Previously, we began looking at the issue of executive compensation, particularly in light of Texas A&M’s ongoing deliberation about whether to offer its current Chancellor an early contract extension. As we noted last time, businesses need to carefully balance the need to attract highly qualified professionals with financial limitations and the need to protect business interests.
Executive compensation negotiations typically include discussions about the full range of compensation, including base compensation, stock options, signing bonus, annual incentives, wardrobe allowance, and benefits. Although not strictly considered compensation, job title is another matter that is sometimes negotiated in compensation discussions.
Another matter that can be negotiated is termination provisions. If no agreement is reached to the contrary, employers have the default right to terminate employees at will, including high-level employees. In each of these areas, businesses must carefully address any potential legal issues that could arise down the road. This is particularly important with respect to termination conditions, such as non-compete agreements.
Termination discussions should also address the issue of severance compensation. Legal issues concerning compensation and severance are especially important to address when it comes to nonprofit businesses, which are prohibited from offering unreasonable compensation to their executives. For nonprofits, establishing sound procedures to negotiate executive compensation and severance agreements is important not only to look out for the financial interests of the business, but also to avoid potential legal liabilities down the road.
In a future post, we’ll say a bit more about this topic, and how an experienced attorney can help nonprofits navigate executive compensation and severance issues in Texas.
Source: Monster.com, “5 things you must negotiate on every executive job offer,” Vicki Salemi, Accessed May 20, 2017.