Companies are increasingly disclosing provisions in separation agreements that include continuing health care coverage for departing executives. The uptick in disclosures puts the details of these plans front and center for execs and competitors. Boards mulling over retention considerations or updating change-in-control agreements may find it useful to examine peers’ offerings, sources suggested.
Sources told Agenda that the perquisite—whether offered through continued monthly medical and dental insurance coverage or a lump-sum payment meant to cover the cost of insurance for one to three years, for example—has long been a standard provision in certain exit deals, but they offered a variety of reasons for the uptick in disclosure.
For one, the Securities and Exchange Commission has ramped up enforcement of perks disclosure in recent years, said Deborah Lifshey, a managing director at executive compensation consultancy Pearl Meyer. “With disclosures getting more regimented and compliance-oriented, maybe [companies] have decided they don’t want to be involved in an SEC enforcement action,” she said.