Executive Employment Agreements

For many employers, hiring executives is a major decision that will likely impact the entire company. Additionally, upper level employees are often in the position to negotiate their contracts, setting out the terms of their employment beyond their salary conditions. Both of these factors can lead to employment contracts for executives becoming complex legal documents. It is not uncommon for high level employees to use an employment law attorney to aid them in the contract negotiation process.

So what can you expect to see in an employment contract? And what can you consider negotiating for if it is not included in the contract you are offered?

Here are several things that you might see in a high level employment contract, or that you may want to add to an executive employment contract.

  • Salary and Other Compensation

This one is pretty obvious, and seems straight forward at first glance. However there are things to consider. Is your salary going to be increased annually? If so, by how much? Is there a standard percentage raise, or is it performance based? Can your salary be decreased under any conditions? All of these might be stated in the contract, or might bear some questions if they are not.

Additionally, you will likely want to know the terms of bonuses. Are they annual, or quarterly? Are they guaranteed? Likewise, is the company offering a signing bonus? Many companies offer these, especially if the employee will be losing certain benefits by leaving their old position.

  • Scope of the Employees Role

This is another fairly obvious component of an employment contract. This is where the company should state what is expected of the employee in the role they were hired for, as well as what the employee’s title will be.

  • Benefits Offered

This is where things like health insurance, pensions and 401(k)’s are discussed. The company might offer other attractive benefits such as dental and vision, or financial counseling. The terms of all of these benefits should be stated clearly.

  • Stock Options and Equity Grants

The contract should detail the agreement regarding equity, including, among other things, the percentage, the period before the equity vests, and what happens in the event of the employee being terminated.

  • Can the Employee be terminated at Will?

Many employment contracts are left “at will,” meaning the employee may be terminated for any lawful reason (not for discrimination or as a retaliatory act). The contract could also state that the employee can only be terminated “for cause,” and then list what causes could lead to the employee’s termination, usually this would include the employee committing certain types of felonies, breaching the employment agreement, or improperly disclosing confidential company information.

  • Confidentiality Clauses

Many employment contracts will likely require that the employee sign an agreement stating that they will not disclose confidential information about the company.

  • Rights to Inventions

Employees should look into the contract’s rules about employee inventions, and under what conditions the company would own the rights to ideas or inventions developed by the employee during the course of his or her employment with the company.

  • Reimbursement for Work Related Expenses

This would include travel expenses, whether a company phone or company car was to be provided and whether the company was going to pay some of the expenses for relocating the employee.

  • Resolution of Disputes

It is common for employment agreements to include rules regarding the resolution of disputes that might arise between the employee and the hiring company. This would include things such as whether conflicts were to be arbitrated, the choice of law, and the location where dispute resolutions would take place.

  • Limitations for the Employee Following Termination

Contracts often include “non-compete” agreements limiting the ability of the employee to take jobs with competing companies. These agreements are restricted in time and region, but they can seriously limit an employee’s ability to seek a related position. Additionally, they might restrict the employee’s ability to recruit other employees from the company in order to bring them with them to a new position.

  • Indemnification Agreements

The employee might want to determine what sort of liability protections the company provides its executives, and whether the company holds Directors’ and Officers’ insurance, and what the policy is on payment of legal expenses.

Executive employment contracts will likely address other issues in addition to those listed above, and it is important to remember that the issues above will likely be covered in greater depth in the actual employment contract. Be sure that you have a complete understanding of everything that you are agreeing to prior to signing the contract agreement. If you are in the process of negotiating an executive level employment contract, consider speaking with an employment attorney.

Contact Stern Law, PLLC for A Free Consultation

At Stern Law, PLLC, we have compassionate and caring attorneys ready to work with you to find the best solution to your employment law related legal issues. Contact Stern Law, PLLC today at (844) 808-7529 for a free consolation with an experienced employment attorney.

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