Using Career Advancement Covenants to Safeguard Non-Financial Executive Pay

Last month, on May 26, 2021, CEOWorld magazine published an article I wrote on “Using Career Advancement Covenants to Safeguard Non-Financial Executive Pay”.

This new article is designed for CEOs, C-level and senior executives, who, on occasion, may accept less in salary, bonus and equity in favor of non-financial compensation that is sometimes more important. Some of the examples of such non-financial compensation listed in the my article are:

• Assignments in a new field where you have little prior experience,
• Face time with valued contacts,
• Exposure for your work, showcasing your skills in your industry,
• Basing your work in a desired location,
• Access to technology or markets, back license of technology.

The article then highlights two examples of C-level and senior executive clients of mine, who in recent representations chose non-financial compensation to advance their careers, building their resumes for future rewards, the first becoming CFO and Chief Accounting Officer for a company to go public, the other for my client to become a first time CEO.

Finally, my article discusses how, in each case, special covenants and agreement terms were included and are mentioned in my article to assure my clients that either they got the experience or resume value they were seeking or could resign for good reason and trigger severance.

To see my full CEOWorld magazine. article, go to LINK: https://ceoworld.biz/2021/05/26/using-career-advancement-covenants-to-safeguard-non-financial-executive-pay/

Or on my website at https://www.executiveemploymentattorney.com/using-career-advancement-covenants-to-safeguard-non-financial-executive-pay/

This was my 34th article published in CEOWORLD since 2016. Previously, the editor advised that I can use “Featured in the CEOWORLD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.

On its own initiative, CEOWOLRD magazine created on their website a library of Robert Adelson published articles. You can peruse this library and/or read as many of my 34 published articles as you wish. See https://ceoworld.biz/author/robert-adelson/

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who at some point in their career might be considering an opportunity to advance their career that might involve financial sacrifice or other risks and may want to consider review of their executive employment contract to give the best assurance of gaining those career for which a price will be paid. So, my hope is that this article will offer insights on these important matters. Feel free to tweet or share this article. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.

Don't Let Disparagement or Defamation Blackball Your Executive Career Prospects

 Last Tuesday, on April 27, 2021, CEOWorld magazine published an article I wrote on “Don’t Let Disparagement or Defamation Blackball Your Executive Career Prospects”.

This new article is designed for CEOs, C-level and senior executives, who may face, on occasion, issues of disparagement and even defamation, in connection with employment termination. For those executives who do face this prospect at the time of employment termination, disparagement or defamation can have effects on your career and prospects, both short and long term, that can be even more far reaching than how much severance will be paid.

The article first discusses three such situations that faced C-level and senior executive clients of mine in recent representations and our successful resolution of each, as follows:

• Company’s plan to fire the executive for cause, where, on short notice, we effected a complete reversal of that situation from a negative to a positive for the C-level executive’s reputation, plus significant severance and deterrence of any future recurrence of attempted defamation;
• Company’s public announcements that made the innocent C-level executive toxic and essentially unemployable in his industry, where the public company was made to rectify the situation, including signing a document that I prepared, a corrective document to the company’s 8K filing, that the company’s securities law counsel then filed with the SEC; and
• Changes initiated to a draconian no-rehire provision in the executive’s separation agreement that met the company’s needs but removed the cloud over this senior executive with recruiters and for future employment..

The article then moves on to and concludes with a discussion of other provisions of the separation agreement and my recommendations on the handling of termination and terms for a mutual non-disparagement clause to protect not just the company (as the company’s first draft separation agreement almost always does) but the executive as well (through language we seek to add).

To see my full CEOWorld magazine. article, go to LINK: https://ceoworld.biz/2021/04/27/dont-let-disparagement-or-defamation-blackball-your-executive-career-prospects/

Or on my website at https://www.executiveemploymentattorney.com/dont-let-disparagement-or-defamation-blackball-your-executive-career-prospects/

This was my 33rd article published in CEOWORLD since 2016. Previously, the editor advised that I can use “Featured in the CEOWORLD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.

On its own initiative, CEOWORLD magazine created on their website a library of Robert Adelson published articles. You can peruse this library and/or read as many of my 33 published articles as you wish. See https://ceoworld.biz/author/robert-adelson/ 

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who at some point in their career might face disparagement or defamation, which if not properly dealt with could seriously derail an otherwise successful and rising career. So, my hope is that this article will offer insights on these important matters. Feel free to share this article. If you or any colleague of yours has a need for a separation agreement attorney, please do reach out to me at rob@attorneyadelson.com.

