Different Separation Pay Amounts

[Guest Mr. Kite]

Employment agreement provides that if employee is involuntarily terminated without cause, the employer will pay 1/2 employee's annual salary in a lump sum within 60 days. However, if the termination occurs within 1 year after a "change in control" (defined in a way that does NOT comply with the 409A definition), the lump sum payment will equal a full year's salary.

Will this satisfy the short-term deferral exception, or must the definition of CiC in the agreement satisfy the definition in the regulations?

I'm thinking it will work, because the employee's right to payment is subject to significant risk of forfeiture, and is paid within the short-term period after the right is no longer subject to the SRF. Section -3© of the regs gives me some concern that the CiC definition must comply, but this provision relates to when "deferred compensation" may be paid (and, if the payment meets the short-term exception, then -3 doesn't come into play).

I also believe that the agreement won't have 409A effect if the payment is spread out over a 1-year period, as long as the involuntary separation pay exception is satisfied.

Thoughts?