How mergers and acquisitions impact executive compensation – Benefits Canada How mergers and acquisitions impact executive compensation – Benefits Canada

Understanding the elements of a commercial transaction is essential before considering the tax implications of the acquiring company’s executive compensation arrangements, says partner Dov Begun, Tax Group, in an interview with Benefits Canada.

“The analysis always begins by asking what the commercial deal is and whether the acquirer wants to keep certain option holders engaged,” says Dov.

In Dov’s view, different outcomes can result depending on whether transaction is a share purchase, asset purchase or amalgamation. He notes the terms of the existing compensation plan may have provisions affecting change of control, the right to roll over the options, cash-out conditions, accelerated vesting, or forced exercise of options. Tax considerations only come into play only once the acquirer understands these basic elements.

“The most important thing is to accommodate the commercial deal, which means that tax is not necessarily what drives the executive compensation elements of a transaction,” says Dov.

If you have a subscription to Benefits Canada, you can read the full article by author Julius Melnitzer posted on December 19, 2024.