Executive compensation is the payment method for high-level managers and chief executive officers (CEOs) of large companies and corporations. Executive compensation usually includes a base salary, as well as long-term and short-term incentives like stock options and bonuses. Often, executive compensation issues come up in connection with mergers and acquisitions deals for public and private companies. They can also come up just before an IPO. Employees may face executive compensation concerns at any time during their employment with a company. If you are concerned about these complex issues, the New York City executive compensation lawyers at Phillips & Associates may be able to help you.Distinctive Nuances of Executive Compensation
Executive compensation may implicate issues that ordinary workers' wages do not. Often, executives receive a basic salary, as well as benefits, bonuses, deferred compensation, stock options, or company shares. Sometimes there is non-monetary remuneration, such as savings plans, reimbursement for housing, travel benefits, or a company vehicle. At corporations, a board of directors manages company spending, including the board's own salaries and employee pay.
An executive compensation package includes not only the remuneration but also sometimes the terms and conditions of employment. It may include terms about when the employment relationship can be terminated and how much notice should be provided. In some cases, executives get guaranteed severance or a certain period of continued health insurance. It can be important to consult an executive compensation attorney in the New York City area even when an employment agreement is being negotiated.
Sometimes there are issues of discrimination that arise when an employment agreement is being drafted. For example, there may be issues of discrimination on the basis of race, gender, religion, national origin, pregnancy, age, and other protected characteristics. It is not appropriate for an employer to provide for unequal or lesser terms based on your sex, for example. Under Title VII of the Civil Rights Act and the Equal Pay Act, you should not be paid less than male executives if you are a woman. Similarly, you should not face unfavorable terms related to severance because of your race.
Sometimes executive employment agreements contain non-compete or mandatory arbitration clauses. A non-compete clause prohibits you from working for a competitor of an employer for a certain period of time. It can prevent you from taking other jobs within the industry that you might find attractive. In New York, non-compete agreements are disfavored, and a New York City executive compensation attorney may be able to help you defeat an agreement’s enforcement. When deciding whether to enforce it, the court will consider whether the agreement is necessary to protect valid business interests like trade secrets and special skills obtained while you were employed as an executive, the reasonableness of the geographic and temporal scope of the agreement, whether the agreement is harmful to the public, and whether it is unduly burdensome.
Mandatory or “cram down” arbitration clauses are prevalent in the financial services and high tech industries where highly compensated employees are more likely to suffer discrimination or disparate treatment. Such clauses force executive employees to surrender valuable statutory rights as a condition of employment. An experienced employment lawyer may be able to thwart the inclusion or enforcement of mandatory arbitration provisions in executive compensation contracts.
Special issues may come up with respect to remuneration other than base salary. For example, there may be special concerns that arise in connection with qualified retirement plans and health and fringe benefit plans. Qualified retirement plans include 401(k) plans, profit-sharing plans, ESOPs, 412(i) plans, and multiple employer plans. Employers are required to comply with the Internal Revenue Code and ERISA when designing these plans.
Non-discrimination limits are placed on qualified retirement plans. Section 410(a)(1) of the Internal Revenue Code provides minimum age and service requirements to be eligible for a qualified retirement plan. The law states that a plan cannot require that employees be able to participate because they have completed a period of service with the employer that extends beyond the later of attaining age 21 or the date on which one year of service is completed. Moreover, under IRC section 410(a)(4), plans are not qualified unless the plan states that an employee who is eligible to participate under the terms of the plan starts participation no later than the earlier of either the first date of the first plan year starting after the minimum age, when the service requirements are satisfied, or the date six months after the date on which the employee has satisfied the minimum age and service requirements.Contact an Experienced Executive Compensation Lawyer in New York City
If you are facing a dispute over executive compensation, you should consult an experienced employment litigator. You can contact Phillips & Associates at 212-248-7431 or through our online form for a free consultation. We handle employment litigation in the Bronx, Queens, Brooklyn, and Manhattan, as well as in New Jersey and Westchester, Nassau, and Suffolk Counties.
PHILLIPS & ASSOCIATES
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New York, NY 10006