Regulation Of Compensation Agreements By SEBI

Compensation Agreement or Upside Sharing Agreement or Reward Agreement:

Compensation Agreement or Upside Sharing Agreement or Reward Agreement is entered into by private equity firms quite often in the form of a side agreement with top personnel and key managerial personnel of the listed companies wherein:

1. investor agrees to share a certain portion of the gains above a certain threshold limit made by them at the time of selling the shares, with such top personnel and key managerial personnel; or
2. in the event the listed investee company achieves certain performance criteria and the employee continues with the company for a certain period, such employees shall be eligible for sharing of the gains with the investor.