Archive for June, 2012
As discussed in my last post, there are several critical steps to take in the negotiation of an employment package. Let’s move on to steps #2 and 3.
- Show Me the Money. In evaluating the salary component of a compensation package, it is essential that the executive be realistic not only about his or her financial requirements but also about the value he or she brings to the employer and what the market will bear. The executive should gather his or her own market intelligence and be an informed participant in the negotiation. Knowing the “going rate” for executives with similar skills, talents and experience is the best way to gauge the strength of the compensation offer.
- Spell out the Equity. The employment package should specify the level of equity grants, how they will vest and their forfeiture provisions. The equity grant provision(s) must take into consideration the terms and conditions of the governing plan documents, and relevant IRS requirements, federal securities laws, and other applicable rules and regulations.
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There are several critical steps to take in the negotiation of an employment package. Clients come to us at all stages during the employment process – at the commencement of a job search, upon receipt of a term sheet by a potential employer, when an offer letter or employment agreement is to be negotiated, or following termination. Regardless of when an individual chooses to engage counsel, attention must be paid to seven critical steps. This series of posts will take you through those seven critical steps.
- Get it in Writing. Rare is the situation where the executive does not receive an offer letter or an employment agreement from a prospective employer. One should always request the protections of such a document before starting a new job. In fact, many jurisdictions require the delivery of a written offer letter based on the nature of the position offered. While the employment agreement provides multiple protections for the employer, including, for example, the imposition of covenants of non-competition, confidentiality and non-solicitation, it also benefits the executive as it provides a road map to the employment relationship and the compensation package. By defining the executive’s position, compensation, and benefits, an employment agreement does more than simply govern the terms of the executive’s employment while employed. Rather, it provides the framework for the parties’ post-employment relationship, including severance, if any, that may be paid in the event of termination and the nature and extent to which post-employment restrictions may apply.
Please subscribe and return every week for posts on other critical steps.