What To Look Out For In Your First Executive Employment Contract

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Signing an executive employment contract is a critical moment for anyone striving for a successful career in the highest echelons of business. A legally-binding agreement that outlines both rights and responsibilities of both parties should not be taken lightly, and it is essential that you take the time to understand what you are signing up to before putting pen to paper.

At Genie AI, we understand the importance of understanding your executive contract before taking on the role and provide step-by-step guidance on how to access our template library today. With millions of datapoints used to create our market-standard legal documents, we want everyone to be able to draft contracts with confidence and without paying hefty lawyer fees.

Before signing your executive contract, it’s important that you consider the scope of your new job: what will you be responsible for? What specific rights or obligations are included in order for both parties to benefit from this agreement? Once those questions have been answered, dig deeper: What potential liabilities or legal issues could arise out of this agreement? Are your compensation and benefits fair when compared with similar positions within your industry? And most importantly — make sure the termination clause is clear, concise, and mutually beneficial should either side need to exit the agreement suddenly.

Most importantly though - don’t forget that using Genie’s template library does not require an account - we just want everyone who signs up for an executive position have complete peace of mind when it comes time to put pen to paper. So read on below for our step-by-step guidance and information on how you can access our template library today.

Definitions (feel free to skip)

Non-Compete Clause - A clause in a contract that prevents an employee from competing with their employer in certain ways (e.g. setting up a competing business).

Confidentiality Clause - A clause in a contract that prevents an employee from sharing certain information (e.g. trade secrets) with anyone outside the company.

Bonus - An extra payment made by an employer to an employee, typically as a reward for good performance.

Stock Options - A type of investment where an employee is granted the right to buy a certain number of company shares at a set price at some point in the future.

Incentive - A form of motivation or reward given to an employee by an employer to encourage them to do their job better.

Termination Provision - A clause in a contract that outlines the conditions under which the contract can be ended by either party.

Dispute Resolution Clause - A clause in a contract that outlines the process for resolving any disputes between the parties.

Notice Period - The amount of time that must pass before an employee’s contract can be terminated.

Arbitration Clause - A clause in a contract that states that any disputes between the parties will be settled by a third-party arbitrator.

Mediation Provision - A clause in a contract that states that any disputes between the parties will be settled by a mediator, who will work with both parties to negotiate a resolution.

Relocation Policy - A policy set by an employer outlining the conditions for an employee’s relocation to a new location.

Succession Plan Expectations - An arrangement made by an employer that outlines the criteria and conditions under which an employee may be promoted or advanced in their position.

Intellectual Property Rights - Rights granted to an individual or entity to protect their creative or artistic works (e.g. copyrights and patents).

Employment Laws - Laws or regulations governing the relationship between employers and employees.

Safety Regulations - Laws or regulations governing the safety and health of employees in the workplace.

Legal Liabilities - Potential obligations that may arise due to the actions or omissions of an individual or entity.

Performance Standards - Requirements set out by an employer that must be met in order for an employee to remain in their job.

Disciplinary Policies - Policies set out by an employer outlining the procedures for dealing with employees who do not meet the performance standards.

Contents

• Overview of the main terms and conditions of the contract
• Understanding the compensation package
• Salary and wages
• Other benefits, such as insurance and retirement plans
• Identifying potential risks and liabilities
• Discussion of non-compete and confidentiality clauses
• Exploring opportunities for bonuses, stock options, and other incentives
• Rights to terminate the contract and the associated consequences
• Rights to dispute and challenge the contract
• Reviewing dispute resolution mechanisms
• Rights to severance and the associated conditions
• Reviewing the company’s relocation policy (if applicable)
• Exploring the potential for future promotions or advancement opportunities
• Discussing any additional benefits or special arrangements
• Understanding the employer’s expectations
• Reviewing the employer’s policy on intellectual property rights
• Exploring opportunities for professional development
• Understanding the employer’s succession plan expectations (if applicable)
• Exploring opportunities to participate in the company’s business strategy
• Assessing the overall impact of the terms and conditions on the employee
• Establishing a timeline for contract review and renewal
• Ensuring that all parties are in agreement before signing the contract

