How should listed companies treat severance payments or non-compete arrangements in the context of Section 303A.02(b)(ii)?
When determining whether Section 303A.02(b)(ii) is applicable, the listed company must determine that there is or was an obligation for services by the director. Typically, a severance package or a non-compete arrangement is not contingent upon continued service. However, if the non-compete arrangement is part of, or entered into in connection with a consulting agreement that calls for continued service (even if that service is never rendered), this payment must be considered.
