Structuring and Negotiating Executive Compensation Packages: Addressing Pay, Severance, Restrictive Covenants, and More

Structuring employment agreements with senior executives can raise significant legal issues, considerations and consequences for employers and executives, including tax, securities, corporate and employment law, among others.

Additionally, because employment agreements for public company executives must often be publicly disclosed, these agreements and the amounts payable under them are subject to scrutiny from shareholders and their advisors, governmental agencies and others.

Counsel must prepare to anticipate and avoid pitfalls that lurk in the details of an executive employment agreement. There are various important provisions, including those addressing incentive pay, equity grants and severance entitlements (including the circumstances triggering payment and release requirements). Special considerations that arise in the context of a change in control will also be addressed. The restrictive covenants landscape is constantly changing, and our panel will address recent developments regarding those arrangements.

Listen as our panel reviews the various types of executive compensation; techniques and considerations for negotiating severance provisions; best practices for drafting restrictive covenants; and more. The panelists will discuss relevant legal issues with an emphasis on addressing practical real-life situations.

1. Threshold considerations
   1. Pros/cons of entering into executive employment agreements
   2. Term
   3. Title/duties
   4. Reporting
2. Types of compensation
   1. Base salary
   2. Bonus/short-term incentive pay
   3. Long-term incentive pay
   4. Benefits and prerequisites
3. Negotiating severance
4. Change in control considerations
5. Restrictive covenants
6. Other key provisions and considerations

The panel will review these and other key issues:

• When employment agreements are appropriate
• What types of compensation structures that must be considered when negotiating and drafting an executive employment agreement
• How tax considerations for different forms of compensation
• What are the “hot-button” executive compensation issues from an investor’s perspective
• How to handle the release requirement in order for an executive to receive severance
• How an employer can bolster the enforceability of restrictive covenants
• When and how to include change in control protections