--- name: prompt-pack-executive-employment-agreement description: Use when drafting an executive employment agreement for a C-suite or senior executive position. Covers base salary, bonus structure, equity compensation, benefits, change-of-control provisions, termination scenarios (for cause, without cause, good reason), severance, post-employment restrictions, and D&O coverage. Applicable across MENA (UAE, KSA, DIFC, ADGM, LB, EG) and internationally. Trigger when a company is engaging a CEO, CFO, General Counsel, or other senior executive and needs a comprehensive employment agreement that balances executive interests with company protections. license: MIT metadata: id: prompt-pack.executive-employment-agreement category: prompt-pack practice_area: employment jurisdictions: [UAE, KSA, LB, EG, DIFC, ADGM, UK, EU, US] priority: P2 intent: [drafting, executive-employment-agreement, ceo, cfo, cxo, severance, golden-parachute] related: - prompt-pack-employment-offer-letter - prompt-pack-employment-contract-compliance-review - prompt-pack-equity-incentive-plan-summary - prompt-pack-employee-handbook source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal) version: "1.0" --- # Executive Employment Agreement ## When to use this Use this skill when drafting the formal employment agreement for a C-suite executive or senior leader. Executive agreements are more complex than standard employment contracts because they involve: equity compensation, performance-based remuneration, carefully defined termination scenarios with significant financial consequences, post-employment restrictions, and often a change-of-control component. Typical triggers: - Hiring a new CEO, CFO, COO, or General Counsel - Renewing or renegotiating an existing executive agreement - PE or VC-backed company formalizing founder employment terms at Series A or above - Pre-IPO executive team alignment and contractual documentation - Board compensation committee instructing legal counsel to document approved executive terms ## Required inputs | Input | Why it matters | Default if omitted | |---|---|---| | Executive name and role | Identity and scope of authority | Ask | | Company name and jurisdiction | Applicable law; governs term and termination rules | Ask | | Compensation: base salary, bonus target | The primary commercial terms | Ask | | Equity grant (options, RSUs, phantom) | Often a significant part of executive comp; must be documented | Ask | | Duration (fixed-term vs. indefinite) | Executive agreements may be fixed-term in MENA; affects termination obligations | Ask | | Termination scenarios and severance | What the executive receives on different departure scenarios | Ask in detail | ## Optional inputs - Relocation provisions (common for international executive hires in MENA) - Change-of-control provisions (golden parachute trigger and amount) - Garden leave provisions - Post-termination non-compete / non-solicitation - D&O insurance coverage - Housing and schooling allowances (standard in UAE/KSA expat executive packages) - Discretionary authority limits (signing authority, hiring authority, capex thresholds) ## Document structure ### 1. Parties and recitals - Company name, jurisdiction, registered address - Executive name, role title - Effective date of agreement ### 2. Role and responsibilities - Title and department - Reporting structure (board, CEO, or other) - Duties: general description and scope of authority - Exclusivity: executive's full time and attention; no outside board positions or consulting without prior consent - Fiduciary duties: reference to directors' duties under applicable company law if the executive is also a board member ### 3. Term **Indefinite-term approach** (preferred in most common-law jurisdictions and DIFC): - Employment continues until terminated by either party on notice - "At-will" employment: NOT applicable in MENA or DIFC; there must be notice or payment in lieu **Fixed-term approach** (common in MENA mainland, KSA): - Agreement runs for an initial term of [2–3] years - Automatically extends for 1-year periods unless terminated on [90 days'] notice before the end of the then-current term - In UAE: fixed-term contracts under Federal Decree-Law No. 33 of 2021 cannot exceed 3 years in the initial term; renewal is permitted ### 4. Compensation **Base salary**: - Annual base salary in [currency]; paid [monthly / bi-weekly] - Review: salary reviewed annually by the compensation committee; no entitlement to increase **Annual bonus**: - Target bonus: [X%] of base salary - Performance conditions: [financial metrics / individual KPIs / board discretion] - Payment timing: following board approval of annual results; typically within [90] days of financial year end - Pro-rating on termination: specify whether the executive receives a pro-rated bonus for partial year of service - Clearly state: "Bonus is discretionary unless performance conditions are met as determined by the board" — or, if contractual: state the specific trigger conditions **Equity compensation**: - Grant: [X] options / RSUs / phantom units at a price of [X] on [grant date] - Vesting: [4-year] vesting; [1-year] cliff; monthly vesting thereafter - Full reference to the company's equity incentive plan; this agreement provides the executive's individual grant terms - Change of control: accelerated vesting on [single trigger / double trigger] (see Section on Change of Control) **Benefits**: - Health insurance: [gold-tier family coverage / BUPA / equivalent] - Housing allowance: AED/SAR [X] per month (or company-provided housing) - Transportation: car or allowance; driver (if applicable) - Schooling allowance: up to [X] per child per year for [X] children - Air tickets: [2] economy class / [1] business class round trips per year - D&O insurance: company will maintain D&O coverage for the executive during employment and for [3–6] years post-departure (tail coverage) ### 5. Leave entitlements - Annual leave: [30] calendar days (UAE statutory minimum; increase for senior executives common) - Public holidays: per UAE/KSA statutory calendar - Sick leave: per applicable UAE/KSA Labour Law provisions - Emergency and bereavement leave: company policy - Unpaid leave: by written agreement only ### 6. Confidentiality - Broad obligation covering all confidential information (business plans, financial data, customer data, trade secrets, IP) - Post-termination duration: indefinite for trade secrets; [3 years] for business confidential information - Exceptions: public domain information, legally required disclosure, prior