Congratulations, you’ve been offered a senior role. The title is right, the salary looks good, and you’re eager to say yes. But for executives, the employment agreement deserves just as much attention as the offer itself. The terms you accept now will decide what happens to your bonus, your equity and your career options if the relationship ever ends. And the best time to negotiate is before you sign, when you have the most leverage.
Compensation that’s clearly defined
Start with how you’ll be paid beyond base salary. Bonus terms are often vague, using phrases like “discretionary” or “subject to company performance.” Push for clarity on targets, how they’re measured and when bonuses are paid. Pay attention to clauses that say you must be “actively employed” on the payout date, since they’re designed to cut off bonuses if you’re terminated.
If equity is part of the package, ask to see the actual stock option or RSU plan, not just a summary. Vesting schedules, exercise periods and what happens on termination are all set out in the plan. These details can be worth a great deal of money down the road.
The termination clause
This is often the most important clause in the agreement. Many employers try to limit departing executives to the minimums under the Employment Standards Act, which may be only a few weeks of pay. For a senior leader who might need a year or more to find a comparable role, that’s a big risk.
You can negotiate a fixed severance entitlement that reflects your seniority, often a number of months plus a set amount per year of service. Ask for benefits to continue during that period and for bonus and equity treatment on termination to be spelled out clearly.
If the company could be sold, consider a change of control provision. A common approach is a “double trigger,” where enhanced severance applies if the company is sold and your role is then eliminated or significantly changed.
Non-competes and other restrictions
Ontario generally prohibits non-compete clauses in employment agreements, but there’s an exception for executives. That means a non-compete in your agreement may actually be enforceable. Read it carefully. How long does it last? What geography and industries does it cover? Is it reasonable given your role? Non-solicitation and confidentiality clauses also deserve scrutiny, because they can affect where you work next.
Governing law and other fine print
If your employer is part of a multinational group, the agreement may say that foreign law applies or that disputes must be heard outside Ontario. Our article on Friel v. Hub International and the enforcement of a Delaware clause shows how much this can matter. Also review clauses about relocation, changes to your duties, intellectual property and dispute resolution.
Negotiate with confidence
Asking for changes to an executive agreement is normal and expected. Employers rarely withdraw an offer because a candidate asks reasonable questions through counsel. A well-negotiated agreement protects both sides and avoids disputes later.
Our team reviews and negotiates executive employment agreements across the GTA. Learn more about our employment law services, connect with our Mississauga employment lawyers, or read about executive severance and stock options after termination.
Have your executive agreement reviewed.
This article is general information, not legal advice.
