Disputes over management packages: the significance of the risk taken by senior executives – Maurice Nussenbaum and Teddy Guérineau
Decision-Makers: Strategy, Finance, Law – Experts’ Views – No. 169 – March 2015
A ruling by the CADF reclassified the gains arising from a management package, notably on the grounds of a lack of risk-taking. This ruling appears to us to overlook the fact that executives who have paid the fair value of a management package take risks whose full extent cannot be assessed in hindsight, even if it has been agreed that they will recoup their investment under certain circumstances.
Carrying out an LBO is, by its very nature, a risky undertaking. Executives who invest in a management package and have paid its fair value take risks whose extent cannot be limited in hindsight, even if it has been agreed that they will recoup their investment under certain circumstances.
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