Change In Control Events

[SycamoreFan]

An employment agreement provides for the payment of deferred comp, the payment terms of which would be compliant with Section 409A if triggered by a compliant change in control event. The agreement lists several change in control events, including a Section 409A compliant change in ownership provision, a Section 409A compliant change of effective control provision and a Section 409A compliant change of a substantial portion of the assets provision.

The agreement also contains a provision defining a complete liquidation of the company, or approval by the shareholders of a plan for liquidation as a change in control event. This seems to be too broad for a Section 409A compliant change in control, any thoughts?

[Guest gaham]

I agree that such language is too broad. Sometimes, however, the desired language is subsumed in the technically correct language and you don't need the broader language. Note also, the language can be narrower than the change of control definition in the regs. Finally, note that if the true trigger is a separation from service due to a change of control you don't have to worry about your change of control definition under 409A.