From the standpoint of the CEO or other senior executive, it is best to first approach your retention compensation by framing it as a small portion of the benefit the company gains by your agreeing to retention. Framed this way, the company gets a significant potential pay-back if it succeeds in getting you to agree to retention.
Full Answer
When should I retain an employment lawyer?
Very frequently, the officer remaining in control of the company will retain corporate lawyers to represent the company and sue the other owner or have the corporate lawyers defend against derivative claims by the other owner. Attorneys stepping into that representation should be cautious because the owner in control probably has no authority to retain counsel on behalf of …
Is it scary to consider retaining a lawyer?
Oct 27, 2017 · Interim CEO or Turnaround CEO agreements of this latter sort often include an employment term of one year or longer, rather than just “at will”. The base salary should be at least as high as the prior CEO and often higher to command the special talents of the “hired gun” being summoned for the Turnaround CEO. Also, where the company is ...
How to write a letter to retain an attorney?
Truth: You can determine an attorney’s competency in a particular field by asking for references and verifying that the attorney has successfully handled similar legal matters. Myth: An optimal outcome can be achieved by retaining a contentious attorney. Truth: Attorneys who are charging by the hour will earn more by prolonging a dispute. A client may be able to obtain a better net …
Do I need an employment lawyer?
an exempt organization and its CEO. 1. The CEO should retain personal coun - sel for the review and negotiation of the employment agreement, and should keep his or her personal counsel available dur-ing the course of employment to address any issues that arise. This is a recommendation even in the most friendly of negotiations.
Why did the defendants move to dismiss the complaint?
The defendants moved to dismiss the complaint because a majority of the LLC’s governing authority—the four members—had not authorized the suit on behalf of the company. The Street Star Designs, LLC board was deadlocked two-to-two.
How long does a motion to dismiss be served?
The notice of the motion shall be served upon the challenged attorney at least ten days before the hearing on the motion. At the hearing on the motion, the burden of proof shall be upon the challenged attorney to show sufficient authority to prosecute or defend the suit on behalf of the other party.
What is the role of a trial court?
A trial court has inherent power to issue and enforce orders that “aid in the exercise of its jurisdiction, in the administration of justice, and in the preservation of its independence and integrity.” Such power has existed in common law courts for centuries, and “it is beyond dispute that lawyers are officers of the court and that the courts have the inherent authority to regulate their professional conduct.” More importantly, courts have a duty to protect the rights of all parties to the litigation.
What is Rule 12 motion?
The second member also files a Rule 12 motion. After hearing the motion, the trial court should hold that the company’s attorney had no authority to represent the company, bar that attorney from appearing, and strike the lawsuit, leaving the second member as the plaintiff on his derivative claims.
Can a shareholder file a derivative claim?
Individual members or shareholder may, of course, file derivative claims on behalf of the company against officers, directors, and other shareholders. While the company is usually required to be named as a nominal defendant on those derivative claims, it is the actual plaintiff. “A shareholder derivative suit is for the benefit of the corporation. Although a party joins a corporation as a nominal defendant, the corporation is actually a nominal plaintiff because any recovery inures to its benefit.” Especially when the derivative claims charge serious wrongdoing against the company by the officers controlling the company, the company as a party and the attorney representing the company must remain neutral regarding the dispute.#N#In Providential Investment Corp. v. Dibrell, the court held that the company could not appeal a judgment for the plaintiff in a derivative suit that resulted in a receiver being appointed over the company, because the “judgment is in its favor, not adverse to it. A party on appeal cannot complain of action by the court that is favorable to it.” The Dibrell opinion cited the New Jersey Chancery Court opinion of Solimine v. Hollander, which held that “where directors are charged with misconduct in office and are sought to be held accountable, the corporation is required to take and maintain a wholly neutral position, taking sides neither with the complaining stockholder nor with the defending director.” The Minnesota Supreme Court in Meyers v. Smith—also cited as authoritative in Dibrell—struck a corporation’s answer which contested the derivative claim on its merits:
What is interim period?
The interim period may be one of mere place-holding and transition, to continue to keep the company operating smoothly until a new permanent CEO can assume the position. Other times, the departing CEO may have been ousted by the Board or otherwise left the company in circumstances of turmoil.
Do you need an employment agreement with an outsider CEO?
