Negotiating employment agreements is an important task for businesses, for a number of reasons. First of all, there is the need to attract and secure qualified individuals, particularly for positions of great responsibility within the business. There is also the need to form agreements which allow a business to retain its talent. In addition, though, it important to consider the changing needs of the business and to establish options for addressing contractual disputes as they arise.
The Texas A&M University System is currently in the midst of determining how to deal with a proposed extension of the employment agreement for its current Chancellor John Sharp. The extension proposal comes less than two years after the current contract was signed. That contract was supposed to run until 2020, but the proposed extension would extend the contract into 2023.
Not all those in charge of the decision—the university’s Board of Regents—are in support of the extension. Some say the extension comes too early into Sharp’s current contract. Others say the timing of the extension is poor, both because of the impending Senate confirmation of a newly appointed regent and public concern about excessive university spending.
Supporters of the extension proposal, however, say the timing is right and that securing Sharp’s leadership of the university will ensure the continued success of the institution. Sharp has actually asked that the vote concerning the proposed extension be pushed back to August in order to dispel rumors that he is attempting to have his contract extended before the confirmation of the newly appointed regent.
Balancing the need to attract highly qualified professionals and to incentivize their continued service with a business’ financial limitations is not necessarily an easy matter. Boards of directors need to carefully consider these decisions, especially keeping in mind the background legal issues that play into such matters.
In our next post, we’ll say a bit more about this topic, and how an experienced attorney can help provide sound advice and guidance in handling decisions surrounding executive compensation.