Q: Can I claim a material reduction in the Participant’s authority, duties or responsibilities?
I am a SVP wanting to execute CiC. The acquiring company will plop my organization in as an entity into one of their BU's. I will still report to the CEO of my company who will most likely become a VP, so I will be relegated to a lower title. Even though titles will change, the acquiring company sees no material change in my role because of the structure of my organization not changing.
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- California
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A:
Under California law, determining if you can claim a material reduction in authority, duties, or responsibilities depends on the specific terms of your employment contract and the Change in Control (CiC) provisions. If your employment agreement defines a material reduction in a way that includes changes in title or reporting structure, you may have grounds to execute the CiC clause. However, if the contract emphasizes the substance of your role and your responsibilities remain largely the same, it might be challenging to argue that a material reduction has occurred.
The fact that your title will change and you will report to a VP rather than a CEO could support your claim if your contract considers such changes significant. The perception of the acquiring company that your role remains materially unchanged might not align with the legal interpretation of your employment agreement's terms. It's essential to review the language of your contract closely to understand your rights fully.
Given the complexity of employment agreements and the potential consequences of executing a CiC clause, consulting with an employment attorney would be beneficial. They can provide guidance based on the specifics of your contract and help you determine the best course of action.
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