EXECUTIVE CONTRACTS: SEVERANCE UPON EXPIRATION

April 14th, 2018 Posted by No Comment yet

Executives who are offered contracts with a specific term should ask that any severance payment also apply upon the expiration of the contract term in addition to any termination by the employer prior to the end of the term.

The rationale for this request is that it very difficult, even unlikely, for an executive, particularly a senior or C-level executive, to find the time look for a new position while also fulfilling their considerable employment obligations prior to the expiration of the term.  As such, executives will still be faced with the same lengthy job search as if they were terminated prior to expiration; except without any cushion.

EXECUTIVE CONTRACT: SEVERANCE

April 10th, 2018 Posted by No Comment yet

Companies are often reluctant to grant an executive severance upon the expiration of the executive’s contract term.  When negotiating an executive employment agreement under these circumstances, the fall back position is to eliminate the term completely and become an “At Will” employee.  It may seem counterintuitive, but most contracts for a term provide the company with the ability to exit the agreement at any time prior to expiration without “cause” so long as they pay a penalty otherwise known as severance.  So, even if you have a contract for a term, the ability of the company to end the relationship before the term expires really renders the relationship “At Will.”

However, as long as you have a severance provision in the contract then the “At Will” arrangement will (a) eliminate an inexpensive exit strategy for the company since the company can just let the contract expire, and (b) always provide you with severance no matter how long you remain employed.

HAVE AN ATTORNEY REVIEW YOUR EMPLOYMENT AGREEMENT

December 17th, 2014 Posted by No Comment yet

There is an old saying that a lawyer who represents himself has a fool for a client.  This maxim also holds true for an executive or manager who does not have a lawyer review their employment contract or offer letter, and negotiates the language and terms themselves.

When reading your contract or offer letter, keep in mind that employers will purposely use language that is vague to leave themselves an opportunities to exploit during difficult times.  For example, sales people constantly have issues collecting commission payments upon termination because the company does not define when commissions are earned.  In addition, in trader and banker agreements just because the word guarantee is used as to a bonus amount does not mean it is guaranteed if you are terminated before it is paid.  These are just two examples and there are many more.

Without the experience and training of an executive attorney, there is a strong likelihood that risks you could have negotiated away will get over-looked. The time to address the risks associated with your agreement is before you execute the agreement and resign your current position.  Once you are employed it is too late.

What an executive attorney can do for you is help you identify and assess the risks inherent in your agreement, and offer the best solutions for addressing the risks that are of the greatest concern.  Most risks are negotiable.  But, unless you know what they are and how best to address them you may experience conflict during, or upon exit from, your employment or be denied compensation you believe you had earned.