Background
Our client was looking to acquire a private media company and compensate management for the completion of the acquisition. The Compensation Committee retained Hugessen to provide a conceptual framework market context to determine the CEO’s allocation of a Bonus Retention Pool (“BRP”) of up to $45M to recognize the acquisition’s success.
Analysis/Work Completed
In order to fully understand the situation at hand and provide relevant context, we completed the following:
- Provided an overview of the competitiveness of existing pay levels and design
- Reviewed market precedents of similar transactions and success bonus awards, as well as post-transaction arrangements
- Conducted an analysis of the absolute and relative total shareholder value creation over the CEO’s tenure
Outcome
Hugessen presented a framework for decision making regarding an appropriate bonus amount, considerations of which included:
- Value creation during CEO tenure
- Continued CEO support during sale process
- Post-transaction commitment from CEO to join the Board of the acquirer