of directors
• Executives and other employees covered by a golden parachute agreement

Instructor Profile:

Mike Melbinger, is a partner in the law firm of Winston & Strawn LLP, and global head of the Firm’s Executive Compensation and Employee Benefits Practice. Mike is also an Adjunct Professor of Law at both the University of Illinois College of Law and Northwestern University School of Law.

Mike is the author of the CCH treatise Executive Compensation, now in its Second Edition, the American Bankers Association’s Compliance Guide to Employee Benefit Trusts, and more than 75 articles on executive compensation and employee benefits topics. He is also on the editorial boards of myNQDC.com and Practical Tax Strategies, and the "Melbinger's Compensation Blog" for CompensationStandards.com, the oldest and most widely read blog on the topic.

Mike practices exclusively in the area of executive compensation and employee benefit issues for corporations, partnerships, executives, boards of directors and fiduciaries. He also handles the benefits and compensation issues in litigation, bankruptcy, change in control, and public offering situations.

Mike received a B.A. from the University of Notre Dame in 1980 and a J.D. from the University of Illinois College of Law in 1983. He serves on the Board of Visitors of the University of Illinois College of Law.

Topic Background:

The government, the media and everyone else is scrutinizing at golden parachute agreements. Two different sections of the Internal Revenue Code apply to golden parachute agreements. Code Sec. 280G prohibits a corporation from taking a deduction for any excess parachute payments. An “excess parachute payment” is an amount equal to the excess of the aggregate present value of all parachute payments paid to a “disqualified individual” over his or her “base amount.” Code Sec. 4999 imposes an excise tax on any disqualified individual who receives an excess parachute payment, equal to 20% of the amount above his or her base amount. Additionally, federal securities laws impose significant disclosure requirements on public companies that offer parachute plans or agreements. Finally, institutional investors, prospective buyers, the media and Congress apply to highest level of scrutiny and often criticize golden parachute agreements.

However, some types of golden parachute agreements and provisions are more acceptable to investors, buyers and the media than others. Whether to do a plan or separate agreements. Thus, the development and implementation of golden parachute plans and agreements is one of the most important parts of the compensation process for executives, HR and legal professionals and boards of directors.

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