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5 important elements in an executive contract

On Behalf of | Feb 24, 2023 | Executive Employment

Companies that have people in executive positions usually have employment contracts for those individuals. These contracts provide information about the duties and expectations of both sides. 

Having a solid employment contract is crucial to ensure the company and the executive are both protected. Besides basic information, such as identifying information for all parties, executive employment contracts should have these elements. 

1. Salary, benefits and other compensation

The salary and all benefits for the executive must be outlined. This includes the starting salary and the stipulations for future raises. Benefits, such as health insurance, paid time off, sick days, profit sharing and similar matters must be included. Expense reimbursement and use of a company credit card should also be included if they’re applicable to the situation.

2. Job description and required performance standards

A detailed job description is required for an executive employment contract. The performance standards that must be met can also be included so there’s no doubt about what’s required. 

3. Specialty clauses

Non-disclosures, non-compete and conflict-of-interest clauses should be included. These should be detailed so it’s perfectly clear what’s suitable and what’s forbidden.

4. Termination information

Termination information deals with when it’s allowable for the company to terminate the executive’s employment. This can be things like failure to do the job duties and gross negligence. If severance pay is included in the contract, the terms of the executive receiving this upon termination must be covered. 

5. Dispute resolution

Many executive employment contracts include information about how breaches are handled. This could be a limitation for only alternative dispute methods. 

Executive employment contracts provide valuable protection for the company and the executive.  These contracts should be followed exactly as written. When either side breaches the contract, legal action can occur. Having someone who understands these matters is beneficial so you can learn your options for addressing the issue.