The terms of an employment contract can be undeniably consequential. For example, someone’s employment contract will likely set their base pay rate, explain the benefits they’ll receive and establish when the company will pay them bonuses or other forms of incentive pay. Employee contracts can also clarify what severance pay, if any, someone will receive when they leave their position and what restrictions the company can enforce regarding their future economic activity.
Those in well-compensated positions, such as executives, often need to be especially cautious about the negotiation of their employment contracts. How can they most effectively protect themselves when reaching an agreement with future employers?
Coming to the table with clear expectations
Executives and other high-value workers need to know what they are worth and what types of compensation they would command elsewhere if they took a different offer or negotiated a new role at their existing company. It is easier to leverage an existing job or offer than it is to begin negotiating from a blank slate.
Ideally, executives will know what kind of salary range is acceptable and also what kinds of supplemental compensation and benefits they require. From stock options and severance packages to healthcare and long-term disability insurance, there are many variables that someone needs to understand and address before sitting down to negotiate their employment contract with a business.
Creating a counter-offer
Businesses tend to expect that even high-ranking professionals will sign the employment contract that the company proposes, possibly after making a few small adjustments to certain clauses. This approach to employment negotiations puts the worker at a disadvantage, as companies sometimes hide tricky or manipulative language deep in a document where they would not notice unfavorable terms.
It is often beneficial to have a lawyer review the initial employment contract and then draft a custom counter-offer that includes terms that specifically protect the executive considering the position. From rewriting the language of restrictive covenants to clarifying compensation clauses, there are many details that are easier to control in a custom counter-offer than they are to manipulate in a document drafted by an employer.