Summary
Aon plc filed an 8-K on December 11, 2015, to report on changes to its executive compensation and severance policies. Effective February 2016, the company is terminating existing individual Change in Control Agreements for most named executive officers, excluding the CEO. This action is coupled with the adoption of a new 'Executive Committee Combined Severance and Change in Control Plan.' The new plan aims to provide a standardized framework for severance benefits, particularly in cases of termination following a change in control. It outlines payments for both non-qualifying and qualifying terminations, with enhanced benefits upon a qualifying termination within two years of a change in control, including lump-sum payments, accelerated vesting, and extended benefits. These benefits are contingent upon the executive releasing the company from claims and adhering to non-solicitation and confidentiality covenants.
Key Highlights
- 1Termination of existing individual Change in Control Agreements for most named executive officers, effective in early 2016.
- 2Adoption of the new 'Executive Committee Combined Severance and Change in Control Plan' to standardize executive severance.
- 3The new plan applies to members of the management executive committee not covered by other severance agreements.
- 4Severance for non-qualifying termination includes base salary and accrued benefits up to the termination date.
- 5Qualifying termination includes base salary and accrued benefits plus a lump sum equal to annual base salary.
- 6Enhanced severance upon a qualifying termination within two years of a change in control, including a cash lump sum equivalent to twice the sum of annual base salary and average incentive bonus, plus accelerated vesting and extended insurance coverage.
- 7Severance payments are conditioned on the executive releasing the company from claims and adhering to restrictive covenants (non-solicitation, confidentiality).