Executive Employment Agreement
(Pro-executive)

Summary

This form is an executive employment agreement between a single employer and an executive and is drafted from the perspective of an executive hire with ample negotiation leverage and containing more executive-friendly provisions. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template is non-jurisdictional and should be tailored to suit the relevant circumstances, including consideration of state or local employment law issues. Unlike a pro-employer executive employer agreement, this agreement does not bind the executive to arbitration and does not contain pro-employer restrictive covenants on the executive, such as non-solicitation, non-competition, non-disclosure, non-disparagement, and proprietary information restrictive covenants. Rather, it includes an employee-friendly definition of Good Reason, relatively generous severance and change-in-control severance terms, executive-friendly indemnification rights, and other special benefits such as reimbursement of attorney's fees (for agreement negotiation and for litigating agreement matters if the executive prevails) and tax gross-ups for parachute payments, I.R.C. § 409A violations, and severance payments relating to the cost of health insurance coverage. However, note that tax gross-up and other executive perquisites have become increasingly less common, particularly at public companies. FTC Ban on Noncompetes. The Federal Trade Commission (FTC) finalized a rule that essentially bans the use of non-competition clauses that prohibit a worker from (or penalize them for) engaging in competitive activities in the United States after the end of the employment relationship, with retroactive effect for non-senior executives. The wide scope of the rule is highly contentious and legal challenges have been made over the agency's authority under the FTC Act to regulate unfair methods of competition outside the arena of consumer protections. See Texas Judge Blocks FTC's Impending Ban On Noncompetes and U.S. District Court Issues Order Blocking the FTC's Non-Compete Ban Nationwide: Client Alert Digest. If the rule survives legal challenges, it would: • Prohibit entering into new post-employment non-competes (or forfeiture-for-competition clauses) with workers at all levels • Prohibit enforcing existing non-competes, except for clauses affecting senior executives that were entered into prior to the effective date –and– • Require employers to notify individuals subject to existing unenforceable non-competes regarding the effect of the rule. An exception applies for non-competes entered into pursuant to a bona fide sale of a business entity, the assets of a business, or a person's interest in a business entity. 89 Fed. Reg. 38342 (May 7, 2024). Executives should be cautious in their review of employer-friendly employment agreements which may contain noncompetition clauses or non-solicitation clauses that are so overbroad as to comprise noncompetition clauses. For a full listing of related ancillary agreement content, see Ancillary Agreements in M&A Transactions Resource Kit. For a full listing of key content covering executive employee agreement considerations, see Executive Employment Agreement Resource Kit. For an employer friendly agreement, see Executive Employment Agreement (Pro-employer). For additional guidance, see Executive Employment Agreement Negotiation and Drafting (Pro-employer), Executive Employment Agreement Negotiation and Drafting (Pro-executive), and Executive Employment Agreement Insights: From High Stakes to Competing Interests. See also the related templates Executive Employment Agreement Term Sheet and Executive Offer Letter. For additional related practical guidance, see the Section 280G Resource Kit and Section 409A Resource Kit. For video guidance on employment agreements and offer letters, see Employment Agreements and Offer Letters (Non-Executive Employees) Part I Video and Employment Agreements and Offer Letters (Non-Executive Employees) Part II Video. To compare state and federal laws on restrictive covenants and terminations in employment agreements, see the Employee Benefits & Executive Compensation State Law Comparison Tool. For a full listing of key content covering recruiting, screening, testing, hiring, and onboarding, see Screening and Hiring Resource Kit. For a practice note and chart that summarizes and describes market trends and key terms found within a sample of executive employment agreements entered into by public companies during the first quarter of 2023, see Market Trends 1Q 2023: Executive Employment Agreements. Executive Employment Agreement Precedents You can find precedents of executive employment agreements with Market Standards–Employment Agreements, the searchable database from Practical Guidance of publicly filed executive employment agreements that enables users to search, compare, and analyze over 8,600 agreements, dated from 2017 to the present, using approximately 75 detailed deal points to filter search results. For more information on Market Standards–Employment Agreements coverage, click here. Click here to access employment agreements on Market Standards. Following are Market Standards links to the results page for recently filed agreements and the information/agreement page for selected agreements: • Results page for covered agreements filed with the SEC within the last 60 days • Lineage, Inc. CEO (April 17, 2025) • Insulet Corporation, CEO (April 28, 2025) • Open Lending Corporation, CEO (March 31, 2025) • NeoGenomics Laboratories, Inc., CEO (April 1, 2025) • Madison Square Garden Entertainment, CFO (April 7, 2025) • ADT LLC, COO (March 18, 2025) • NASDAQ Inc. CTO (March 10, 2025)