An interesting survey released by Frederic W. Cook & Co., Inc. analyzed SEC filings made by 125 of the largest publicly traded U.S. companies for the 2006 – 2009 period and found the companies made a range of modifications to change-in-control policies. Specifically, the companies:

  • Eliminated payment of excise tax gross ups (11 percent)
  • Shifted from full gross-ups to modified gross-ups (eight percent)
  • Changed from single-trigger vesting to double-trigger vesting of equity awards (nine percent)
  • Raised the acquisition threshold, typically to 30 percent, for triggering change-in-control payments (eight percent)
  • Removed “walk-away” rights or windows (seven percent)
  • Reduced the severance multiples for the CEO and other named executive officers, typically from three times to two times the executives' base amounts (seven percent)

According to the survey, the pace of change is accelerating, particularly in three areas: excise tax gross-ups, single-trigger change-in-control provisions, and walk-away rights or windows. The trend is to eliminate or constrain all three.