Council of Institutional Investors Adopts Policy against Automatic Acceleration of Unvested Equity Awards on a Change in Control

By and on April 10, 2015

On April 1, 2015, the Council of Institutional Investors (CII), a shareholder rights advocacy group, adopted a policy opposing the automatic vesting of unvested equity awards on a change in control at public companies.  Companies have often provided for such “single-trigger” vesting to encourage executives and employees to work towards the completion of a sale without being concerned about the treatment of their equity awards when the deal is consummated.  The CII policy provides that a company’s board should have discretion to permit full, partial or no accelerated vesting of awards on a change in control and, if it decides to accelerate vesting in full, should disclose in public filings a detailed rationale of the decision and how it relates to shareholder value.  CII follows Institutional Shareholder Services (ISS), a shareholder advisory firm, which treats single trigger vesting as a factor weighing against its positive recommendation of an equity award plan subject to shareholder approval.  ISS’s policy is discussed in more detail here.

Andrew Liazos
Andrew C. Liazos is the global chair of McDermott’s Benefits & Compensation Practice Group and has practiced at McDermott for over 25 years. Andrew focuses his practice on compensation and benefit matters, including related securities, M&A, IPO, private equity, international and litigation matters. Clients range from Fortune 500 companies to compensation committees to individual executives in employment and severance negotiations. Read Andrew Liazos' full bio.

Joseph K. Urwitz
Joseph (Joe) K. Urwitz focuses his practice on employee benefits, executive compensation and Employee Retirement Income Security Act (ERISA) fiduciary matters. He advises clients on a wide range of issues, including fiduciary duties and prohibited transactions, employee benefit matters arising in mergers and acquisitions, benefits issues unique to nonprofit entities, deferred compensation arrangements, equity award and bonus plan design, employment and severance arrangements, and qualified plan work. Read Joe Urwitz's full bio.




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