Frequently Asked Employment Law Questions - Executive employment contracts

An executive employment contract is a written employment agreement, usually made between a highly compensated executive and an employer, that contains more expansive terms and conditions than an ordinary employment agreement.

Executive Employment Contracts from the Executive’s Perspective

From the executive’s perspective, some key terms of an executive employment agreement include:

(1)  A guaranteed minimum term of employment;

(2)  A guaranteed minimum base salary and criteria for increases;

(3)  Other compensation, such as specified bonus and incentive compensation that is not discretionary;

(4)  Benefits and expense reimbursement;

(5)  Mandatory severance for a predetermined amount;

(6)  Termination for cause only (vs. “at will” employment);

(7)  D&O insurance and indemnification;

(8)  A change in control provision;

(9)  Resignation for good cause without jeopardizing severance; and

(10)  Options for renewal of the employment agreement.

Executive Employment Contracts from the Employer’s Perspective

From the employer’s perspective, some key terms of an executive employment agreement include:

(1)  A statement of the executive’s title, duties, responsibilities, time-commitment, and fiduciary obligations to the employer;

(2)  Restrictive covenants, such as a non-compete clause, a non-solicitation clause, and a non-disparagement clause;

(3)  A confidentiality and non-disclosure clause protecting confidential and proprietary company and client information;

(4)  A remedies provision with an attorneys’ fees clause;

(5)  An arbitration clause;

(6)  A clause that makes any severance conditional on the executive entering into a release and cooperating with the employer post-termination;

(7)  A claw-back provision requiring the executive to re-pay the severance to the employer if the executive breaches the employment agreement or release agreement;

(8)  A mitigation provision reducing the amount of severance if the executive becomes reemployed during the severance period;

(9)  A provision relieving the employer of any severance obligations in the event of breach by the executive; and

(10)  A termination provision that gives the employer the right to terminate the executive with or without cause or, if not “at will,” for an expansive set of “for cause” and other reasons that include performance.