Regardless of whether you are an insider or outsider Interim CEO, you should have an employment agreement with the company. That agreement needs to reflect the understanding you have with the company, on which you relied upon in accepting the assignment. It should be precise and cover the conditions, authority, indemnity and insurance, employment terms, compensation, severance and equity, if any. This agreement is especially important if you are an outsider or the position involves a turnaround.
How long does it take to become a competent attorney?
Truth: An attorney only becomes competent in a particular area as a result of years of practice and experience. For most legal fields, it takes at least 10-years of practice before the attorney becomes competent. Myth: The best attorneys are extremely busy.
Does Maryland require malpractice insurance?
Truth: There is no requirement in Maryland for any attorney to purchase malpractice insurance. It is always proper for a client to request that the attorney provide proof of insurance. Myth: A client cannot fire his or her attorney. Truth: A client has the right to terminate the attorney-client relationship with or without cause at any time.
Do attorneys charge contingency fees?
Myth: All attorneys charge a one-third contingency fee in personal injury cases. Truth: The contingency fee charged by an attorney in a personal injury case is negotiable. For example, an attorney should voluntarily reduce his contingency fee when representing 2 or more clients that were injured in the same accident.
Do attorneys charge by the hour?
Truth: Attorneys who are charging by the hour will earn more by prolonging a dispute. A client may be able to obtain a better net result by entering into a favorable settlement early in the case rather than spending a small fortune on attorney’s fees.
What is a clawback?
“Clawback” refers to a situation in which an incentive award has been awarded or paid, but it is subsequently determined that, due to fraud or the misreporting or misstatement of information, the incentive award otherwise would have been a lesser amount or would not have been paid at all, and therefore should be returned to the organiza-tion. Public companies are subject to two clawback requirements: Sarbanes-Oxley Act section 304 and Dodd-Frank section 954.
Can a CEO terminate without cause?
Many agreements allow the CEO to terminate employment voluntarily following a “good reason” event and to receive the same severance benefits that apply to an involuntary termination without cause.
Robert Adelson, Executive Employment Agreement Lawyer
I am committed to helping executives get the value they deserve for their skills and experience. If you get a new job offer or wish to re-negotiate your employment contract, contact me at [email protected] or call 617-875-8665.
Representative Cases by Attorney Robert Adelson
Here are some cases where I have successfully represented C-suite executives in negotiating their job offers:
What is a long form CEO contract?
This contract is the "long form" CEO contract. It is somewhat more formal than the letter agreement and specifically lays out some of the minimal benefits that a CEO should receive. Its formality and extensiveness make it more applicable as part of the negotiations for a new relationship than as a contract proposed during an existing one. It should be examined so that the items covered are raised in the negotiations rather than for the exact benefit and salary structure stated. Some benefits will be agreed upon and some not. That is the purpose of a contract negotiation.
What is an executive contract?
An employment contract with an executive employee typically contains a covenant by the employee not to compete with the employer during the term of the contract and for a specified period following termination of employment. The covenant is essential to the employer in order to prevent the employee from dealing with the employer's customers or otherwise engaging in competitive activities with the employer immediately following his termination of employment so as to cause material adverse financial consequences to the business of the employer.
What is confidential information protection?
This provision protects the hospital from disclosure of confidential information by the CEO during and after his term of employment with the hospital. An employment contract with a key executive should contain a provision that prohibits the employee from disclosing to outsiders confidential information acquired by the employee during his term of employment without the express written permission of the employer. This provision should describe the applicable information so as to put the employee on notice as to what constitutes confidential information.
What is the termination clause in a hospital contract?
It is by far the most important part of the contract. In the event that a majority of the board decides the services of the CEO are no longer required, for whatever reason, the contract is terminated. However, the CEO will still be entitled to a stated amount of salary even though he is no longer working for the hospital. Also, the CEO's group life and health insurance benefits continue.
What is the Parole Evidence Rule?
It states that this particular contract embodies total agreement of the parties and supersedes any previous contract, in response to the so-called "parole evidence rule" of contract law. It eliminates any questions there may be as to the subject matter contained in the contract.
What is a no oral modification clause?
This provision requires that any amendments to the contract have to be stated in writing. This prevents either side from claiming that an "oral understanding" superseded some portion of this contract. It is technically referred to as a "No Oral Modification" or "NOM" clause.
