Executives may be provided with Change In Control Agreements when another company acquires the executive’s company. The purpose of Change in Control Agreements is to provide some assurance to executives that they will be compensated in the event that their position is eliminated or they are assigned to a position that has significantly different responsibilities. Companies use Change In Control Agreements to help with the transition process so that executives will work with the new company to transition the business to new management.
Change In Control Agreements allow executives to terminate their employment for a showing of “good cause.” “Good cause” is typically defined as (1) decrease in salary or benefits; (2) material adverse change in authority, responsibility or status; or (3) relocation of corporate offices to a new location beyond a reasonable distance from the previous office location.
If you have received a Change In Control Agreement, we recommend that you have an employment attorney review it. The employment attorney will be able to assist you with the requirements to invoke the Change In Control in the event that “good cause” exists for you to invoke the agreement and receive severance.
Please call us for a free consultation to discuss your Change In Control Agreement. We have numerous Change In Controls for large pharmaceutical companies in New Jersey and small businesses that have been acquired by larger companies.
March 17, 2011 – Castronovo & McKinney – Tom McKinney