Clouse Brown attorneys understand the legal, business, and professional implications of entering and exiting employment relationships and agreements. We have extensive experience negotiating contracts and agreements for our clients in a variety of employment, corporate, and partnership contexts, including providing representation when a party breaches a contract, threatens to breach, or is accused of breaching an agreement.
Executive Employment Agreements
An employment agreement or executive agreement is a legal document generally entered into before the start of the employment relationship between an executive and an employer that sets forth the material terms of the relationship. These agreements typically include the duration (or “Term”) of employment; the executive’s compensation (including incentives or bonuses), benefits, and equity arrangements; and the duties and responsibilities of the executive and employer.
These agreements often include restrictive covenants for the executive, such as non-competition, non-solicitation, confidentiality, and preserving trade secrets. Employment agreements may also establish the venue and choice of law when a dispute arises, as well as a mechanism for dispute resolution.
Other key terms include definitions of “Cause” and “Good Reason,” severance provisions, indemnity provisions (also called indemnification provisions), and automatic renewal clauses.
Clouse Brown advises executives in all phases of corporate restructuring and negotiates new employment agreements or retention agreements for executives and entire management teams. Business reorganization often impacts the debt or equity of a company and may impact an executive’s compensation or continued employment. Early consultation with Clouse Brown attorneys is crucial because we often can protect executives who are at-will employees by negotiating favorable agreements during the transition.
Clouse Brown attorneys negotiate agreements that maximize our clients’ economic interests, protect them from unreasonable obligations, and are consistent with their position and industry. Our team is highly skilled in negotiating executive agreements, and drafting clear and concise contracts that contain market provisions for compensation, benefits and post-employment restrictions.
Clouse Brown attorneys are experienced in negotiating and drafting equity agreements with public and private employers and helping executives understand the terms of their equity agreements. Equity agreements govern the terms of equity compensation such as stock options, restricted stock units, as well as equity equivalents such as phantom stock and profits interests.
Equity agreements often contain non-competition and non-solicitation agreements, which can dictate an executive’s ability to work in a particular industry upon the termination of employment. Vesting periods are established in the equity agreement and can be impacted by such events as a change of control (including initial public offerings or company sales), or when an executive dies, becomes disabled, retires, is terminated without Cause, or resigns for Good Reason before the end of the vesting period.
Many executives retain Clouse Brown to assist them with employment agreements for new senior positions. We negotiate every contract to obtain optimal terms for our clients, including favorable exit strategies. Not every employment relationship lasts, and skilled executives are often recruited for new positions. We focus on exit strategies that allow our clients to leave an employment situation under a variety of circumstances.
When an executive receives an offer from a competitor, we review the client’s employment agreement to analyze whether restrictive covenants could affect the transition. We look for provisions that are unenforceable, and those that are subject to negotiation. We analyze litigation risks and formulate transition strategies. We counsel our clients regarding their actions in changing jobs, and proactively manage confidential information to minimize risk of a potential trade secret claim.
We also work with executives who find themselves in conflict with their employer, often in connection with an acquisition or change in leadership. We strategize to choreograph a departure that removes the executive with a view toward timing, optics, and compensation.
On the employer side, Clouse Brown analyzes risks associated with executive departures and advises our corporate clients in all phases of executive termination. From investigation to termination, we assess the business needs of the organization to develop a strategy for terminating an executive with minimal disruption to company operations. We advise employers regarding protection of trade secrets and confidential information in connection with departing employees, and proactively manage these risks with in-house legal and human resources departments.
Clouse Brown regularly represents executives whose employment is ending. In some cases, an employee voluntarily resigns and needs advice concerning the scope of post-employment restrictive covenants.
In other cases, an executive who is terminated without Cause or resigns for Good Reason may be entitled to severance compensation. We negotiate separation agreements to contain favorable terms for our clients. Our goal is to maximize our clients’ economic terms, improve optics, and minimize any post-employment restrictions.
We also represent executives whose former employees make claims about possible violations of non-competition or non-solicitation agreements. If handled properly, an executive’s transition can provide substantial economic benefits that allow time to explore options for the next career move. Clouse Brown’s team can assist with both sides of the equation — separation from the former employer and new agreements with the next employer.