Equilar examined change-in-control arrangements among Fortune 100 companies for fiscal years 2008 and 2010. Key Findings:
Change-in-Control Cash Multiples Decrease for CEOs:
The prevalence of 3x salary multipliers among Fortune 100 CEOs decreased from 65.9% in 2008 to 44.2% in 2010, while the prevalence of 2x salary multipliers rose from 18.2% to 34.9%. Similarly, the prevalence of 3x bonus multipliers decreased from 65.9% in 2008 to 44.2% in 2010, while that of 2x bonus multipliers rose from 15.9% to 32.6%.
Over 40% of Fortune 100 Executives Receive Cash Payments upon a Change-in-Control Termination:
In 2010, 45.3% of CEOs included in the study had cash change-in-control payment arrangements in place, while 41.2% of other NEOs had such agreements.
Most Common Multiplier Higher for CEOs Compared to Other NEOs:
The most prevalent salary and bonus multiplier was 3x for CEOs and 2x for other NEOs.
Majority of Change-in-Control Payments Require “Double-Trigger” Termination Scenario:
97.7% of companies with cash payments upon a termination related to a change-in-control required a double trigger, while the remaining 2.3% required a modified trigger.
Target Bonus is the Most Prevalent Bonus Definition Used in F100 Severance Formulas:
50.8% of all change-in-control cash payments used target short-term incentives to calculate the bonus portion of the severance amount.
Equilar Study: Change-in-control Cash Severance Analysis. Conclusion: Active investors are having some minor impact. For a more radical approach that I endorse, see USPX Shareowner Guidelines for Say-on-Pay Voting.