Negotiating Your Executive Package 

On Behalf of | Apr 18, 2023 | Employment Law

Using legal counsel to achieve your goals

When negotiating your executive package, more than likely, it is in your best interest that you not attempt to do it alone. Using the services of Villaume & Schiek not only provides you someone that can offer you valuable advice and discuss strategy, but it gives you someone that can substantiate your position and shield you from hard feelings during negotiations.

Negotiating your executive compensation package can get complicated; accomplishing some of these distinct goals can get involved. Villaume & Schiek will help you:

  • Negotiate your financial needs
  • Negotiate valuable equity in the organization
  • Negotiate the primary terms for stock and equity

Negotiating your financial needs – options

Your fundamental financial needs include base salary, benefits, medical/dental insurance, disability insurance, and pension or 401k benefits. These would have to fall within reason of the company’s affordability and fitting your financial needs into the compensation structure of the organization. Negotiations can include exclusive executive benefits, minimum bonus to compensate the executive’s base salary while in line with the salary structure of the organization.

Negotiating valuable equity in the organization

Executive compensation has become ever so complicated due to our tax laws. Today’s CEOs and senior executives seek more than a salary; they expect an equity element as part of their executive compensation package, which can turn out to be the most valuable component of the package.

The equity element offers the possibility of growth potentially exceeding your base salary and bonus structure many times over. This may have the potential for long term capital gains treatment, which are often taxed at half the rate of ordinary income.

Negotiating the primary terms for stock and equity

Securing the right equity position in the structure of your compensation package can significantly increase the value of your executive compensation package. There are numerous choices for equity structure, such as:

  • ISOs
  • non-qualified options
  • RSUs
  • restricted stock
  • performance shares.

Unless you are skilled in these options and understand terms such as acceleration, clawbacks, drag along, exercise, parachute provisions, phantom stock, tag along, valuation, vesting, and other key terms, it would be wise on your part to engage attorneys with this expertise. Equally important is negotiating terms that allow you 3-5 years to exercise your options in the event they had tanked at the time of termination.

Negotiating incentives that align with the growth of the company

As part of the executive compensation negotiations over Executive equity should align with the interests of the organization.

Rising stock prices benefit everyone: the company, the owner, and you. Vesting can be associated with milestone achievements set in advance to avoid cliff targets and growth levels. Additionally, vesting boosts company loyalty and stability.

Often, the stake you place during initial negotiations may be revisited in the future during the renegotiation of your executive compensation package.

Other key areas of negotiation

Your executive package involves several other vital areas open to negotiations as well, including:

  • Commitments of the company in return for your commitment
  • Reasonable terms for non-compete, and other restrictive covenants
  • Relocation, if relevant, and other vital expenses
  • Triggers for termination and severance, including triggers you control
  • Your position on the board, if applicable
  • Signing bonus to make you whole for things left behind
  • Your title, duties, and responsibilities

The attorneys at Villaume & Schiek have negotiated numerous executive packages; their experience will help you land the most comprehensive compensation package and lock-down future earnings and incentives.

If you have received an offer for an Executive position, why take the chance of leaving money on the table. Before accepting the initial offer, let us help you negotiate the best Executive Package. Contact Villaume & Schiek for a free evaluation today!

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individualsituation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.