Executive employment agreements and negotiations can be especially complex. Existing at the intersection of several different areas of law, executives often need the help of an Ohio executive compensation attorney to navigate their way through.
The Cleveland employment law attorneys at Bolek Besser Glesius LLC help executives negotiate compensation agreements and fair severance packages. And if litigation is necessary, we have the elite legal skills and experience to go to-to-toe against even the biggest corporations . . . and win.
What terms should be negotiated in Ohio executive employment contracts?
Negotiating executive employment agreements is complicated. The company’s lawyers draft these contracts, usually filling them with legal jargon. It’s important to have a lawyer on your side.
Some of the more common terms in executive contracts cover:
- Job title and duties. The contract should describe the executive’s job title and duties. It should be specific enough that everyone knows what to expect. Ohio executives should also want the contract to identify the position to whom they will report.
- Executive compensation. An Ohio executive employment agreement should list the types of compensation the executive will receive. That includes things like salary, bonuses, and benefits. It also might include things like stock options.
- Duration. The contract should state the length of employment. It should also state whether it will automatically renew.
- Termination. If the contract requires “cause” for termination, it should state what types of things qualify as sufficient cause. The executive should ask to include a “cure” period—essentially a chance to fix any claimed breach before termination. The contract should also identify when the executive can terminate the contract for cause.
- Executive severance pay. Many executive contracts will address severance pay. The contract should identify how severance will be calculated, either by fixed amount or based on a formula. The executive might also seek a promise the company will pay healthcare continuation under COBRA, and other post-employment benefits.
- Indemnification. The executive should seek the company’s agreement that it will indemnify for liability and attorneys’ fees if the executive is sued because of his or her job duties.
- Executive noncompetition agreements. Typically, employers will seek to limit the executive from going to work for a competitor after employment. If so, the “noncompetition” clause should specify the geographic range of the limitation and how long will it last.
- Change-in-control agreements. These provisions entitle executives to compensation if they lose their jobs because of a merger or sale.
Negotiating Ohio executive compensation agreements
Executive compensation is more complicated than just listing a “salary.” To ensure compensation terms are fair, employees should consult with an Ohio executive compensation attorney.
Some of the varying forms of executive compensation include:
- Base salary. Sometimes called “cash compensation.”
- Stock option grants. Companies might grant stock options to executives in several different forms, each with their own pros and cons. If nothing else though, executives should pay close attention to the strike prices, vesting schedules, and expiration dates for any stock options.
- Deferred compensation. This refers to compensation deferred until the future, usually for tax purposes. An obvious example is a 401(k) plan. Unfortunately, deferred compensation raises complex tax issues for both executives and employers, and the drafting must be done very precisely.
- Retirement packages. Related to deferred compensation are provisions governing retirement packages. Under some circumstances they are called “golden parachutes.” These packages might include health benefits as well as cash compensation. As with all deferred compensation, however, it’s crucial to consider the tax implications.
- Bonuses. There are several ways to structure bonuses. They might be based on annual or multiyear performance goals. They might also be discretionary. Some executives might even be able to negotiate a guaranteed bonus. And in some instances, an executive might seek a signing bonus or relocation bonus.
- Other benefits and perks. Ohio executives should negotiate for obvious items like health insurance, life insurance, vacation and sick days. They should also consider less obvious things like travel reimbursement or a car allowance.
There is no set formula for Ohio executives to answer the question “Is my compensation package fair?” One factor to consider is what other executives earn. Although this information is not always available, for public companies it is. Executive compensation for public companies can be evaluated by reviewing public SEC filings.
Ohio attorneys helping negotiate executive employment contracts
If you are a senior manager, CEO, CFO, or other executive or director, the Ohio executive compensation attorneys at Bolek Besser Glesius offer the rare mix of elite, big-firm legal skills, with the individualized attention you get from a boutique law firm. If you need to negotiate an employment contract, or are an Ohio executive who has no choice but to litigate, contact us today.