Executive Employment Agreement (With Template and Example)

New employees complete paperwork like tax forms, payroll information and benefits enrollment when starting a new job. Most employees also sign an employment agreement outlining the expectations and compensation of the position. Learn how to create an employment agreement, review a template, read an example and peruse frequently asked questions. 

 

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What is an employment agreement?

An employment agreement is a legally binding document that describes terms of employment like:

  • Job duties
  • Compensation
  • Benefits
  • Stock options
  • Termination and consequences
  • Confidentiality expectations
  • Dispute resolution 

Companies might refer to this document by a few different titles:

  • Employment contract
  • Contract of employment
  • Employee contract
  • Employee agreement
  • Job contract
  • Job agreement

Usually, these all refer to a document that defines all aspects of your new employee’s expectations and compensation, so choose the title that fits best for your organization. 

Related: How to Hire Employees

 

What to include in an employment agreement

Executive employment agreements often include more line items than regular employment agreements because of the demands of the position. Executive employment agreements may include these categories: 

  • Compensation
  • Stock options/equity grants
  • Scope of position
  • Benefits
  • Job term and termination
  • Expense reimbursement
  • Company property
  • Liability protection
  • Confidentiality during and post-employment
  • Rights/ownership
  • Disability/death
  • Dispute resolution
  • Company takeover severance
  • Miscellaneous

The specifics of your company’s executive employment agreement will depend on your industry, whether your business creates proprietary products or services, your business’s IPO status and other factors that might impact confidentiality or the executive’s responsibilities.

 

How to create an executive employment agreement

Follow these steps to create your own executive employment agreement:

 

1. Identify necessary terms

Determine what items are necessary for your company. Consider whether you can or will offer the executive stock options, what benefits are available, company property like computers or cars, non-disclosure agreements and who owns the rights to new inventions. Remember, not every category may relate to your company. Include only those you need. 

 

2. Create a template

Make an employment agreement template that you can use whenever your company hires a new executive. This will save you time in the future and ensure that your agreements include all the necessary information. Meet with your legal team and board of directors to review the document to make sure it adheres to legal guidelines and company bylaws prior to sending it to the employee to sign. 

 

3. Assess the specifics

Review the template and adjust any categories as needed for the specific executive. Include figures for items like salary, stock options, severance and expense reimbursement. 

 

4. Meet with the executive and make changes

Hold a meeting with the executive to review the employment agreement. They may suggest changes or additions to the document prior to signing. Check with the necessary company stakeholders and then make any changes needed.

 

5. Sign and file

Have the executive and a company representative sign original copies of the executive employment agreement. Place the agreement in the executive’s personnel file for safekeeping. 

 

Employment agreement template

Often, executive employment agreements are lengthy documents that explain your company’s policies in great detail. Use this short-form template to outline your company’s executive employment agreement: 

This is a legally binding employment agreement (upon signature and date) between [company] and [employee]. 

[Company] and [employee] enter the following employment agreement in good faith:

  1. Position of employment: [Describe the position.]
  2. Terms of employment: [Explain the length of the job.]
  3. Compensation and benefits: [Provide annual salary, benefits, stock options and any other compensation]
  4. Duties and performance: [Describe the duties and responsibilities of the position.]
  5. Termination and employment: [Explain the company’s termination policy.]
  6. Confidentiality: [Include any confidentiality expectations while working for the company and after leaving the position.]
  7. Non-competition: [Explain any non-compete expectations.]
  8. Expenses: [Describe how company expenses will be handled and any materials the company provides for the employee.]
  9. General provisions: [List any other necessary contractual items.]

Employee signature and date: 

Company representative signature and date:

 

Employment agreement example

Here is a short-form example of an executive employment agreement:

This is a legally binding employment agreement (upon signature and date) between ERB Holdings and Pat Bowson. 

ERB Holdings and Pat Bowson enter the following employment agreement in good faith:

  1. Position of employment: ERB Holdings will employ Pat Bowson in the position of Chief Operations Officer (COO).
  2. Terms of employment: Pat Bowson’s employment shall begin on May 1, 2020, and continue indefinitely. 
  3. Compensation and benefits: 
    1. Base salary: Pat Bowson will receive $225,000 annually, subject to required state and federal withholdings. Pay increases for Pat Bowson are at the sole discretion of ERB Holdings. 
    2. Pat Bowson shall be eligible for all benefits available from ERB Holdings, including stock options. ERB Holdings outlines the specifics of each benefit in the corresponding benefits packet.
  4. Duties and performance: Pat Bowson will review and update staffing practices, develop long-term growth plans for ERB Holdings, work closely with the CFO to develop financial forecasts, manage employee trainings, provide executive leadership and any other duties as assigned. 
  5. Termination and employment: Pat Bowson may terminate their position at any time. ERB Holdings may terminate Pat Bowson at any time for cause. ERB Holdings outlines cause in the employee handbook. 
  6. Expenses: ERB Holdings will refund any company purchases directly to Pat Bowson upon the submission of appropriate paperwork. ERB Holdings will issue Pat Bowson a company computer, phone and car, which they must return upon leaving the company. 

Employee signature and date: Pat Bowson, April 20, 2020

Company representative signature and date: Alex Rose, April 20, 2020

 

FAQs

Review these frequently asked questions related to executive employment agreements:

 

Can the executive write their own employment agreement?

Usually, the company establishes the initial terms of an executive employment agreement. The employee can request changes to the document.

 

What’s the difference between an agreement and a contract?

Companies often use "agreement" and "contract" interchangeably. Be clear about what your document entails for employees. 

 

Who keeps the original employment agreement? 

Both the company and the employee keep original signed copies of the agreement.

 

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