Executive Compensation Agreement Generator

What is an Executive Compensation Agreement?

An Executive Compensation Agreement is a contract between a company and a high-level executive that outlines the comprehensive compensation package, performance expectations, and terms of employment. This agreement covers base salary, bonuses, equity compensation, benefits, severance terms, and performance metrics tailored to senior leadership roles.

Key Sections Typically Included:

• Executive Role and Responsibilities
• Term of Employment
• Base Salary Structure
• Short-term Incentive Plan (Annual Bonus)
• Long-term Incentive Compensation
• Equity Grants and Stock Options
• Performance Metrics and Evaluation
• Executive Benefits Package
• Retirement Contributions
• Severance and Change in Control Provisions
• Non-compete and Non-solicitation Terms
• Confidentiality Requirements
• Clawback Provisions
• Dispute Resolution Process
• Corporate Governance Requirements
• Regulatory Compliance

Why Use Our Generator?

Our Executive Compensation Agreement generator helps companies create a comprehensive document that clearly establishes the terms for executive employment and compensation. By defining performance expectations, compensation structure, and severance terms upfront, both the company and executive can establish a relationship with aligned incentives and clear accountability.

Frequently Asked Questions

• Q: How should performance-based compensation be structured?

  • A: The agreement should establish clear, measurable performance metrics aligned with company goals (financial targets, operational efficiency, strategic objectives), specify the evaluation period and measurement methodology, and outline the calculation formula for translating performance to compensation. It should address both individual and company-wide performance factors, establish thresholds, targets, and stretch goals with corresponding payout levels, and document the approval process for performance assessment. The agreement should also include provisions for adjusting metrics in response to extraordinary events and specify timing for performance reviews and compensation payouts.

• Q: What should be included in severance and change in control provisions?

  • A: The agreement should specify triggering events for severance eligibility (termination without cause, constructive termination, change in control), detail the severance package components (salary continuation, bonus treatment, benefits continuation, equity acceleration), and outline any conditions for receiving severance (execution of release, compliance with post-employment restrictions). It should address treatment of unvested equity under various scenarios, define "cause" and "good reason" precisely, establish notice and cure periods, and specify timing of severance payments with consideration of tax implications (Section 409A). The agreement should also consider including provisions for outplacement services and addressing board resignation upon termination.

• Q: How should equity compensation be addressed?

  • A: The agreement should specify the types of equity awards granted (options, restricted stock, performance shares), detail vesting schedules and conditions (time-based, performance-based, accelerated vesting triggers), and outline exercise periods and prices for options. It should address ownership guidelines and holding requirements, specify treatment of equity upon various termination scenarios, and include provisions for equity refreshes or additional grants. The agreement should also reference the equity plan governing the awards, address tax considerations and withholding procedures, and outline reporting requirements for insider transactions.