The economic contraction upon us is likely to result in a resetting of your compensation and employment provisions. We encourage you to be both prepared and proactive.

A. Adjustment Requests — When Presented to You.
Several of our clients have recently been presented with modifications to their compensation and employment provisions. The primary rationale, of course, is the unforeseen economic reality brought about by the Covid-19 crisis. Whether presented to you or by you, either way, it is prudent to be prepared.

Flexibility is a virtue, but so is sober analysis. We cannot abandon prudence when discussing valuable and hard-won interests, rewards and risk mitigation. It is essential to fully grasp not only the changes, themselves, but also their potential consequences, both short-term and long-term.

Most personal service agreements and associated plans – employment, incentive compensation, equity, partnership, LLC and others – are often quite intertwined. Thus, a change in one agreement or plan may result – intentionally or otherwise – in a change in another. And each word of each document is important. As the social commentator Andy Rooney said “Fine print rarely delivers good news.”

B. Adjustment Requests – By The Executive.
Some of our clients are proactively preparing requests for modification of compensation and contract models, themselves. As mid-year approaches, and diminished financial conditions intensify, so too do diminished expectations for this year’s year-end results, and yearly compensation along with them. The need to adapt to this “new reality” is upon us, or soon will be.

Whether on “offense” or “defense,” don’t let yourself be flat-footed, caught off guard, or unprepared to respond – or propose – based upon a careful analysis.

C. Most Common Resets:.

a. Compensation – Incentive Comp Formula Resets, Changes in Targets and Minimum Payouts

b. Equity Awards – Vesting Schedules

c. Change of Control – Additional Conditions to Protections

d. Employment – Altered Duration of Term of Service

e. Benefits – Reduction, Elimination, Change in Eligibility

More than ever, leverage is found in your perceived contribution to (i) ongoing operations, (ii) reliable sources of revenue, and (iii) successful adaptation to the evolving “new normal.”

There’s a lot to consider, a lot to evaluate, and a lot to memorialize with clarity and precision. And, too, there’s a lot to lose or gain. We are here to help you.