Attracting, retaining, and motivating top talent is a big concern for businesses in New Jersey and beyond. Offering a competitive executive compensation package that recognizes the work executive-level employees do by providing appropriate performance incentives and rewarding exceptional service is a must.
At The Law Offices of Andrew Dressel LLC, our experienced labor and employment attorneys help businesses across the Garden State, and around the world, craft executive compensation plans that reward performance and loyalty, while advancing the organization’s core objectives and ensuring compliance with local, state, and federal employment laws.
When business relationships have run their course, we are there to assist with the drafting of severance agreements. These often include non-competition, non-solicitation, non-disclosure, and clawback provisions, which must be tightly drafted in order to survive legal scrutiny.
We represent high-level employees in litigation against their current and former employers when the promises made in an employment or severance deal are not honored. And we have also defended several small and medium-sized firms across the country against such claims.
The The Law Offices of Andrew Dressel LLC team assists clients in a wide variety of industries, but we are well known for our representation of executives in the energy, pharmaceutical, and cryptocurrency industries.
What is Executive Compensation?
A well-crafted executive compensation package aligns top employees with the organization’s mission by paying for performance and incentivizing long-term loyalty. The money, benefits, and other perks provided to C-level employees have a dramatic impact on an organization’s ability to woo and excite top talent.
Modern compensation plans include more than basic salary and benefits. The Law Offices of Andrew Dressel LLC helps businesses in New Jersey and beyond craft executive compensation plans that incorporate things like:
- Long- and short-term cash incentives
- Performance-based equity compensation
- Stock options
- Restricted stock
- Performance shares
- Phantom stock
- Stock appreciation rights (SARs)
- Employee stock purchase plans (ESPPs)
- Deferred compensation
- Executive life insurance
Pulling together a compensation or severance package that includes the right mixture of these and other benefits requires an understanding of employment law, but also an appreciation of business norms and the way different industries work.
Strategies for Designing Effective Executive Compensation and Severance Packages
An effective executive compensation or severance package must meet the needs of the employee and employer. It is not just about money; it is a business agreement that both parties expect to benefit from.
- Identifying the objectives and values of each party before any dollar amount is discussed smooths the negotiation.
- Making sure specific goals, timelines, and benchmarks are well-defined and attainable is critical when drafting a compensation package that pays for performance. Both the employer and the employee should be comfortable with the way incentives will be earned, and expect them to be earned.
- Any agreement should attempt to minimize ambiguity by clearly defining relevant terms and outlining specific targets that must be met instead of speaking in generalities.
- The risk when drafting an executive compensation agreement should never be that the employee will reach their full earning potential — that should be expected.
- Any compensation or severance package must work as well in the real world as it does on paper. This means you aren’t just pulling together a package that satisfies the parties at the negotiating table. Plans must comply with the law, and mesh well with the organization’s governing documents; but they must also take into account the company culture and the way the plan will be perceived by the public.
The The Law Offices of Andrew Dressel LLC team counsels our clients with these factors in mind.
Strategies for Designing Effective Executive Compensation and Severance Packages
An effective executive compensation or severance package must meet the needs of the employee and employer. It is not just about money; it is a business agreement that both parties expect to benefit from.
- Identifying the objectives and values of each party before any dollar amount is discussed smooths the negotiation.
- Making sure specific goals, timelines, and benchmarks are well-defined and attainable is critical when drafting a compensation package that pays for performance. Both the employer and the employee should be comfortable with the way incentives will be earned, and expect them to be earned.
- Any agreement should attempt to minimize ambiguity by clearly defining relevant terms and outlining specific targets that must be met instead of speaking in generalities.
- The risk when drafting an executive compensation agreement should never be that the employee will reach their full earning potential — that should be expected.
- Any compensation or severance package must work as well in the real world as it does on paper. This means you aren’t just pulling together a package that satisfies the parties at the negotiating table. Plans must comply with the law, and mesh well with the organization’s governing documents; but they must also take into account the company culture and the way the plan will be perceived by the public.
The The Law Offices of Andrew Dressel LLC team counsels our clients with these factors in mind.
Legal Considerations in Executive Compensation Plans and Severance Agreements
Modern-day compensation plans and severance packages are complex agreements that must comply with layers of different laws. But respecting the local, state, and federal regulations that apply when the documents are drafted is only the first step.
These agreements must also be implemented. Each time a performance benchmark is met, or a former executive enters into a new business relationship, these documents should be reviewed to make sure the plans outlined in them are being followed.
To further complicate matters, the laws that govern these agreements are constantly changing. For example, over the past few years, we have seen policymakers at the federal level, and in states like New Jersey, attempt to void noncompete and nondisclosure agreements through legislative and executive action.
We are at the point where doing business is risky business, so working with attorneys who understand both the legal and business ramifications of various decisions is critical.
What are Examples of Disputes Over Executive Compensation and Severance Agreements?
Disputes over executive compensation or the terms of severance agreements are increasingly common. As the terms of such agreements have become more complex, disagreements about their meaning and application are increasing.
- An executive may claim that their compensation is not in line with their performance or the performance of the company.
- A company may claim that an executive is not entitled to severance pay based on their actions.
- Either the employer or the employee may claim that the other party has breached their contract and sue for damages.
What are Examples of Disputes Over Executive Compensation and Severance Agreements?
Disputes over executive compensation or the terms of severance agreements are increasingly common. As the terms of such agreements have become more complex, disagreements about their meaning and application are increasing.
- An executive may claim that their compensation is not in line with their performance or the performance of the company.
- A company may claim that an executive is not entitled to severance pay based on their actions.
- Either the employer or the employee may claim that the other party has breached their contract and sue for damages.
Resolving Disputes Over Executive Compensation, Change in Control, and Severance Agreements
Heading off a disagreement between an organization and a current or former executive before it spills into the public square offers many advantages.
The pressure that comes from knowing that a dispute will hurt the company’s bottom line, negatively impact employee morale, and jeopardize the reputation of everyone involved, causes many cases to settle.
That being said, many high-level employment agreements now include arbitration clauses. This form of alternative dispute resolution can keep employment disputes out of court and offer some assurance of privacy to the parties involved. The Law Offices of Andrew Dressel LLC has a growing arbitration practice that spans the country.
Work with an Experienced Executive Compensation Attorney
The Law Offices of Andrew Dressel LLC provides the custom service of a boutique law firm and the expertise of a large name-brand law firm, which is why many New Jersey businesses and business executives rely on us to arrange their legal affairs.
The Law Offices of Andrew Dressel LLC can also provide counsel when a relationship sours. We have helped several high-level employees fight for their full compensation in litigation against their current and former employers. We have also defended several small and medium-sized firms across the country against meritless claims over unpaid compensation.
Contact The Law Offices of Andrew Dressel LLC today to discuss your compensation questions with our experienced team.