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Getting Paid After the Deal is Made Executives who are selling their companies to foreign firms must be certain to negotiate how they will get paid—particularly if they’re being paid at least partially in company stock. “If you’re staying on and getting stock-based compensation or accepting a minority interest in the company, that puts more burden on you to find out who [the buyer is], and how they plan to run the company,” says Girard Miller, a partner at Fulbright & Jaworski, LLP. “I’d want to know what kind of budget they have for developing the business. You don’t want them leaving you high and dry if you have equity in there.” You may also need to accept an unfamiliar compensation structure. If you do get stock, it may be in the parent company and traded on a foreign stock exchange. A foreign company may pay cash compensation in dollars, but its stock may be valued in another currency, leaving you open to fluctuations in currency value. If you don’t get equity—many privately held foreign companies are reluctant to offer it—you may need to discuss an equity substitute, such as a bonus structure that gives credit for stock appreciation. Seller beware: This could come with an added personal tax burden, because it offers ordinary income rather than capital gains. |
July 2008 | by Ingrid Case
