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Vital Elements of Any Employment Agreement

April 24, 2019



Because it is such a significant milestone in your professional journey, a new career opportunity can cause both excitement and nervousness. New challenges, a higher income, and advancing in your field are great motivators as you become more successful. However, a new professional frontier also brings uncertainty.


The potential relationship between a candidate and a company commonly starts with hope and enthusiasm, but enduring hope is not guaranteed. Circumstances within the organization can change, relationships among executives can turn sour, and there may be economic and industrial factors that are beyond your control.


As a result, your position with a company can come to an abrupt end.


Before signing anything, consider working with a skilled business law attorney who can provide counsel to ensure your employment agreement is equitable.


Key Elements to Any Employment Agreement


Because a well-structured employment agreement is so vital in setting forth the obligations of the company and the expectations of the employee, it is crucial that you become familiar with some of its key elements. For a more detailed understanding, consult with a business law attorney in Santa Monica.


When you are negotiating an employment agreement, consider the following:




Depending on your reasons for working, compensation could be one of the most obvious issues to consider. The discussion surrounding salary and benefits goes far deeper than just figures:

  • Will there be an annual increase in the base salary?

  • Is there a signing bonus, primarily if the employee is losing benefits for making the transition?

  • Are there bonuses? If so, will they be paid annually or quarterly? What is the bonus contingent upon?

Equity Grants


An equity grant is also referred to as equity compensation. It is a non-cash payment offered to someone as a representation of partial ownership in the company. This too has considerations:

  • What percentage of equity is appropriate?

  • If offered in the form of stock options, what is the exercise price?

  • What is the vesting period? One year? Four years or more?

  • How long after termination can the employee exercise any options granted?

  • If the company is acquired or merges with another organization, how is the equity affected?

Scope of Employment


It is important to gain clarity on:

  • What is the exact job title of the employee?

  • What are his or her responsibilities? Can they be increased, decreased or modified in any way?

  • Is there the possibility of demotion?

  • Where is the primary location of employment?

  • Can the employee sit on the Board of Directors?

  • Will the employee possibly be relocated, unilaterally, to another city or state or will the employee have to consent to relocation?

All of the considerations above can make future employment fulfilling or highly stressful. It is a good idea to work with a lawyer to ensure you are treated fairly.


Knowledgeable Business Attorney Serving Santa Monica and Los Angeles


The experienced lawyers at Verhagen Bennett work tirelessly to ensure our clients are protected from any legal or financial obligations that are unreasonable or unfair. We also help organizational leaders acquire executive compensation packages that are well-structured an equitable.


Our Los Angeles lawyers are highly adept at negotiating the terms of executive and many other types of employment agreements.


Schedule an appointment to learn how our skilled team can help you.


© 2018 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.



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