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The Wall Street Journal reported that thousands more banking and trading jobs will be cut. Some firms plan to cut experienced employees and replace them with more junior folks and utilize “campus hiring.” This is interesting. To save on expenses, the bank will eliminate more experienced employees, while keeping younger, less experienced, and, without question, less efficient employees. Therein lies the true cost of expense reduction.
In Part I and II, I discussed getting an employment agreement in writing, understanding the salary component, and details of the equity. The next critical step to take in the negotiation of an employment package is:
- Don’t Forget the Fringe Benefits. Many executives overlook the value that fringe benefits and perquisites (“perks”) bring to an overall compensation package. These can be “found money” for the executive and a way for an employer to lure new talent into its ranks. Fringe benefits and perqs can take several forms and can add, in some cases, significant dollars to the compensation package. These include health, life, disability insurance, car payments/allowances, club dues, home security systems, executive physicals, and relocation expenses. The executive should also be mindful of the tax treatment afforded these benefits to avoid the surprise of incurring taxable phantom income.
Please subscribe and return for future posts on other critical steps.
It appears that the trustee in bankruptcy is considering bringing suit against former executives of failed MF Global for “breach of fiduciary duties.” News reports indicate that there are insurance policies in place that will provide coverage for the executives for their “wrongful act” legal defense fees. While the author is not opining on the actions of the MF Global executives, the issue illustrates the significance for C-suite executives to obtain maximum indemnification coverage, not only as provided under a company’s bylaws, but also under insurance policies of indemnification (referred to as “errors and omissions” or “directors and officers” insurance policies). It will be interesting to see whether the causes of actions enumerated in the pleadings will be subject to the coverage in the policies or whether there will be coverage disputes ensuing.
I was recently asked when you should retain counsel in connection with termination of your employment. The answer depends on your individual situation.
If you are experiencing difficulties in your current position or anticipate being fired, counsel can be a helpful behind the scenes guide. Strategies can be implemented to help achieve better than initially expected results in the event of a termination of employment.
If you are planning to leave, counsel can provide guidance in marshalling the documents that govern your employment and advise as to the impact of resignation on the agreements (including non competes, non solicitations and garden leave agreements), offer letter, and compensation and benefit plans. The analysis is always about leverage. However, one should always have the agreements in place with the new position before resigning from the current one (see “GET IT IN WRITING!!”).
The bottom line is that employment advice involves assessing risk and reward under employment documents and evaluating leverage to maximize the reward and minimize the risk.
Today is a Strategy Day. Today’s strategy is “GET IT IN WRITING!!”
Seems obvious, but you would not believe how many individuals start employment without a writing. This happens regardless of the law requiring offer letters in many jurisdictions.
While “GET IT IN WRITING” are words that you would expect to hear from an attorney, it really holds true. You should not leave one job until you memorialize and both parties sign an agreement to the terms of the new job.
Bring as much clarity to bear as possible – make sure as much of the deal is spelled out in written form signed by both employer and employee. Don’t forget specifics concerning financial terms, benefits, perquisites, equity, and the impact of different events of termination on those pieces of the package.
And by asking for the terms to be in writing, you will take the “employment temperature” of the prospective employer. You will learn a lot from the answer to your request for a written document.
How many of you have been in the predicament of starting a new job without the protection of a written agreement or offer letter?
Welcome! This blog, Transitions in Employment, will endeavor to provide its readers with insights into current developments to help you make informed decisions regarding your current job situation. Whether you are contemplating a change, are fearful of being terminated, thinking of moving your “book of business” to another firm, have just been terminated and presented with a severance package or believe that you may have been the subject of unlawful discrimination or harassment, here you will find timely information surrounding the ever-changing employment landscape.
The focus will be on developments in employment agreements, offer letters, severance packages, garden leaves and non-compete and non-solicitation restrictions, confidentiality agreements, changes in control, deferred compensation, stock options, bonus, commissions, equity and benefits. Please join the discussion as together we explore the current employment arena and discuss individual strategies and solutions.