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w w w . C A N A D I A N L a w y e r m a g . c o m A U G U S T 2 0 1 8 45 awardee's employment is terminated or they resign due to the change in control. Termination of employment includes constructive dismissal, where the terms of employment (e.g., location of work) change so substantially that an employee is effectively dismissed from the job. This shift to the double-trigger accel- eration of vesting pleases institutional investors and proxy advisory firms, as vesting is not automatically triggered in a change-of-control situation and execu- tives are more motivated to act in the best interests of the firm. As Perreault points out, too, "You don't want all your people to become free agents just on the announcement of a transaction." "Double-trigger is viewed as a bet- ter governance practice," Lacoursière says. "The bulk of public company plans assume that there's a double trigger . . . And if the buyer is also a public com- pany, you . . . can continue on the same vesting schedule." For M&A transactions involving privately held companies or owned by private equity, however, the transaction may be structured differently. "You won't necessarily roll over entitlements," says Lacoursière. In this context, vesting is typically on a change of control, mean- ing that the single trigger is used to pay out equity awards, she says. Retaining and taking care of talent is always front of mind in a change-of- control situation. "If I am considering being acquired, what's of concern is retention of key peo- ple," says Perrault. "You want to make sure that until the transaction is signed, [you] make sure that your team is with you, that they continue grooming the baby. . . . Ensure that executives, if they are going to be terminated, that they have a significant or fair compensation package." Some executives will be linked to the success of the transaction and will get a transaction bonus based on the trans- action's value, Perrault says. "In addi- tion to being able to harvest or cash in my incentives, stock options, etc. if the transaction takes place, the likelihood is there will be significant increase in stock price. You want to make sure key people are motivated to stay before the transac- tion takes place." The cycles of industry — and lower commodity or manufacturing prices — also affect compensation, not surprisingly. "Everything is cyclical, particularly in B.C.," says Howcroft, "where a lot of our industries are commodity industries, and commodity industries [e.g., gold, oil, for- estry, fishing] are inherently cyclical; they all go up and down. So, when the industry is on an uptick, recruitment is first and foremost: You're desperate to get the best people." Sometimes, a premium must be paid to secure the best people, and that often includes generous compensation packages and protections. "Now, in some cases, commodity pric- es are lower than they've been, and now that you're no longer desperate to recruit people, I've been hearing a lot of pushback regarding generous packages. . . . The contract hasn't changed, but now, it's . . . 'Why are we stuck with this expensive compensation package when industry is down?'" Master the law. Canada's leading law school offers a graduate degree in four unique streams: Business Law Canadian Law in a Global Context Innovation, Law and Technology Law of Leadership Apply today. Visit gpllm.law.utoronto.ca Questions? gpllm@utoronto.ca ntitled-6 1 2018-05-25 11:45 AM

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