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An executive employment agreement covers the pay, equity, and exit terms that come with a senior leadership hire. Work through the step-by-step questionnaire and download a version tailored to your company.
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An executive employment agreement is a written contract between a company and a senior leader it hires. That covers roles such as a chief executive, a chief financial officer, or a general counsel. It sets out the role, the full compensation package, and what happens if the relationship ends.
These agreements run longer than a standard employment contract because so much of the pay sits outside base salary. Bonuses, equity, deferred compensation, and severance each need their own terms.
The document also protects the company. Confidentiality, non-solicitation, and clawback provisions matter more when the person leaving has sat inside every strategic decision.
Unlike a rank-and-file contract, this one usually goes through line-by-line negotiation. Both sides expect to trade points, and both normally bring an advisor.
Use an executive employment agreement when a hire carries real authority over strategy, budget, or people, and when the package includes more than salary.
Typical situations include:
Not every senior title needs one, however. A standard employment contract often suits a director-level hire on straight salary, since a heavier agreement adds negotiation time without adding protection.
Tip: Agree the headline terms in a short offer letter or term sheet first, then draft the full agreement from it. Negotiating equity and severance inside a full draft tends to reopen points both sides thought they had settled.
A senior package has more moving parts than a standard hire, so work through each of these in turn.
Give the title, describe the scope of the role, and name who the executive reports to. Also state any board seat or observer right that comes with the position.
Say whether the agreement runs for a set period or continues until ended. If it renews automatically, set the notice needed to stop that renewal.
State the base, the pay schedule, and when it comes up for review. A fixed review date avoids an awkward conversation about timing later on.
Record the target amount, the metrics it depends on, who sets those metrics, and when it pays. Then cover what happens to a bonus if the executive leaves partway through a year.
Note the grant, the vesting schedule, and the plan documents that govern it. Because the plan usually controls, the agreement should say which document wins in a conflict.
Cover health coverage, retirement contributions, and any executive-specific items such as relocation, travel, or professional fees.
Define what counts as confidential, how long the duty runs, and who owns work created during the role.
Both sides will read this section hardest, so it gets its own treatment further down the page.
Variable pay is where an executive package gains most of its value, and also where vague drafting does the most damage.
Be specific about:
Then say which document controls. Where the agreement and the equity plan disagree, one of them has to win, and settling that now costs far less than arguing it later.
Equity and deferred pay also carry tax consequences on both sides, so have an accountant or attorney review the package before anyone signs.
Most executive negotiations come down to the exit terms, because that is where the numbers get large.
Cause sets out the conduct that lets the company end the agreement without paying severance. Keep the list specific, and allow a cure period for conduct the executive can put right.
Good reason lets the executive resign with severance when the company changes the deal materially, such as by cutting pay or stripping responsibilities. It mirrors cause, and it belongs in most senior agreements.
Set the amount, the payment schedule, and the conditions that apply. A signed release is a common condition, and continued benefits often run alongside the payment.
Decide what a sale, merger, or majority investment does to the package. Severance, equity acceleration, and the executive’s own role can all shift on that event.
Tip: Write cause and good reason as closed lists rather than open descriptions. Open wording invites each side to read the clause the way that suits them at the moment it matters.
Requirements for an executive employment agreement vary by state and by industry, and the restrictive covenants inside them are the most variable part of all. So check your state’s official website, and confirm anything sector-specific with the relevant regulator, before you finalize the terms.
Have both sides take advice. The company usually needs employment counsel, while the executive usually needs their own, since these two sets of interests genuinely diverge.
Sign before the start date, with both parties dating the same version and keeping a copy. Electronic signatures work well here, and they keep the whole package, plan documents included, in one place.
Review the terms whenever the role, the reporting line, or the ownership of the business changes. Draft your executive employment agreement template now and have it ready for negotiation this week.
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