Executive Employment Contract Review
Executive contracts are more complex: longer severance, change-of-control clauses, board seats, indemnification. This guide covers executive-specific terms.
Executive-Specific Terms
(1) SEVERANCE: Usually 6-24 months (vs. standard employees: 0-4 weeks). (2) CHANGE-OF-CONTROL: Severance if company is acquired. "Double-trigger" = acquisition + you leave/fired. "Single-trigger" = acquisition alone. (3) ACCELERATION: Equity accelerates if company is sold. (4) GOLDEN PARACHUTE: Large severance if acquired and you're fired. (5) CLAWBACK: Executive clawbacks can be permanent or very long. (6) INDEMNIFICATION: Company covers your legal fees if sued. (7) DIRECTOR/OFFICER LIABILITY INSURANCE: Company buys insurance.
Executive Red Flags
(1) GOLDEN PARACHUTE MISSING: No severance if company is acquired. Red flag. (2) ACCELERATION ONLY WITH EMPLOYMENT: "Equity accelerates only if you stay after sale." Otherwise you lose. Red flag. (3) CLAWBACK ON BONUS/EQUITY: Long clawbacks for executives. Red flag. (4) NO INDEMNIFICATION: "If sued, you pay legal fees." Red flag. (5) RESTRICTIVE NDA: "Can't speak about company ever." Red flag. (6) SINGLE-TRIGGER ACCELERATION ABSENT: Better to have it but often only double-trigger.
Executive Negotiation Tips
ASK FOR: (1) Double-trigger acceleration (acquisition + layoff or you leave). (2) Severance: 12-24 months if company is acquired. (3) Bonus: Paid out if acquired. (4) Sign-on bonus: No clawback if acquired. (5) Indemnification: Company covers legal fees. (6) Insurance: Director/Officer liability insurance. (7) Release terms: You don't give away lawsuit rights for severance.
Frequently Asked Questions
What's a typical executive severance?
C-level: 12-24 months salary + bonus. VP: 6-12 months. Director: 3-6 months. Plus continuation of benefits, usually.
Should executives always have acceleration?
Yes. If company is sold and you're retained, equity should accelerate (either partial or full). Standard in executive contracts.
What's single vs. double-trigger?
Single-trigger: Company acquired = vesting accelerates (regardless of whether you stay). Double-trigger: Company acquired + you leave/fired = vesting accelerates. Double-trigger is more common (safer for company).
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