“Change of Control” Provisions in Employment Agreements
In this interview with Jennifer Rubin, Member, Employment, Labor & Benefits Practice at Mintz Levin, we discuss “change of control” provisions in an executive employment agreement and the difference between “dual trigger” and “single trigger”.
Jen focuses on C-suite executive compensation practices, and on meeting the increasingly complex employment needs of executives of public and private corporations. When she isn’t negotiating employment, equity and severance arrangements, Jen leverages her twenty-five years of experience as a trial lawyer to help clients craft business solutions to legal problems. Jen, who has an AV Preeminent ranking from Martindale-Hubbell, which publishes a highly respected Law Directory, that provides background information on United States lawyers and law firms.
She is also a member of the Board of Directors of Big Brothers Big Sisters of San Diego County and is a faculty member and advisor to The Honor Foundation, a non-profit organization that assists Navy Seals and other armed services special operators transition from military service to the private sector. Jen is frequently quoted in the Wall Street Journal and other publications.
According to Jen Rubin:
“A single trigger change of control is when there is an exit in effect, whether it’s an asset purchase or stock purchase. It is a defined situation usually when a company is acquired. A single trigger means that, upon the happening of that event, the executive gets to parachute out. I haven’t seen a single trigger change of control provision in a very long time. As you can imagine, they’re disfavored because it may be that the new company coming in making the acquisition wants the management team to stay. It almost becomes a disincentive. That’s becoming unusual. A double trigger is when there is this transaction or exit. Within a certain defined period of time, the executive is terminated. At that point, the executive gets to parachute out with certain benefits, whether it’s equity acceleration or a more robust severance. There has to be that two-step process. There has to be the transaction and then the exit associated with the transaction.”
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.
This article originally appeared in QuestFusion.