One of the little facts that’s not widely known is that the SEC typically publishes all sorts of executive employment agreements for publicly-traded companies. They’re ready and available for download.
Why might the average person do that? Well, for one, these agreements can sometimes contain the latest and greatest “crowd-sourced” language for executive agreements. For many companies, attorneys have pored over these types of documents making sure that little nuances get covered and don’t turn into big issues.
Let’s take, for example, a company that’s been in the headlines of late: Ralph Lauren. The company just named a new CEO — Stefan Larsson — to take the reins of this organization.
But in doing so, the company also sent to the SEC the new employment agreement of Larsson. You can download it here, free of charge.
It’s a fascinating read into what’s in these agreements nowadays. It contains, a multi-year guarantee of employment, compensation details, a relocation “package”, etc.
But it also provides insight into how one company will handle how the relationship ends. For example, it allows the company to terminate the employee “without cause” at any time. In such a case, however, there is also a draft severance agreement that would kick in with the following provision:
[T]he Corporation shall: (a) beginning with the first payroll period following the fifty-second (52nd) day following the date of termination of Executive’s employment pay the Executive, in accordance with the Corporation’s normal payroll practice, a monthly amount equal to one-twelfth (1/12th) of 400% of Executive’s Base Compensation, as in effect immediately prior to such termination of employment (and without giving effect to any diminution that is the basis for the Executive to resign for Good Reason), for the two-year period commencing on the date of such termination (the “Severance Period”)….
If you’re wondering, 400% of his current salary is $6 million per year. So, putting it all together: $12M severance payable over two years. And that doesn’t include the other benefits, stock awards, etc.
There’s much more to the agreement, including a non-compete provision that prohibits Larsson from participating in a “business engaged in the designing, marketing or distribution of premium lifestyle products”.
Ken Adams, of Adams Drafting, has much more on retrieving such agreements. The easiest way is through a paid service, but with a bit of sleuthing, the agreements are free and can be used for both drafting ideas and concepts.