What Are the Primary Things You Focus On When Negotiating Executive Employment Agreements?

Video Transcript

The two things I focus on are compensation and the exit. A lot of clients come in and they’re most concerned with the compensation piece – as they should be. They understand what their duties are. They’re excited. They want to make sure they get paid for what the services are that they’re providing. And I understand all of that. And usually, I don’t get involved in the compensation piece at all, because they’re fair. They’re very competent about negotiating that from there, from their standpoint. My concern is, are they going to get paid? And when are they going to get paid? If the relationship ends, do they have a bonus opportunity out there that has vested and that they have the right to get paid? Or are they going to lose the bonus? Are they going to lose a commission? So it’s very, very important from an employment contract standpoint, that there be absolute clarity on when an employer or employee is entitled to be paid a bonus or some sort of incentive compensation and what the conditions are for payment.

The other thing I look at, that the clients almost never want to look at, is what happens at the end of the relationship because that’s when I get the calls. And we want to make sure that there’s a clear roadmap as to what happens when they leave, what they are entitled to in terms of compensation and severance. The timing of the payment of the compensation and severance ensures that they’re compliant with the various deferred taxation requirements. And then what happens if there are other restrictive covenants? Is there a nondisclosure obligation that they need to be aware of? Non-compete and non-solicitation obligations? The front end is when you negotiate those, you don’t try to negotiate those on the back end because the employer will never negotiate on the back end.

Disclaimer: Please be aware that the information in this video may be outdated regarding the legality of noncompete agreements in Minnesota. For the most current information, please refer to our latest article here: Minnesota Legislature Bans Employee Noncompete Agreements.

This video provides general information and is not legal advice. Consult a qualified attorney for personalized guidance.