System, method and computer program product for implementation and management of change-of-control severance

摘要

A system and related method to implement and manage severance payments during a change-of-control process, wherein participant's net benefits are equitable and maximized while considering tax liabilities and other constraints.

主权项

1. A computer-implemented method to determine severance amounts for a team of two or more individuals during a change-of-control (“COC”), the method comprising:
(a) calculating a transaction pool, the transaction pool being a total amount of cash available to be distributed to the team as the severance amounts; (b) calculating a participation alignment for each individual based upon compensation of each individual; (c) calculating initial COC cash values for each individual, the initial COC cash values being the individual's portion of the transaction pool scaled relative to one another based upon the participation alignment; (d) calculating a total equity value for each individual that represents a total unvested equity award as of a date of the COC; (e) calculating a total severance amount for each individual by adding the initial COC cash value to the total equity value; (f) calculating a total tax liability of each individual; (g) subtracting the total tax liability from the total severance amount to thereby determine a realized net benefit for each individual, thereby obtaining the realized net benefit for the team; (h) varying the initial COC cash values for each individual to thereby produce a variable COC cash value for each individual, and continuing to vary the variable COC cash values until final COC cash values are determined for each individual, the final COC cash values representing a maximized realized net benefit for the team; and (i) outputting severance amounts for the individuals that jointly represent the maximized realized net benefit for the team, wherein (a)-(i) are performed by a computer processing unit communicably coupled to memory comprising instructions which, when executed by the computer processing unit, results in performance of (a)-(i).