Why Have Executive Employment Agreements?

Executives are often in a class of their own, and don’t have the same benefits and responsibilities of a regular employee. Executives get the big bucks and perks, and they are in on all the trade secrets and inner circle. But they don’t get overtime pay, paid leaves, and holiday pay. Executives are often on call 24 hours a day and they take the bulk of the blame and responsibility when things go wrong. This is why executive employment agreements are important for both the company and the executives.

Executives wield a lot of authority and influence, but they also take on a lot of responsibility. Executive employment agreements document and limit the power and responsibilities that an executive has, as well as the compensation and perks such as stock options and the like that goes with the position. The agreement may also include nondisclosure or noncompetitive clauses that would prevent an executive from divulging trade secrets to competitors or enticing key employees away. Such agreements serve both the company and executive if it is properly negotiated and structure.

Executive employment agreements tend to favor whoever draws it up, however, which is why it is important that such agreements are brought before a labor lawyer to go through it with a fine-toothed comb. Legal loopholes and certain conditions that could work against either party must be carefully considered and weighed, and subjected to negotiations.

An experienced lawyer should be in on the negotiation process every step of the way before the agreement is finalized and signed. In that way, both parties have a fair shake and disputes can be avoided in the future. This can help both parties avoid contentious and potentially expensive legal battles that will be professionally detrimental to them in more ways than one, no matter who wins.


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