Get started

Overview of the main terms and conditions of the contract

• Read through the entire contract thoroughly
• Make sure to understand the overall purpose of the contract
• Check the duration of the contract and any renewal terms
• Identify any termination clauses
• Look at any confidentiality and non-compete clauses
• Find out if there are any restrictions on using outside resources
• Check the reporting structure and any assigned duties
• Look out for any additional benefits or incentives
• Make sure to ask questions and clarify any issues

When you can check this off your list:

• You have read and understood the entire contract
• You are clear on all of the terms and conditions and any additional benefits
• You have asked questions and clarified any issues

Understanding the compensation package

• Analyze the compensation package for range of salary, bonus, and other benefits
• Understand how the package is structured and how it will change if you are promoted or demoted
• Evaluate the short-term and long-term rewards of the package
• Be aware of potential risks and costs associated with the package
• Consider the incentives and rewards associated with the package

You will know when you can check this off your list and move on to the next step when you have evaluated the compensation package and have a good understanding of the structure, rewards, risks, and incentives associated with it.

Salary and wages

• Review the salary and wages offered to ensure they match the rate you agreed to.
• Make sure there are no discrepancies between the stated salary and wages and the rate you discussed.
• Ask for a detailed breakdown of all wages, such as base salary, bonuses, and commissions.
• Review the payment terms, such as when you’ll get paid and in what form.
• Make sure the salary and wages are consistent with other positions at the same level in the organization.

Once you have verified all the details of your salary and wages, you can check this off your list and move on to the next step.

Other benefits, such as insurance and retirement plans

• Understand the types of insurance being offered, such as health, life, disability, and long-term care.
• Compare the coverage offered by your employer to other insurance carriers.
• Determine the premiums associated with the coverage, as well as any co-pays or deductibles.
• Review the retirement plan options, such as a 401(k) or other plan.
• Consider the vesting schedule, employer contributions, and other retirement benefits.

You can check this off your list when you have a full understanding of the types and amounts of insurance and retirement benefits being offered in the contract.

Identifying potential risks and liabilities

• Review the contract for any risks associated with your role, such as potential liabilities or any other conditions that might create a risk for you if not properly managed.
• Make sure you understand any language that could be interpreted as protecting the employer from any damages or losses that may arise from your performance of your duties.
• Carefully review any indemnification and insurance clauses that the employer may have included in the contract.
• Ask questions about any clauses that you don’t understand or that you think could be a potential risk or liability.
• Ask for a clause to be included in the contract that assigns the risk associated with any third-party relationships to the employer.

Once you have reviewed the contract for potential risks and liabilities and have asked questions, you can check this off your list and move on to the next step.

Discussion of non-compete and confidentiality clauses

• Read through the entire employment contract and take note of any non-compete or confidentiality clauses that may be included
• Ask your attorney to explain the full implications of these clauses to you
• Be aware that non-compete or confidentiality clauses may limit your ability to work for certain organizations or with certain clients for a specified period of time
• Negotiate with the employer if you feel that the non-compete or confidentiality clauses are too restrictive for your needs
• Ask your attorney to review any changes that you and the employer have agreed upon

You’ll know that you can check this step off your list and move on to the next step when you have read through the entire employment contract, had your attorney explain the implications of the non-compete and confidentiality clauses and negotiated any changes with the employer.

Exploring opportunities for bonuses, stock options, and other incentives

• Make sure to review the contract in detail to understand the terms of compensation, such as any bonuses, stock options, or other incentives
• Ask your employer for clarification if something isn’t clear
• Make sure to ask about the vesting schedule of any stock options
• Ask if there are any conditions that must be met for bonuses, stock options, and other incentives to be awarded
• Understand the taxation implications of any bonuses, stock options, or other incentives
• Check that the contract specifies any vesting periods, expiration dates, or other conditions for bonuses, stock options, and other incentives
• Once you understand the terms of compensation and are happy with the details, you can check this off your list and move on to the next step.

