A well-drafted Executive Employment Agreement is essential for the protection of both the Executive and the Employer. A material misunderstanding on Executive’s part, of what she or he is being offered by the Employer, could prove to be fatal to the relationship. Without a solid foundation between employer and executive, production will not be at it’s ultimate level.
Every Executive has different priorities and thus, what is a "material issue" to one and not necessarily what is a "material issue" to the other. If you are the Executive, do not assume that the drafter understands what is of great importance or concern to you in the compensation package, and vice versa if you are the Employer. Utilize a well-drafted writing that clearly sets for the important issues and concerns of both parties.
Consider including the following issues in your Executive Employment Agreement:
1. Term of employment, or if at-will, clearly state that employment is At-Will."
2. Describe title and position and to whom the Executive will report.
3. Address expectation of commitment with exceptions for winding-up of affairs of previous engagement, relocation, etc., if applicable.
4. Address benefits clearing and include in writing any benefits that concern relocation reimbursement, commuting reimbursement, etc.
5. Address issues concerning Employer’s agreement to gross-up for tax imputed to Executive arising out of benefits received.
6. Address limitations or agreements pertaining to Executive’s activities outside of the scope of employment, for example, other directorships, etc.
7. Compensation and bonuses should be clearly set forth and if dependent upon certain goals being met, all related information should be provided prior to signing.
8. Timing of vesting of benefits should be clearly set forth.
9. Termination terms should be address in the same or separate written document. If termination provisions are set forth in a separate writing, that writing should be reviewed prior to the signing of the Executive Employment Agreement and signed simultaneously.
10. Assignment of developments should clearly distinguish between developments that are Employers property and developments outside of the scope of Executive’s employment.
11. Post-employment obligations, including non-compete provisions should be specific.
12. Employers will want a clause allowing them to recover attorneys fees and costs in event of breach by the Executive. Executive will want it to be more difficult for the employer to recover such fees and costs.
13. Governing law and other contractual provisions should be included as well.
Whether you are an Executive or Employer, obtain legal counsel to prepare or review and modify your Executive Employment Agreement. The consequences of not having a well-drafted Agreement could be significant.
For more information on Executive Employment Agreements, visit Attorney Grenier’s webite at http://www.contactmylawyer.com/executive-contract/employment-lawyer
For a telephone consultation from the Author of this article, Michelle L. Grenier, Esq., Executive Contracts Lawyer, click here.
Experienced Executive Contracts Lawyer, provides a valuable checklist of provisions to consider including when negotiating your Executive Employment Agreement. Such provisions, if clearly written in a well-drafted agreement, can substantially reduce the likelihood of costly disputes, misunderstandings between executives and employers.