Companies enhancing M&A retention strategies, WTW survey finds

About this update from Willis Towers Watson Public Limited Company

[{"type":"text","content":"NEW YORK, April 16, 2024 (GLOBE NEWSWIRE) -- A majority of companies (72%) either track or set aside fixed retention payments to encourage employees to remain at the company during or after an acquisition is completed, according to a survey by leading global advisory, broking and solutions company WTW (NASDAQ: WTW). C-suite executives and their direct reports are more likely to be offered retention agreements than other salaried employees. “Shoring up key executives and employees is important to a successful merger or acquisition,” said Josephine Gartrell, senior director, Executive Compensation and Board Advisory, WTW. “To that end, retention agreements play a critical role in keeping talent at target companies both during and after the transaction. The challenge is how to structure retention agreements and determine which executives and employees at the acquired companies should be offered them.” According to the 2024 WTW M&A Retention Study, acquiring companies tend to offer retention agreements to more C-suite executives and their direct reports compared with other salaried employees. In fact, 44% of acquiring companies selected half or more of C-suite executives to sign agreements, while just 19% selected over 20% of other salaried employees to sign agreements. Most acquiring companies use cash retention bonuses for senior leaders (86%) and other salaried employees (80%). Over half of respondents (56%) use restricted stock or other “full value” equity awards for senior leaders, while 40% use these awards for other salaried employees. The retention payment value at the median is typically 75% to 100% of base salary for C-suite to CEO, 50% for other senior leaders and 30% for salaried employees, although actual values may vary significantly depending on the deal. Moreover, retention agreements are usually time-based for senior leadership (55%) and other salaried employees (73%). A much smaller proportion of companies (36% for senior leadership and 23% for other salaried employees) indicate agreements are a mix of time and performance, with financial performance of the acquired business being the most prevalent performance metric. Fewer than one in 10 is just performance-based for either group. The survey also found the majority of respondents are optimistic their retention strategies will be successful. Nearly six in 10 respo...

More updates from Willis Towers Watson Public Limited Company