Executive Compensation Negotiations

Whether you are a Chief Executive Officer, Chief Operations Officer, President, Vice President, Manager, or another level of executive, negotiating the best possible executive compensation package in your employment contract can be extremely important to your career and financial success.

In addition to your salary and benefits, there are many important considerations before you accept a job offer, including job security, bonuses, commissions, severance pay, equity such as stock options and stock grants, and whether you are limiting your right to work for a competitor in the future.

At Rabner Baumgart Ben-Asher & Nirenberg, P.C., our New Jersey executive compensation attorneys are experienced at negotiating better employment agreements for corporate executives and management-level employees. We can help you negotiate your own employment contract, or we can negotiate its terms and conditions on your behalf.

Below are some of the most common issues and concerns with respect to executive compensation packages.

One of the most important considerations in an employment contract is job security. Whether you are seeking a one-year contract, a multi-year contract, or an agreement prohibiting your employer from firing you without “just cause,” the goal is the same -- protecting you and your family from the sudden and unexpected loss of your income. Similarly, severance provisions and golden parachutes in employment contracts can serve the purpose of ensuring you a soft landing in the event you are laid off.

There are many important considerations with respect to bonus plans. For example, you should consider how your bonus will be calculated, whether it is guaranteed or discretionary, when it will be paid, and what happens if you leave the company before you receive it. Too many employment contracts do not address these types of issues, or worse yet address them in ways that are unfair to the employee.

Even more issues arise with commissions and other compensation based on sales. For instance, it is important to make sure your employment contract indicates when a commission is earned (e.g., when the sale is made, when it is booked, when the payment is received, or at some other point).

Likewise, your employment agreement should address whether and for how long you are entitled to receive residual commissions in the future, what happens if your employer reassigns one of your accounts to another employee, whether you are entitled to a commission if another employee makes a sale to one of your clients or customers, and other similar issues.  Our New Jersey executive compensation lawyers can help with any of these issues.

In addition to offering salary and more traditional benefits, some companies offer their executives deferred compensation such as stock options, restricted stock units ("RSUs") and other equity grants.

While stock options can be a great incentive, they are limited by the strike price, how well the company performs and how long you remain at your job. In addition, they typically must be exercised during your employment, or within a short period after your termination date. Similarly, RSUs usually stop vesting after your employment ends. Further, companies often include non-compete provisions in equity agreements.

As a result, it is important to make sure you fully appreciate and understand the potential risks and rewards that can come with these equity grants, as well as the limitations on when they will vest and when you can exercise them. 

Many companies include non-compete agreements, non-solicitation provisions and other restrictive covenants in their executive compensation packages.

Not only can these provisions severely limit your ability to find your next job, but they also can limit your bargaining power when you are negotiating future contract extensions or raises with your current employer.

Our New Jersey executive compensation attorneys can help you try to negotiate a contract that does not include these onerous restrictive covenants. Even if your company will not agree to remove the restrictive covenants from your employment agreement, we can try to limit their applicability, duration and scope. Similarly, if necessary, we can represent you in a lawsuit in which your previous employer claims you breached a restrictive covenant.

If you need help negotiating an employment contract or with a dispute relating to one in New York or New Jersey, we can help. Please feel free to contact us online or call us at (201) 777-2250 to schedule a meeting with one of our New Jersey executive compensation lawyers.