Don’t Let Misalignment in Executive Compensation Create Your Own “Black Sox Scandal”

 Last Wednesday, on March 31, 2021, the day before Major League Baseball’s Opening Day for the 2021 baseball season, CEOWorld magazine published an article I wrote on “Don’t Let Misalignment in Executive Compensation Create Your Own “Black Sox Scandal”.

This new article is designed for CEOs, C-level and senior executives, who may face misalignment in the structuring of their executive compensation, incentive and performance-based compensation.

The article first discusses misalignment as commonly mentioned that can harm the interests of investors, owners and shareholders, where executive compensation incentives revenues and earnings per share that can encourage acquisitions that can benefit CEOs but not add long term value and might actually harm the interests of the investors.

My article then moves to discuss the less often recognized issue of misalignment that can harm CEOs, C-level and senior executives. Major misalignment of executive compensation is discussed in the three circumstances, as follows:

• Added performance targets are set even after liquidity occurs as approved by the investors,
• A major portion of equity is tied to remaining in the position until liquidity occurs, and
• Tying an entire bonus to the achievement of a single fixed objective, where the owners have significant discretion to limit or even eliminate the executive’s ability to achieve that sole objective.

I timed publication of this article to coincide with Major League Baseball’s Opening Day, because the 3rd and last example of misalignment harmful to executives, and certainly one of the most flagrant, was the root cause of the biggest scandal in American sports history, when Chicago White Sox players accepted bribes from gamblers to intentionally lose the 1919 World Series. This “Black Sox Scandal” offers a vivid demonstration how such executive compensation misalignment can harm both executives and players in this case and also the company, owner and other stakeholders (in this case the fans) as well.

My article then ends with recommendations for executives to adopt in their executive compensation negotiations to avoid harm from such destructive misalignment,
To see my full CEOWorld magazine. article, go to LINK: https://ceoworld.biz/2021/03/31/dont-let-misalignment-in-executive-compensation-create-your-own-black-sox-scandal/

Or on my website at https://www.executiveemploymentattorney.com/dont-let-misalignment-in-executive-compensation-create-your-own-black-sox-scandal/

This was my 32nd article published in CEOWORLD over the last five years. Previously, the editor advised that I can use “Featured in the CEOWOLRD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.
See: https://ceoworld.biz/author/robert-adelson/

With more than 12.4+ million-page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.
CEOWORLD magazine | LinkedIn

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who are engaged or will soon engage in negotiations over the terms of their executive compensation, incentive compensation and performance compensation. It is my hope that this article may be helpful to you to avoid executive compensation misalignment potentially harmful to the executive. Feel free to share this article. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.

Impact Entrepreneurship and Your Triple Bottom Line

On Tuesday, May 17, 2016, I moderated a panel on this subject for the Boston Entrepreneurs’ Network (ENET) on this subject at the group’s Cambridge location:  then Microsoft Technology Center, Kendall Square. 

The article I prepared for the meeting, published in the Reflector, and posted on the ENET website, was as follows:

Money and profits, income, and shareholder return, drive many, and perhaps most U.S. companies.  As the fictional Gordon Gekko long ago said in the film “Wall Street” – “Greed is good…it’s all about bucks”  Yet, that is not so for all U.S. companies.  Some companies seek an integration of both financial and other returns into the management of enterprises.  This perspective can enhance financial returns while providing more benefit for non-owner stakeholders.  For many of these companies and entrepreneurs, there is a “triple bottom line”, that of the three P’s:

People: Social change & justice, employee well-being, governance, ownership, community involvement, philanthropy, legacy, and service;

Planet: Building performance standards, resilience, company carbon footprints, and environmental restoration;

Profits: Financial success and stability, growth, capitalization, sales and marketing, investment.

ENET’s meeting on May 17 will have three speakers who have each worked in the field of social impact entrepreneurship, who will share their experiences.  One speaker is a noted serial entrepreneur whose companies are known for their social awareness; a second speaker heads the program at Babson College focused on social entrepreneurship; our third speaker is VP of Innovation and Social Impact at her company. Her company was one of the first certified New Hampshire “B” corporations, whose mission is the triple bottom line. Our moderator is ENET’s chairman who recently received the award from IEEE-USA for contributions to the IEEE entrepreneurial community.  This is a night for entrepreneurs interested in giving back to the community as part of our business model – hope you can join us.

