Company executives transitioning out of positions differ from most employees because they are more likely to have employment contracts and to have executed documents restricting future employment. In addition, financial considerations for executives may include future performance bonuses and stock options that have not yet vested.
Although every situation is different, here are five of the steps executives should consider taking before they sign any separation agreements and before they transition out of the company:
(1) Obtain Copies of All Executed Agreements
This would include all employment contracts, all revisions and addenda and any signed confidentiality, non-compete, non-solicitation, and inventions agreements. It would also include any shareholder agreements and any other documents that may affect your rights and obligations.
(2) Understand the Impact of Any Restrictive Covenants on Future Employment
Is that non-compete still valid following the merger or acquisition? You signed the agreement five years ago before your promotion. Still valid? The agreement you signed may or may not be enforceable. Do not assume that just because you signed a document restricting your post employment opportunities that it is valid and enforceable. You may need a legal opinion.
(3) Take Into Consideration Future Benefits
Before signing off on a separation agreement, consider future benefits you made be leaving on the table. Are you entitled to a bonus at the end of the year? Is there a schedule for vesting of stock options?
(4) Understand Whether You are Giving Up Legal Claims
Depending upon the circumstances of your separation from the company, you may be giving up certain legal rights when signing a separation agreement. Check with an employment attorney to see whether there are any grounds for a discrimination or retaliation claim, or whether you have any rights as a whistle blower.
(5) Consider the Job Market You are Entering
Fully appreciate the job market you will be entering after leaving your position. Will you need to re-locate? Will your age be a factor? Will that non-compete restrict you from working in your industry? How long will it take you to find suitable employment. What will you need to ease the transition? References? Resume Assistance? Companies offer a range of tools to ease the transition of executives. These may be a valuable part of any exit package.
As a company executive you have learned to “know what you don’t know” and seek advice.
If you have an questions about your job transition, please call Boston Labor & Employment lawyer Maura Greene at 617-936-1580 for a confidential consultation.