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Executive Compensation Agreement Template for England and Wales

An Executive Compensation Agreement under English and Welsh law is a comprehensive legal document that outlines the terms of remuneration and benefits for senior executives. It details base salary, bonuses, equity compensation, benefits, and termination provisions while ensuring compliance with UK corporate governance requirements, tax regulations, and employment law. The agreement typically includes performance metrics, clawback provisions, and protective covenants for the company.

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What is a Executive Compensation Agreement?

The Executive Compensation Agreement serves as the primary document governing the financial relationship between a company and its senior executives in England and Wales. It is essential when hiring or promoting individuals to executive positions, particularly in regulated industries or listed companies. The agreement encompasses all aspects of compensation including fixed and variable elements, equity participation, and benefits, while ensuring compliance with corporate governance requirements and protecting both parties' interests. It should be regularly reviewed and updated to reflect changes in law and market practice.

What sections should be included in a Executive Compensation Agreement?

1. Parties: Identifies the company and executive, including their registered addresses and company details

2. Background: Sets out context of the agreement and executive's appointment

3. Definitions: Defines key terms used throughout the agreement

4. Term and Position: Duration of agreement and description of executive role

5. Base Salary: Fixed annual compensation amount and review provisions

6. Benefits: Standard benefits package including healthcare, insurance, etc.

7. Annual Bonus: Structure and terms of performance-based compensation

8. Termination Provisions: Circumstances and procedures for ending employment

9. Confidentiality: Protection of company confidential information

10. Governing Law: Specification of English and Welsh law governance

What sections are optional to include in a Executive Compensation Agreement?

1. Equity Compensation: Share options or restricted stock units - include when offering equity-based compensation

2. Change in Control: Provisions triggered by company ownership changes - include for listed companies or where M&A activity is likely

3. Garden Leave: Terms for paid leave during notice period - include when protecting business interests post-termination

4. International Assignment: Terms for overseas work - include for executives with international responsibilities

5. Clawback Provisions: Recovery of compensation in specific circumstances - include for regulated industries or listed companies

What schedules should be included in a Executive Compensation Agreement?

1. Job Description: Detailed outline of executive's duties and responsibilities

2. Bonus Scheme Rules: Detailed terms of variable compensation arrangements

3. Share Option Agreement: Terms of any equity-based compensation

4. Benefits Schedule: Detailed list of benefits and their terms

5. Performance Metrics: KPIs and measurement criteria for variable compensation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use

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