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Do you live in Massachusetts and have questions or concerns about protecting your interests in executive and equity compensation? Did you receive an oral offer for equity, and want to ensure the documentation reflects your agreement? Is your company going through a major change such as a sale or initial public offering? Whether you are a C-suite executive, founder, senior leader, or team member offered an equity stake, request a confidential consultation with Rodman Employment Law today. Our firm serves clients in the Boston area and throughout the Commonwealth of Massachusetts.
What is executive compensation, and what does it entail? The term “executive compensation” broadly means the compensation whether in the form of cash, equity, benefits, perquisites or termination payments that executives may receive as compensation for their services provided to an organization. While the term “executives” encompasses a wide range of titles, for purposes of executive compensation, the term generally refers to founders, presidents, vice presidents, chief executive officers (CEOs), chief financial officers (CFOs), chief operating officers (COOs), chief legal officers (CLOs), and other C-suite executives, as well as other types of senior leaders. The term “C-suite” generally means all the executives and managers who run a business or organization, and whose titles start with “c” for “chief.” C-suite executives oversee the strategies and operations central to running an organization, and executive compensation refers to the ways in which they (and other certain executives and managers) are compensated.
It is critical to seek legal guidance when it comes to executive compensation for a wide range of reasons, including the high stakes associated with executive compensation packages, the complexity of these agreements, tax implications for both the organization and the executive, and the ability to negotiate for an appropriate package based on each executive’s unique role.
Executive compensation agreements often include non-compete and non-solicitation clauses, clawback provisions, and equity compensation with vesting, whether performance or time-based. In addition, the terms of your separation and severance pay are typically also included in these agreements. It is crucial to have an experienced attorney review prior to joining the company to help you understand and negotiate any terms that could be more favorable to you while still recognizing the organization’s needs and abilities.
At Rodman Employment Law, we provide a range of services for employees located in Massachusetts that are C-suite executives, founders, senior leaders, and team members receiving equity compensation. We can assist you with all of the following.
When you are joining an organization as a founder, C-suite executive, or senior leader, it is essential to understand the structure of your compensation package and, when possible, maximize the terms of your compensation package. Wise founders, C-suite executives, and senior leaders rely on counsel to review the legal terms of the contract and make sure that what was promised is accurately reflected.
In both public and private companies, change-in-control provisions can provide additional compensation in the event of a change in ownership or management of the organization, as well as provide ongoing requirements in exchange for such payments in the event such a change occurs. Change-in-control provisions may also have additional tax consequences, which need to be explained and evaluated at the time of the transaction. Change-in-control terms can be negotiated on your behalf by an experienced lawyer.
Severance provisions are also often negotiable. Our firm can assist you with any elements of your separation with the organization, including when and how such separation can occur, the conditions under which it may occur, and the compensation you will be paid in exchange depending upon the type of termination. You will often not receive a severance or separation agreement until the end of the employment relationship, which would also need to be reviewed as that agreement typically requires a release of legal claims in exchange for such compensation.
Our attorneys can also assist you with negotiations concerning all types of equity and equity-like compensation. Equity compensation means compensation to be paid based on the value of the company and typically is paid in common stock. This form of compensation is offered to many types of team members, and may include:
With equity compensation, we can explain the awards and their payout structures, confirm the plan and agreements are consistent with all prior promises whether oral or in emails or offer letters, and confirm whether vesting schedules, change of control vesting acceleration clauses and other terms including post-termination equity treatment are in line with industry standards.
Organizations often grow and change in the course of their existence. Mergers and acquisitions can occur, and equity financings and initial public offerings (IPOs) also have significant impacts on an organization. These occurrences are often known as “liquidity events,” which allow founders and other early investors in organizations to receive cash in exchange for their share ownership or provide a more certain path for future liquidity. When you join a start-up organization, it is critical to understand your rights during such liquidity events. If a liquidity event is about to occur, we can assist you with understanding your legal options.
These executive compensation arrangements sometimes cause executives disputes with the employer, including some that may require litigation. At Rodman Employment Law, we can assist you with a range of disputes that may arise, including those that ultimately require litigation, including but not limited to:
There are many common legal pitfalls that executives can experience, which require the need to understand provisions at the time of acceptance of employment. These include, but are not limited to:
Our firm can assess your executive compensation package today, along with any legal questions you may have regarding your executive or equity compensation.
Founders, C-suite executives, senior leaders, and equity holders organizations often have common questions about executive and equity compensation. The following are some of the frequently asked questions (FAQs) we receive, along with our answers to help guide you.
RSUs are the promise to automatically receive company stock in the future through a vesting schedule, while stock options give you the right to purchase stock at a fixed price for a certain period once the option has become vested.
Yes, you can and should negotiate your equity package before you agree to serve in an executive role with an organization. You may also need to understand what you are given upon leaving your current company and determine whether you can ask for more equity to provide a similar opportunity. We can help you work through these issues and compare different equity compensation packages across various types of organizations.
Equity compensation contracts for all employees set forth what happens to your equity in the event you are terminated. This is usually known as a post-termination equity clause, and for stock options typically includes a post-termination exercise period (PTEP) that clarifies the amount of time you will have to exercise vested options. When you leave a company on good terms, these arrangements can sometimes be renegotiated as part of a severance arrangement and release of claims. A lawyer can help you negotiate these terms, and we can also help you understand the terms of your current arrangements if you are considering leaving your employment.
If you need help understanding, negotiating, or are in a dispute about your executive or equity compensation, contact us today.
Why choose Rodman Employment Law? At our firm, we have a deep understanding of issues affecting all employees including executive-level employees. Our team has experience serving founders, C-suite executives, senior leaders, and equity holders for years with executive and equity compensation package negotiations, as well as issues that arise during an executive’s tenure within an organization, such as disputes and common legal pitfalls. Our attorneys have many years of experience working with all types of companies and employees and have been involved in all stages of a company’s evolution from start up to sale, including experience with the securities laws applicable to all types of equity compensation.
We offer confidential, strategic, and tailored advice to founders, C-suite executives, and senior leaders and other equity holders, whether you are just beginning negotiations about your compensation package or seeking advice about interpretation of an agreement or litigation concerning a breach of contract or other dispute that has arisen.
