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change in control


Gudgergirl

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How much leeway (if any) do you have to alter (or restrict) the definitions of change in control as set forth in the regs? I am reviewed a NQDC plan which sets forth the reg definitions but then adds language that says a change in control won't be deemed to occur if the value of the business at the time of the transaction does not exceed a certain amount. Is this permissible?

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How much leeway (if any) do you have to alter (or restrict) the definitions of change in control as set forth in the regs? I am reviewed a NQDC plan which sets forth the reg definitions but then adds language that says a change in control won't be deemed to occur if the value of the business at the time of the transaction does not exceed a certain amount. Is this permissible?

The change in control definition in the final regs doesn't depend on the value of the company, so this suggestion doesn;t seem to work. Looked at another way, what it sounds like more is that they want to create two different payment methods triggered upon change in control - above the threshold participant is paid one way, and below participant is paid another way. That sort of toggle doesn't seem available.

 - There are two types of people in the world: those who can extrapolate from incomplete data sets...

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Why can't the plan have a definition that is lesser, but included, in the regulation definitions? I don't think such an on/off switch is a toggle under 409A. Perhaps if you string them together in various combinations.

Changing the definition with respect to accrued amounts is another matter. Adding the value restriction could provide an impermissible deferral. Assume that the change in control triggered the payment, except that the new value limit prevented the trigger. The deferred amounts, payable before the amendment, would not be payable until later because of the amendment.

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How much leeway (if any) do you have to alter (or restrict) the definitions of change in control as set forth in the regs? I am reviewed a NQDC plan which sets forth the reg definitions but then adds language that says a change in control won't be deemed to occur if the value of the business at the time of the transaction does not exceed a certain amount. Is this permissible?

The change in control definition in the final regs doesn't depend on the value of the company, so this suggestion doesn;t seem to work. Looked at another way, what it sounds like more is that they want to create two different payment methods triggered upon change in control - above the threshold participant is paid one way, and below participant is paid another way. That sort of toggle doesn't seem available.

There isn't a toggle in the sense that there is opportunity for further deferral. The sole distribution event in this plan is change in control. The change in control definition one found in the regs. There is just another sentence that says "Notwithstanding the foregoing, a change in control will not be deemed to have occured if the business is valued at less than $X at the time the change in control otherwise would have taken place."

So there is payment if there is change in control and the business is valued at at least $x. If the business is valued at less than $x then there is not deemed to be a change in control and there is no payment and the plan terminates.

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