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Executive Bonus Agreement

Executive Bonus Agreement Template for Australia

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Key Requirements PROMPT example:

Executive Bonus Agreement

"I need an Executive Bonus Agreement for our new Chief Technology Officer who starts in March 2025, including both STI and LTI components with specific tech industry KPIs and ASX compliance requirements for our listed company."

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Document background
The Executive Bonus Agreement is essential for Australian companies seeking to implement structured incentive programs for their senior leadership. This document is typically used when establishing or formalizing performance-based compensation arrangements for executive-level employees, ensuring alignment with corporate objectives and regulatory requirements. The agreement comprehensively addresses bonus structure, performance metrics, payment terms, and compliance with Australian corporate law, tax legislation, and ASX requirements (for listed companies). It's particularly crucial for protecting both employer and executive interests by clearly documenting bonus entitlements, conditions, and obligations, while ensuring adherence to governance best practices and regulatory frameworks.
Suggested Sections

1. Parties: Identifies the company and the executive entering into the bonus agreement

2. Background: Sets out the context of the agreement, including the executive's role and the purpose of the bonus arrangement

3. Definitions: Defines key terms used throughout the agreement, including performance metrics, bonus types, and payment terms

4. Term and Commencement: Specifies when the bonus agreement begins and its duration

5. Bonus Structure: Details the framework of the bonus arrangement, including types of bonuses (STI/LTI) and maximum potential amounts

6. Performance Metrics: Outlines the specific KPIs and performance criteria that will determine bonus payments

7. Payment Terms: Specifies when and how bonus payments will be made, including any deferral arrangements

8. Clawback Provisions: Sets out circumstances under which the company may recoup bonus payments

9. Termination Provisions: Addresses what happens to bonus entitlements upon various types of employment termination

10. Confidentiality: Requires the executive to maintain confidentiality regarding the bonus arrangements

11. General Provisions: Standard boilerplate clauses including governing law, entire agreement, and amendment provisions

Optional Sections

1. Equity Components: Required when the bonus includes share-based payments or options

2. Tax Indemnity: Optional section addressing tax implications and responsibilities, particularly relevant for complex bonus structures

3. Change of Control: Include when specific provisions are needed for bonus treatment in case of company ownership changes

4. Non-Competition: Optional restrictions on post-employment activities, particularly relevant for senior executives

5. Shareholder Approval: Required for listed companies when bonus arrangements need shareholder approval under ASX rules

6. Superannuation: Detailed section needed when specific superannuation arrangements apply to bonus payments

Suggested Schedules

1. Schedule 1 - Performance Metrics Detail: Detailed description of KPIs, calculation methodologies, and targets

2. Schedule 2 - Bonus Calculation Formula: Mathematical formulas and examples for calculating bonus amounts

3. Schedule 3 - Payment Timeline: Detailed timeline of assessment periods and payment dates

4. Appendix A - Pro-rata Calculations: Examples and methods for calculating partial-period bonus entitlements

5. Appendix B - Share Plan Rules: If applicable, rules governing any equity component of the bonus

6. Appendix C - Applicable Policies: Reference to relevant company policies affecting bonus arrangements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Accounting Period
Annual Base Salary
ASX
Board
Bonus
Bonus Period
Cause
Change of Control
Clawback Event
Company
Confidential Information
Corporations Act
Deferred Bonus
Effective Date
Eligible Employee
Executive
Financial Year
Good Leaver
Group
KPIs
Long Term Incentive (LTI)
Material Adverse Event
Performance Criteria
Performance Metrics
Performance Period
Related Body Corporate
Relevant Interest
Short Term Incentive (STI)
Subsidiary
Target Bonus
Termination Date
Vesting Date
Vesting Period
Workplace Law
Relevant Industries

Financial Services

Mining and Resources

Technology

Healthcare

Retail

Manufacturing

Professional Services

Telecommunications

Energy

Construction

Real Estate

Transportation and Logistics

Relevant Teams

Human Resources

Legal

Finance

Executive Management

Company Secretariat

Compensation and Benefits

Corporate Governance

Risk Management

Board Secretariat

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Chief Technology Officer

Managing Director

Executive Director

General Manager

Vice President

Head of Department

Regional Director

Senior Executive

Executive Vice President

Division Head

Industries
Corporations Act 2001 (Cth): Primary legislation governing corporate operations in Australia, including executive remuneration disclosure requirements and director duties
Income Tax Assessment Act 1997 (Cth): Governs the taxation treatment of executive bonuses and benefits, including fringe benefits and deferred compensation arrangements
Fair Work Act 2009 (Cth): Covers employment terms and conditions, including provisions related to bonuses as part of employment arrangements
ASX Listing Rules: For listed companies, these rules include requirements for disclosure of executive remuneration and approval of certain equity-based incentive schemes
Superannuation Guarantee (Administration) Act 1992 (Cth): Relevant for determining superannuation obligations on bonus payments
Fringe Benefits Tax Assessment Act 1986 (Cth): Addresses the taxation of non-cash benefits that may be included in executive bonus arrangements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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