“Say On Pay” Won’t Kill CEO Employment Agreements

“Say on Pay” regulations, a part of the Dodd-Frank Act regulations that allows shareholders to vote on executive pay, has not diminished the need for detailed employment agreements for CEOs, according to attorneys Michael S. Katzke and Henry I. Morgenbesser of Katzke & Morgenbesse LLP. They say that these agreements remain common, in part because of the increased number of firms that hire CEOs from outside the company. Terms covered in such agreements may include “duties and responsibilities of the CEO, compensation (including formulaic increases during the term), the duration of the term of employment, termination provisions, severance payments under certain termination scenarios, and post-employment restrictive covenants.”