Negotiating Your Employment Agreement While on the Job

MIT Sloan CEO Network , January 19, 2010

By Robert A. Adelson

1.         Cash Compensation and Benefits

«Cash Compensation

  • Base Salary
  • Deferred Compensation
  • Bonus Income

«Fringe Benefits

  • Medical and Pension Benefits
  • Insurance coverages
  • Vacation, Leave, Company Prerequisites

2.       Equity Incentives, Tax Benefits and Structuring

« Equity Incentives: Based on Tax Structuring

  • Restricted Stock, 83(b) Election
  • Stock Options – Qualified (ISOs), Non-Quals
  • Equity Based Compensation Plans
    • Phantom Stock & Stock Appreciation Rights (SARs)
    • IRC §409 Deferred compensation rules
  • LLC Capital Interest
  • LLC Profits Interest

« Key Terms in Executive Equity Negotiations

  • Vesting and Change of Control
  • Valuation and Anti-Dilution
  • Stock Option Terms and Exercise
  • Purchase Terms & Shareholder Agreements

3.       Position, Platform, and Launching Pad

  • Title and Position
  • Duties and Support
  • Outside Affiliations
  • Terms of Agreement & Exit

4.       Relocation and Expense Reimbursement

  • Temporary Living and Travel
  • Permanent Relocation
  • Tax Gross-Up
  • Business and Professional Expenses
  • Other costs including contract costs

5.       Change of Control

  • Form and Amount of Benefits
  • IRC 280G, 4999. 409A issues
  • Parachute exceptions / Caps
  • Tax Gross-up

6.       Termination and Severance

  • Cause, “Good Reason”, Cure, Notice
  • Severance – relation to surviving covenants

7.       Non-Competes and Restrictive Covenants

  • Confidentiality & Assignments
  • Non-Solicitations – Customers, Employees
  • Non-Compete

8.       Opportunities for Negotiation

When you are on the job

  • Changes in your Employer
  • Changes in your responsibilities
  • Achievements, establishing yourself

9.       Preparing for the negotiation

  • Keeping records of your accomplishments
  • Showing how you added value to company
  • Independent support for your position
  • Bargaining tactics
  • Setting proper stage for negotiation

10.     Understanding your Employers BATNA

(Best alternative to Negotiated Agreement)

  • Employer’s alternatives if you weren’t there
  • Are you unique – do they really need you?
  • What cost?  How long to get replacement?
  • Would operations suffer – what cost to employer?

11.     Knowing your own BATNA

  • Do you have attractive alternative options
  • Could you easily get better job, rate, conditions?
  • Would you be happier elsewhere – job evaluation
  • Could you go an extended period without a new job?

12.     If main goal is salary increase and

Company has freeze policy,

other approaches to take

  • Seek non-cash benefits, items in lieu of salary
  • Negotiate next year’s salary or set time for review
  • Seek deferred compensation (if non-violative of freeze)

13.     Negotiation is worth the effort

  • Employer rarely makes best offer – need to seek it
  • You appear stronger, negotiating in constructive way

14.     How to Negotiate, How to succeed

  • Engage counsel, be prepared to negotiate from beginning
  • Maintain flexibility; even if you don’t at first succeed,

there may be a future occasion to “revisit” the issues

About the Presentation

1.   The outline was prepared for the webinar, arranged by Taariq Lewis, for MIT Sloan CEO Network with focus on employees / executives on the job.  This seminar also represents a portion and overview of the detailed seminar outline and presentation materials Robert Adelson prepared at the request and for national publication by ExecSense Webinars (formerly Reed Seminars) www.reedlogic.com/ of San Francisco, CA, a recognized leader in seminars for executives and attorneys. These materials also offer a preview of the full seminar materials.

2.   The full seminar materials include numerous case studies, discussion of why the topic is important and how and when to negotiate, things to watch out for , pitfalls and ramifications of failing to follow suggestions made, a dozen frequently asked questions and a sample employment agreement.  The materials include a 60-minute presentation by Mr. Adelson.

3.    More information on this seminar is available by ExecSense Webinars under the title What to Know Before Negotiating Your Next Raise, Compensation Plan and/or Employment Agreement. The CD is available from ExecSense Webinars at  http://www.execsense.com/details.asp?id=412

4.    The author also welcomes executives desiring representation in the areas of employment and equity agreements, termination, severance, change of control, relocation and restrictive covenants. Contact information to reach the author, Robert Adelson is on the next page.

About the Speaker

Robert Adelson brings over thirty years of experience to his work representing executives negotiating employment agreements, compensation and equity arrangements. He began as an associate at major New York law firms Dewey Ballantine and Weil Gotshal & Manges, before returning home to Boston in 1985 where he has since been a partner in small and medium sized firms before joining his present Boston law firm in 2004. He holds degrees from Boston University, B.A., summa cum laude, Phi Beta Kappa, Northwestern University (Chicago), J.D., Law Review, New York University,  LL.M. in Taxation.  He is a member of the bar in Massachusetts and New York.

Robert Adelson is a frequent speaker and author of numerous published articles in the areas of employment agreements, non-competes and restrictive covenants, compensation, stock, options, phantom stock and executive equity terms and arrangements.

Robert Adelson has represented a wide range of executives: CEOs, COOs, CSOs, CTOs, CMOs, CFOs and numerous Vice Presidents, taking or changing positions in Massachusetts and across the US.

Thank you,

Robert Adelson

ROBERT A. ADELSON, ESQ.Engel & Schultz, LLP

265 Franklin Street, Suite 1801

Boston, MA 02110

(617) 951-9980 EXT. 205

FAX:  (617) 951-0048

E-mail:  radelson@engelschultz.com

Blog:  https://robadelson.wordpress.com/

Webpages –

http://www.engelschultz.com/index.php/attorneys/partners/robert-adelson/

http://www.engelschultz.com/index.php/category/publications/

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Author: radelson

Robert Adelson has been a corporate and tax attorney since 1977. He began as an associate at nationally prominent New York City “mega” law firms, first at the Wall Street firm Dewey Ballantine Bushby Palmer & Wood and later at the Park Avenue firm Weil Gotshal & Manges. In 1985, Adelson returned home, where he has since established himself as a respected Boston business attorney. He has attained partner at several small and midsize Boston law firms, most recently at Lawson & Weitzen LLP and then Zimble Brettler LLP, where he was a partner from 1994 to 2004 before becoming a partner at Engel & Schultz LLP.

One thought on “Negotiating Your Employment Agreement While on the Job”

  1. There are a lot of times that such questions before getting a job is forgotten and this mostly happens to newly graduates or to those who has been searching for jobs for quite some time now. The inquisitiveness by then is replaced by excitement and anticipation that all they want is to just get the job and get paid. Too bad that most of them ends up in a not so nice company after all.

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