By the time you received the employment offer you dreamed of — the one at the top — you had already completed your education and worked your way up the proverbial corporate ladder. You put in overtime, took ownership of new responsibilities and overcame countless business challenges. So now that you have the offer letter that you wanted, it is critical to review employment agreement do’s and don’ts including:
Employment Agreement Do’s
- Attorney Review: The most important first step is to take your employment offer to experienced executive compensation attorneys for their immediate review. A letter offer contains numerous provisions, most of which are drafted to protect the interests of your soon-to-be new employer. You need the experience of an executive employment attorney to navigate these provisions and look out for your own best interests.
- Take the Blinders Off: Based on our experience — and as the Harvard Business Review[1] independently suggests — any prospective employee should focus on the whole deal, rather than one single aspect of the agreement. Be sure to take that advice, remove any blinders and look at the offer letter as a whole, rather than simply focusing on one aspect, such as base compensation, bonuses (contingent or guaranteed) or stock options.
- Termination: It’s tough to think about during the euphoria of a big new contract, but that is precisely why you need an executive compensation attorney to protect your interests now, long before it becomes clear whether things actually turn out as you hoped. While every executive offer covers issues such as job title, compensation, signing bonuses and health insurance, it is also important to negotiate terms concerning severance in the event of future termination. While it may be hard now to imagine that your time with the company could end, your failure to negotiate this provision at the onset of your employment may leave you empty handed years down the road.
Executive Offer Don’ts
- Don’t Sign: It is a mistake to assume that it is necessary to sign the first letter offer that is given to you from the HR department. After you review all of the terms with your executive employment attorney, it may be prudent to make a counter-offer and allow that attorney to negotiate the provisions that are most important to you and your family.
- Don’t Ignore the Details, such as Attorneys’ Fees: Here is only one of several items which a good attorney will take into account. You have just reached a verbal agreement with your prospective new employer, the agreement has been converted into writing for you to review and you are excited to begin this new chapter in your career. Are you thinking about potential disagreements with that employer that may not surface for several years? Have you considered the possibility that your employer could breach the terms of your employment contract, leaving you with no alternative but to commence legal proceedings? These are important considerations. Your failure to negotiate items such as who will decide such a dispute and whether there will be pre-dispute mediation, or who will pay your attorneys’ fees in the event of future litigation, could cost you tens or even hundreds of thousands of dollars at a time when you may not have a job. Also, sometimes the company will pay your attorney’s fees to have the contract reviewed by an attorney before you sign it.
- The point is: If you have been offered the top job, it isn’t going to go away if you take the time to look over your entitlements with a good executive compensation attorney. Our experience is that most companies want you to be happy and respect you for protecting yourself.
Your career and the welfare of your family are too important to blindly execute any employment offer. Only an experienced executive employment and compensation attorney can review the proposed agreement and advise you on what terms must be negotiated before you sign on the dotted line.
References
[1]Harvard Business Review