Negotiating Executive Employment Contracts

"In the absence of any agreement to the contrary, employment relationships in the United States are generally “at will” relationships. This means that either the employer or employee may modify or terminate the employment relationship with the other party for any reason or no reason at all. When the employer and the employee wish to change this “default” relationship, the parties may enter into employment agreements setting forth the nature of the relationship. The key provisions of employment agreements can be broken down into five general categories:

• Agreement Term;
• Description of Position;
• Compensation and Benefits;
• Termination Rights and Severance; and
• Restrictive Covenants.

The first part of this article by Jeannemarie O’Brien and Jeremy L. Goldstein for PLI's The Lawyer's Toolbox describes the most important aspects of these provisions and provides a roadmap for addressing any issues that may arise in connection with drafting and negotiating such provisions. The second part of the article is devoted to special considerations for change-of-control employment agreement provisions. The third part of the article addresses the impact of recent developments in the law that should be considered when drafting and negotiating employment agreements.