What does the hospital contract keep in force?
This paragraph keeps the contract in force even though the hospital may change its corporate structure or be sold to another owner. It also provides that any benefits provided under the contract, such as life or accident insurance, that survive the CEO upon his death, insure to the benefit of his estate or heirs.
1. Compensation
Compensation is the most obvious key issue, but there are multiple layers of negotiating points encompassed here, including:
2. Equity Grants
Equity grants are often an important part of the Employment Agreement, and key issues here include:
3. Scope of Employment
The scope of the employment and responsibilities raise a number of issues:
4. Benefits
The various employee benefits available to an employee can raise a number of issues, including:
5. Term and Termination
The circumstances when the employee’s employment can be terminated and the resulting consequences will raise the following issues:
6. Reimbursement of Expenses
The issues regarding the right to the employee getting reimbursement expenses include:
7. Liability Protection for the Employee
The employee may want to negotiate certain liability protection mechanisms, covering the employee performing services within the scope of employment:
Compensation
Compensation is the most obvious key issue, but there are multiple layers of negotiating points encompassed here, including: 1. Does the base salary increase each year of the contract? 2. Is there a signing bonus, especially if the employee would be losing options or other benefits for making the job switch? 3. What quar…
Equity Grants
- Equity grants are often an important part of the Employment Agreement, and key issues here include: 1. What percentage of equity grant is appropriate -- a percentage of issued and outstanding stock or a percentage of fully diluted stock? 2. Should the grant be tax advantaged incentive stock options, non-qualified stock options, stock appreciation rights, or restricted stoc…
Scope of Employment
- The scope of the employment and responsibilities raise a number of issues: 1. What is the title of the employee's job? 2. What are the employee's responsibilities? 3. Can the employee be demoted? Can the employee's responsibilities be substantially modified, decreased, or increased? 4. Is the employee guaranteed a seat on the Board of Directors while an employee? 5. Where is t…
Benefits
- The various employee benefits available to an employee can raise a number of issues, including: 1. Will the employee participate in all of the benefit plans of the company? 2. Which of these plans should be in place for the employee? Are all of the payments for the benefits the responsibility of the company? (a) Health and medical (including spouse and dependent coverage) (b) Disability (…
Term and Termination
- The circumstances when the employee’s employment can be terminated and the resulting consequences will raise the following issues: 1. How long is the employment term or is the employment “at will”? 2. What are the grounds on which the company can terminate the employee? 3. What are the terms, if any, for compensation in the event of early termination? 4. …
Reimbursement of Expenses
- The issues regarding the right to the employee getting reimbursement expenses include:
- Will the employee’s business expenses be reimbursed within a set time period?
- Is there a car or car allowance, cellular phone provided, or other such amenities?
- Are moving expenses to be reimbursed?
Liability Protection For The Employee
- The employee may want to negotiate certain liability protection mechanisms, covering the employee performing services within the scope of employment:
- Does the company have Directors’ and Officers’ (“D&O”) insurance coverage?
- Do the company Bylaws provide for indemnification protection for officers and employees?
- Does the company's corporate charter limit the liability of officers and directors to the maxim…
- The employee may want to negotiate certain liability protection mechanisms, covering the employee performing services within the scope of employment:
- Does the company have Directors’ and Officers’ (“D&O”) insurance coverage?
- Do the company Bylaws provide for indemnification protection for officers and employees?
- Does the company's corporate charter limit the liability of officers and directors to the maximum extent permitted by law?
Confidentiality Restrictions
- The employer will want confidentiality provisions in the Employment Agreement: 1. Many companies have a separate form of employer Confidentiality and Invention Assignment Agreement that can be incorporated by reference. 2. The employee must be careful not to use or divulge confidential information of a prior employer – the new employer will often want a coven…
Invention Assignment Issues
- Companies expect that any inventions or business ideas developed by the employee related to the company’s business during the employment period, will be owned by the company: 1. What is the scope of the company’s rights to the employee’s development of new inventions, trade secrets, and ideas? 2. Do the invention assignment provisions comply with applicable law?
Disability and Death
- Various issues arise on the death or disability of the employee: 1. What is defined as a disability event? 2. What happens on disability? Does the employee continue to retrieve salary and benefits for some period of time? 3. What happens on death? Can medical and other benefits continue for some period for the spouse and children?
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