Executive compensation is the term used to describe the compensation package senior executives receives.  It encompasses employment contracts, wages and benefits, stock options, severance packages, non-compete agreements, and confidentiality agreements.  Executive compensation packages protect the executive’s position by restricting the reasons the employer can use to terminate the executive.  Moreover, an executive compensation employment agreement often details both the terms and conditions of employment, and also the Company’s and executive’s post-employment responsibilities. 

Aside from detailing an executive’s title, responsibilities, and authority, executive compensation agreements typically provide for a specific time period of employment.  Generally, such an agreement will state that once the period of employment ends, (a) the contract terms will automatically renew if there was no termination, or (b) the executive will be terminated or continue his or her employment on an at-will basis.

The most complex terms in an executive compensation agreement may address the executive’s compensation package.  Typically, the compensation package will include a base salary; the conditions that need to be met in order for one to receive bonuses; the schedule upon which bonuses will be paid out; Deferred Compensation and Supplemental Executive Retirement Plan information; benefits, fringes, and perks; and equity grants.  Tax consequences and securities laws should be carefully considered when negotiating such an agreement.  Moreover, due to many states’ corporation laws, Board fiduciary duties may conflict with the executive’s objective of negotiating a reasonable rate of compensation. 

If you have questions regarding the terms of your executive compensation agreement, believe your employer has violated the terms of your agreement, or would like help negotiating your agreement, contact Caffarelli & Siegel Ltd. to speak to a Chicago Employment lawyer.