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Deferred Compensation Contract

Deferred Compensation Contract Template for Germany

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Key Requirements PROMPT example:

Deferred Compensation Contract

"I need a Deferred Compensation Contract under German law for our new CFO who will be splitting time between our Berlin and New York offices, with 40% of their annual compensation to be deferred and tied to company performance metrics."

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Document background
A Deferred Compensation Contract is essential in situations where an employer and employee agree to postpone payment of a portion of the employee's compensation to a future date. This document is particularly relevant in the German legal context, where specific regulations govern such arrangements under various laws including the Einkommensteuergesetz (EStG) and Sozialgesetzbuch (SGB). The agreement typically details the amount of compensation to be deferred, payment schedules, tax implications, and social security considerations. It's commonly used for executive compensation, retirement planning, or tax optimization purposes, and must comply with German labor law requirements and corporate governance standards. The contract provides security for both parties by clearly defining obligations, risks, and rights associated with the deferred compensation arrangement.
Suggested Sections

1. Parties: Identification of the employer and employee, including full legal names and addresses

2. Background: Context of the agreement, employment relationship, and reason for deferred compensation arrangement

3. Definitions: Key terms used throughout the agreement, including specific German legal terms

4. Base Compensation: Details of the employee's current compensation structure before deferral

5. Deferred Compensation Amount: Specification of the amount or percentage of compensation to be deferred

6. Deferral Period: Timing and duration of the deferral period, including vesting schedules if applicable

7. Payment Terms: Conditions and timing for payment of deferred compensation

8. Tax Treatment: Provisions regarding tax implications and responsibilities

9. Social Security Contributions: Handling of social security contributions under the arrangement

10. Compliance with German Law: Specific provisions ensuring compliance with relevant German regulations

11. Termination Provisions: Consequences of employment termination on deferred compensation

12. Amendments: Process for modifying the agreement

13. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

Optional Sections

1. Stock Options/Equity Components: Include when deferred compensation includes equity-based elements

2. International Tax Provisions: Required for employees with international tax obligations

3. Company Performance Conditions: Include when payment is linked to company performance metrics

4. Disability and Death Provisions: Detailed provisions for handling deferred compensation in case of disability or death

5. Non-Competition Clauses: Include when deferred compensation is tied to non-compete obligations

6. Currency Provisions: Required when payments might be made in non-Euro currencies

7. Data Protection: Detailed GDPR compliance provisions if extensive personal data processing is involved

8. Change of Control: Include when special provisions apply in case of company ownership changes

Suggested Schedules

1. Schedule A - Calculation Method: Detailed formula and examples for calculating deferred compensation

2. Schedule B - Payment Schedule: Specific dates and amounts for deferred compensation payments

3. Schedule C - Performance Metrics: If applicable, detailed description of performance conditions

4. Schedule D - Tax Calculation Examples: Illustrative examples of tax treatment in various scenarios

5. Appendix 1 - Deferral Election Form: Standard form for employee to elect deferral amounts and timing

6. Appendix 2 - Beneficiary Designation Form: Form for designating beneficiaries in case of death

7. Appendix 3 - Compliance Certificates: Required certifications for regulatory compliance

8. Appendix 4 - Release Forms: Standard forms for releasing payment of deferred compensation

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
Agreement
Base Salary
Beneficiary
Board
Cause
Company
Compensation Committee
Confidential Information
Deferral Account
Deferral Date
Deferral Election
Deferral Period
Deferred Amount
Disability
Effective Date
Eligible Compensation
Employee
Employer
GDPR
Good Reason
Group Company
Investment Options
Parent Company
Payment Date
Performance Criteria
Performance Period
Plan Year
Retirement
Retirement Age
Severance
Social Security Contributions
Subsidiary
Tax Year
Termination Date
Vesting Date
Vesting Period
Vesting Schedule
Works Council
Year of Assessment
Clauses
Interpretation
Definitions
Term and Duration
Compensation Structure
Deferral Elections
Vesting Provisions
Payment Terms
Tax Obligations
Social Security Contributions
Performance Conditions
Investment Options
Confidentiality
Data Protection
Non-Competition
Non-Solicitation
Intellectual Property
Termination Rights
Death Benefits
Disability Provisions
Change of Control
Force Majeure
Assignment and Transfer
Amendment and Modification
Notices
Severability
Entire Agreement
Governing Law
Dispute Resolution
Regulatory Compliance
Risk Disclosure
Beneficiary Designation
Company Rights
Employee Obligations
Clawback Provisions
Record Keeping
Relevant Industries

Financial Services

Technology

Manufacturing

Professional Services

Healthcare

Retail

Energy

Telecommunications

Real Estate

Construction

Automotive

Pharmaceuticals

Consumer Goods

Media and Entertainment

Relevant Teams

Human Resources

Legal

Finance

Compensation and Benefits

Corporate Governance

Tax

Payroll

Executive Management

Risk Management

Compliance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Executive Director

Senior Manager

Department Head

Regional Director

Sales Director

Technology Director

Senior Consultant

Principal Engineer

Investment Manager

Senior Advisor

Partner

Managing Director

Vice President

Industries
Bürgerliches Gesetzbuch (BGB): German Civil Code - Provides the fundamental framework for contract law, including formation, interpretation, and enforcement of contracts
Einkommensteuergesetz (EStG): German Income Tax Act - Governs the taxation of deferred compensation, including specific provisions for various types of deferred payment arrangements
Sozialgesetzbuch (SGB): German Social Security Code - Regulates social security contributions and how they are affected by deferred compensation arrangements
Betriebsrentengesetz (BetrAVG): German Company Pension Act - Governs occupational pension schemes and certain forms of deferred compensation
Arbeitsgesetze (ArbG): German Labor Laws - Various provisions affecting employment relationships and compensation arrangements
Lohnfortzahlungsgesetz (LFZG): Continued Remuneration Act - Relevant for understanding payment obligations and their timing
Aktiengesetz (AktG): German Stock Corporation Act - Relevant if the deferred compensation includes stock-based components
Handelsgesetzbuch (HGB): German Commercial Code - Contains provisions relevant to commercial relationships and accounting for deferred compensation
Datenschutz-Grundverordnung (DSGVO): General Data Protection Regulation - Relevant for handling personal data in the context of compensation 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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