Rights to terminate the contract and the associated consequences

• Learn if either party has the right to terminate the contract without cause
• Understand the contract’s provisions for termination for cause (e.g., gross negligence or material breach of contract)
• Familiarize yourself with any notice requirements for termination
• Understand the consequences of a terminated contract, such as notice periods and severance packages
• Identify any agreements concerning non-compete clauses
• Read through and understand any arbitration or litigation clauses
• Ask for a clear and unambiguous statement of what happens if either party terminates the contract

When you can check this off your list and move on to the next step:

• When you have a clear understanding of the contractual rights to terminate the contract and the associated consequences
• When all the above bullet points have been thoroughly explored and discussed

Rights to dispute and challenge the contract

• Familiarize yourself with the terms and conditions of the contract
• Check the language of the contract and make sure you understand the scope of the agreement
• Look out for any clauses that limit the dispute resolution process
• Read through any arbitration clauses and confirm who will be responsible for any costs involved
• Consider any limitations on the time frame for dispute resolution
• Ensure that you understand any ‘out of court’ dispute resolution process
• Make sure that you understand the process for making a complaint should you not be satisfied with the outcome
• Once you are confident that you understand the rights that you have to dispute and challenge the contract, you can move on to the next step.

Reviewing dispute resolution mechanisms

• Review all dispute resolution mechanisms that are included in the contract
• Understand the remedies available under each dispute resolution mechanism
• Check if there is an arbitration clause, and if so, understand the details of the arbitration
• Evaluate the terms of the dispute resolution mechanism, and determine if any changes or additions are necessary
• Make sure that all parties involved in the dispute resolution understand their roles and responsibilities
• When you are satisfied that you understand the dispute resolution mechanisms, you can check this off your list and move on to the next step.

Rights to severance and the associated conditions

• Read through the contract to see if it includes any rights to severance and the associated conditions.
• Make sure any rights to severance are clearly spelled out, including the circumstances under which severance is applicable and the amount of money that you would be entitled to receive.
• If the contract does not provide for any severance rights, consider negotiating with the employer to include such rights in the contract.
• Be sure to make note of any other terms and conditions related to severance, such as how long you need to stay with the company before you can receive severance, or any other requirements to be eligible for severance.
• Once you have read through the contract and understand the terms and conditions associated with severance, you can check this off your list and move on to the next step.

Reviewing the company’s relocation policy (if applicable)

• Read through the employer’s relocation policy, if applicable.
• Check if the employer will cover all or part of the expenses associated with the move.
• Ensure the policy complies with local labor laws.
• Know the deadlines for moving and settling into a new home.
• Clarify with the employer if there are any restrictions on the move, such as the proximity to the office.

When you can check this off your list:

• You can check this off your list when you have read through and understood the employer’s relocation policy, if applicable.

Exploring the potential for future promotions or advancement opportunities

• Ask your potential employer what advancement opportunities exist and how you can move up in the company
• Research the company’s history of promotions and career advancement
• Make sure the company has a clear career ladder and ask about the qualifications for each level
• Ask about job rotation, on-the-job training, and other methods of career development
• Ask about the company’s policies on promotions, bonuses, raises, and other rewards
• Determine if there are any special programs or policies in place to promote diversity and inclusion
• Ask if there are any opportunities to network with other executives or management

You will know when you can check this off your list when you are satisfied with the answers you receive from your potential employer regarding potential promotions and advancement opportunities.

Discussing any additional benefits or special arrangements

• Clarify any additional benefits or special arrangements that are included in the contract, such as healthcare plans, stock options, bonus or other compensation, vacation time, flexibility of hours, etc.
• Discuss any options for relocation or transition assistance, if applicable.
• Ask for any other special arrangements that you may need in order to make the job work for you.
• Take notes of the discussions and have your lawyer review the contract thoroughly to ensure that all of your requests have been included.
• Once all of your requests have been included in the contract and you are satisfied with the terms, you can check this off your list and move on to the next step.

Understanding the employer’s expectations

• Read through the job description and make sure you understand what is expected of you in your role
• Ask your employer questions to clarify any points you don’t understand
• Research the company and the industry to ensure that you are aware of the standards and practices in the sector
• Talk to your employer about the job to make sure you have a clear picture of what will be expected of you
• Once you feel confident that you understand the expectations of the role and the company, you can check off this step and move on to the next.