written authorization - Obligation to return all company property (physical and digital) on departure ### 7. Intellectual property - All IP created by the executive in connection with employment belongs to the company - Executive assigns all rights (including moral rights waiver where applicable) - Pre-existing IP carve-out: schedule pre-existing IP if executive has relevant pre-existing inventions ### 8. Termination scenarios This section has the most financial consequence and must be precisely drafted: **Termination for cause**: - Definition of "cause": material breach of the agreement; gross misconduct; dishonesty; conviction of a criminal offense; serious negligence; willful neglect of duties - On termination for cause: [30 days'] notice (or statutory minimum); no severance; accrued and vested equity retained (some plans allow forfeiture on "cause") - In UAE/KSA: termination for cause must fall within the statutory grounds in the Labour Law; overly broad "cause" definitions are not effective against those statutory limits **Termination without cause**: - On termination without cause by the company: - [3–6] months' base salary in lieu of notice - Pro-rated bonus for current year - [X] months' additional severance equal to [X months' base salary] - Continued vesting of equity for the severance period OR accelerated vesting of [X%] of unvested equity - Continuation of benefits for the severance period **Resignation for good reason**: - Define "good reason": material reduction in title, responsibilities, or compensation; relocation to a different city without consent; change of control - On resignation for good reason: executive receives the same as termination without cause above **Resignation without good reason**: - Executive gives [90 days'] notice - No severance; vested equity retained; unvested forfeited - Garden leave: company may place executive on garden leave during notice period **Expiration of fixed term** (for MENA fixed-term agreements): - If company elects not to renew: treated as termination without cause - If executive elects not to renew: treated as resignation; no severance - Statutory end-of-service gratuity: payable in all cases on expiry ### 9. Change of control - Definition: change of control means sale of [50%+] of company shares; merger; IPO (sometimes); sale of substantially all assets - Accelerated vesting: on a change of control, [50–100%] of unvested equity accelerates (single trigger) — or: vesting accelerates only if executive is also terminated without cause or resigns for good reason within [12] months post-change of control (double trigger) - Enhanced severance: if executive is terminated or leaves for good reason within [12] months following a change of control, severance equals [2x] annual base salary + target bonus ### 10. Post-employment restrictions **Non-compete**: - Duration: [12–24] months post-termination - Geographic scope: limited to [specific markets where company operates] - Activity scope: limited to the executive's actual area of responsibility - Consideration: the terms of this agreement constitute adequate consideration - Enforceability: see jurisdictional notes **Non-solicitation of employees**: - Duration: [12–24] months - Scope: limited to direct reports and employees with whom the executive had material contact **Non-solicitation of customers**: - Duration: [12–24] months - Scope: limited to customers with whom the executive had direct and material dealings ### 11. Governing law and dispute resolution - Governing law: the law of the jurisdiction of employment (UAE Federal Law; DIFC Law; KSA Law, etc.) - Dispute resolution: for UAE/KSA employment disputes, the labour courts are the primary forum for statutory claims; contractual disputes may go to arbitration if agreed - In DIFC: DIFC Courts have jurisdiction over DIFC employment disputes; arbitration is also available ## Jurisdictional notes ### Non-compete enforceability in MENA | Jurisdiction | Enforceability | Notes | |---|---|---| | **UAE** | Enforceable in principle (UAE Labour Law Art. 10, Federal Decree-Law 33/2021) | Maximum 2 years; must protect legitimate interest; courts may reduce scope; senior executives have stronger case against overly broad restrictions | | **KSA** | Enforceable if reasonable; limited enforcement track record | Saudi Labour Courts apply a reasonableness standard; practical enforcement is limited | | **DIFC** | Common-law; similar to English approach | 12–24 months reasonable; must protect a legitimate interest (trade secrets, key client relationships); garden leave during notice reduces post-termination period courts will enforce | | **Lebanon** | Enforceable under Lebanese Code of Obligations and Contracts | Courts reduce if unreasonable | ### End-of-service gratuity for executives The end-of-service gratuity applies to executives in UAE and KSA just as to regular employees: - UAE: calculated on basic salary; 21 days per year for first 5 years; 30 days per year thereafter; max 2 years' total salary - For executives whose base salary is, say, AED 500,000/year, the gratuity entitlement is material and must be budgeted for - The agreement cannot waive or reduce the statutory gratuity entitlement ## Common mistakes - **"For cause" definition too narrow**: If "cause" is defined narrowly and does not cover gross misconduct or serious breach, the executive can engage in harmful behavior that still requires paying full severance. - **"Good reason" definition too broad**: Overly broad "good reason" definitions allow executives to trigger severance after any organizational change; tie good reason to objective material changes. - **Single-trigger change-of-control acceleration**: Single-trigger vesting acceleration (acceleration merely on change of control, regardless of what happens to the executive) can create perverse incentives for executives to support a sale rather than maximize value; double-trigger is more governance-friendly. - **No PILON clause**: Without a payment-in-lieu-of-notice provision, the company must allow the executive to work out the full notice period, retaining access to systems and client relationships. - **Ignoring statutory floor**: In UAE and KSA, the statutory minimum terms (notice, gratuity) apply regardless of what the agreement says; an agreement below the statutory floor is unenforceable to that extent. ## Related skills - [[prompt-pack-employment-offer-letter]] - [[prompt-pack-employment-contract-compliance-review]] - [[prompt-pack-equity-incentive-plan-summary]] - [[prompt-pack-employee-handbook]]