Reviewing the employer’s policy on intellectual property rights

• Read through the employer’s policy on intellectual property rights carefully and ask questions if you don’t understand any of the language
• Understand who owns the rights to any works created during your term of employment
• Check the length of time the rights will remain with the employer after you have left
• Confirm that you have the right to use the work you create for portfolio purposes
• Make sure that any works you create as an employee are not restricted from use outside of the company

Once you have reviewed and understood the employer’s policy on intellectual property rights, you can check this step off your list and move on to exploring opportunities for professional development.

Exploring opportunities for professional development

• Inquire about any professional development opportunities offered or supported by the employer, such as workshops, seminars, or conferences.
• Ask if the employer provides any additional resources such as mentorship programs, or access to industry-specific publications.
• Inquire if the employer will provide paid time off or reimbursement for professional development activities.
• Find out if the employer offers tuition reimbursement or tuition assistance for furthering your education.
• Ask if the employer offers any in-house training or development opportunities.

You will know you can check this off your list and move on to the next step when you have explored all the available professional development opportunities offered or supported by the employer.

Understanding the employer’s succession plan expectations (if applicable)

• Read through the contract to identify any specific clauses or language related to succession plans.
• Ask your employer for clarification on any difficult to understand language or expectations related to succession plans.
• Confirm that you are comfortable with the succession plan expectations and that these expectations are reasonable and achievable.
• Make sure you understand the timeline for when the succession plan expectations need to be met.
• When you are satisfied with the expectations and timeline, check this task off your list and move on to the next step in the guide.

Exploring opportunities to participate in the company’s business strategy

• Ensure that you have a clear understanding of the company’s business strategy and the role that you would play in it.
• Ask questions about what opportunities there are to be involved in the company’s business strategy, such as attending meetings, providing recommendations, and participating in other decision-making processes.
• Request a detailed explanation of the expectations associated with the role, including any specific objectives that may need to be achieved.
• Make sure that the company’s business strategy aligns with your own career goals, and that you are comfortable with the role you would be playing in it.

You can check this step off your list and move on to the next step when you have a clear understanding of the company’s business strategy, the role that you would play in it, and the expectations associated with the role.

Assessing the overall impact of the terms and conditions on the employee

• Carefully review the entire document, taking note of all conditions and clauses
• Highlight any areas of concern and consider the implications for the employee
• Make sure any benefits and entitlements are clearly outlined
• Make sure the contract provides the employee with appropriate protections
• Consider the taxation, insurance and superannuation implications
• Ensure the contract is compliant with relevant industrial laws and standards
• Read the dispute resolution, termination and redundancy clauses

Once you have carefully assessed the overall impact of the terms and conditions on the employee and addressed any areas of concern, you can move on to the next step.

Establishing a timeline for contract review and renewal

• Check the length of the contract and determine if it is an indefinite or fixed-term contract.
• Consider whether the contract should be reviewed after a certain period of time and if renewal should be an option.
• Discuss with the employer what the review timeline would look like and negotiate for specific terms.
• Decide what factors should be considered in the review of the contract, such as performance, job requirements, and other changes in the workplace.
• Put the review timeline and any other relevant details in writing and include it in the contract.

You’ll know when you can check this off your list and move on to the next step when all parties agree on the review timeline, any other relevant details, and all relevant details are included in the contract.

Ensuring that all parties are in agreement before signing the contract

• Ensure that all parties involved in the contract are aware of the terms and conditions laid out in the contract
• Ensure that all parties are in agreement with the terms and conditions of the contract before signing it
• Ask any questions that you may have about the contract to help make sure that you understand the terms and conditions
• Make sure that any changes to the contract are discussed and agreed to by all parties before they are made
• Get a legal professional to review the contract and provide advice if necessary
• When all parties are in agreement and the contract has been reviewed and revised as necessary, you can sign the contract and move on to the next step.

FAQ:

Q: How does the legislation differ between the UK, US and EU when it comes to executive employment contracts?

Asked by Melissa on 10th April 2022.
A: Executive employment contracts are subject to different laws and regulations in the UK, US and EU. In the UK, executive contracts are governed by the Employment Rights Act 1996, which sets out the rights of employers and employees in relation to pay, contracts and working conditions. In the US, executive contracts are governed by both federal and state laws, with different rules in each state. In the EU, executive contracts are subject to the Acquired Rights Directive, which provides a minimum level of protection for workers’ rights.

It is important to be aware of the relevant legislation when drawing up an executive employment contract so that you can ensure it is compliant with all applicable laws. You should also be aware that any changes or amendments to a contract may need to be approved by a regulatory body before they can come into effect.

Q: What should I consider when looking for an industry-specific executive employment contract?

Asked by Matthew on 15th May 2022.
A: When looking for an industry-specific executive employment contract, it is important to consider the particular needs of your industry. Depending on your sector or business model (for example, SaaS, technology or B2B), you may need an employment contract that takes into account specific industry requirements. For example, you may need to include clauses relating to data protection and confidentiality, or intellectual property rights. Additionally, you should make sure that any clauses in your contract are compliant with applicable laws in your jurisdiction. It is also important to ensure that all parties understand their rights and responsibilities under the contract so that there are no misunderstandings down the line.

You should also consider any particular requirements of your job role when looking for an industry-specific executive employment contract. For example, if you are responsible for managing a team of employees, you may need clauses regarding disciplinary procedures or performance management.

Q: What should I look out for when negotiating my first executive employment contract?

Asked by Ashley on 4th June 2022.
A: When negotiating your first executive employment contract, it is important to ensure that it is tailored to your individual needs and circumstances. You should ensure that all of your key rights and responsibilities are clearly listed in the contract and that any additional clauses you have requested have been included. It is also important to make sure that you understand all of the terms of the contract before signing it so that there are no misunderstandings down the line.

When negotiating your first executive employment contract, you should also make sure that you are aware of any applicable laws in your jurisdiction so that you can make sure that your contract is compliant with them. Additionally, if there are any terms which you disagree with or feel uncomfortable with then you should not be afraid to negotiate them in order to reach a mutually beneficial agreement.

Q: What types of clauses should I include in my first executive employment contract?

Asked by Elizabeth on 8th July 2022.
A: When drafting your first executive employment contract, it is important to include clauses which cover all of the key aspects of your job role and responsibilities as well as any additional requirements which may be specific to your industry or business model (for example SaaS, technology or B2B). This could include clauses relating to pay and bonuses, vacation time and sick leave entitlements, working hours and overtime arrangements, data protection and confidentiality obligations as well as intellectual property rights (if applicable). You should also make sure that any additional clauses which you have requested have been included in the contract such as performance management or disciplinary procedures (if applicable).

Additionally, you should make sure that any clauses in your contract comply with applicable laws in your jurisdiction so that they do not become unenforceable at a later date. It is also important to ensure that all parties understand their rights and responsibilities under the contract before signing it so that there are no misunderstandings down the line.

Example dispute

Suing an Employer for Breach of Executive Employment Contract

• Review the executive employment contract to determine if the employer has breached the terms of the contract.
• File a lawsuit alleging breach of contract by the employer.
• The plaintiff must prove that the employer failed to perform their contractual obligations.
• The plaintiff may be entitled to financial damages, such as lost wages and benefits, or compensation for emotional distress suffered due to the breach of contract.
• The plaintiff can also ask for specific performance of the contract, meaning that the employer must comply with the terms of the contract.
• The court will determine what relief is most appropriate, such as compensatory damages, punitive damages, or specific performance.
• Settlement may be reached prior to court action, or through mediation or arbitration.
• If damages are awarded, they will be calculated based on the terms of the contract and the extent of the breach.

Templates available (free to use)

Executive Employment Agreement
Executive Employment Agreements
Executive Employment Contract
Executive Employment Contract Long Form
Executive Employment Contract Medium Form
Executive Employment Contract Term Sheet
Senior Employee Or Executive Employment Contract

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