I was a speaker as well as organizer and moderation.   I concluded the proceedings speaking about “Benefit Corporations in Massachusetts  and  Certified B Corps Worldwide”

My overview of Benefit Corporations in Massachusetts included the following topics:

• How benefit corporations are different than Mass. non-profit corporation
• How benefit corporations are different than Mass. for-profit corporation
• LLCs, partnerships as non-statutory “certified B corps”
• Statutory benefit corporations incorporation under MGL ch. 156E
• Key components of Mass. benefit corporation
• Changing to 156E corporation
• Annual Reporting
• Enforcement

My overview of Certified B Corps as part of the worldwide private certification included the following topics:

• B Lab & its certification process
• Eligible businesses
• Requirements for certification
• Maintaining certification
• Worldwide movement

To see my slides, from this event go to

https://boston-enet.org/resources/Documents/Presentations/2016/May_17_2016/ENET%205-17-16%20Robert%20Adelson.pdf

or

Benefit Corporations in Massachusetts and Certified B Corps Worldwide by Robert Adelson

Prior to my closing presentation on legal matters, I had recruited three excellent speakers, all with deep business experience with benefit corporations.

Guest Speakers Panel:

(including partial biographies of three guest speakers as compiled in May 2016)

Mark Donohue is a lifetime entrepreneur. Since the late 1980’s, he has been a pioneer in “triple-bottom-line” business, Cleantech and “impact” investing, within both the venture capital and PE worlds. He has held CEO roles in numerous enterprises endeavoring to “Do Well, while Doing Good.”  In Sept of 2013, he was appointed Chairman & CEO of Sheffield Pharmaceuticals (www.sheffieldpharma.com). The company specializes in health & beauty care products since 1850. Sheffield manufactures for Walmart/CVS/Walgreens, does contract packaging for entrepreneurs, owns the “Dr. Sheffield” brands, and has company-owned brands, such as Bioroot All-Natural Hair Growth and Tanner’s Tasty Paste. It products are in 70,000 US stores and the company employs over 200. Mark also serves as Co-Chairman of Faria Beede Instruments, which is the leading provider of gauges/controls in the C&I and marine sectors, plus is a leading IoT and telematics player. Faria employs 200. He is also Managing Partner of Catalyst Insight Partners, where Mark partners with entrepreneurs to accelerate growth, improve profitability and optimize financial exits.  Previously, in 2001, he was the Founder of Expansion Capital, a leading Silicon Valley pioneer in Cleantech investing, which manages $100,000,000+. He has been Chair Emeritus since April of 2008. In January of 2011, Mark was honored as one of the “Top 100 Thought Leaders in Trustworthy Business Behavior” by Trust Across America. Mark earned his BS, with honors, from Babson in 1988. He served on the Board of Overseers from 2002-2011. In September, 2010, he was honored by Babson with a “distinguished lifetime service to the college” award.  ( https://www.linkedin.com/in/marktdonohue)

Cheryl Kiser, Executive Director of The Lewis Institute for Social Innovation and The Babson Social Innovation Lab, Cheryl is responsible for promoting Babson’s work in integrating social innovation and social entrepreneurship into its curriculum and co-curricular activities.  Before coming to Babson, Cheryl was the Managing Director of the Boston College Center for Corporate Citizenship. She is one of the leading voices in the U.S. on the role of business in society, and has won awards for her public affairs campaigns.  For over a decade she managed the content and delivery of the largest annual conference in the world on corporate citizenship, the International Corporate Citizenship Conference which drew representatives from over one third of the Fortune 500 and from 24 countries around the globe. Prior to Boston College, Cheryl was the Director of Marketing for Work Family Directions, the leading provider of work life programs. Cheryl also has a passion for healthy living. She is co-creator of Food Sol an “action tank” at Babson’s Social Innovation Lab dedicated to using entrepreneurship to redesign the food system.  ( www.babson.edu/Academics/centers/the-lewis-institute )

Rebecca Hamilton, Co-Owner/VP of Research and Development, WS Badger Company. Staff profiles also list her as “VP of Innovation and Social Impact”.  In her role, Rebecca directs project-based teams of highly skilled researchers and chemists both at Badger and at external laboratories. She oversees all internal Quality Assurance, Regulatory, Research, and Product Development teams for a company that makes healing balms, lip balms, safe mineral sunscreens and other personal care products, mainly from an environmentally-friendly facility in Gilsum, New Hampshire. Family owned, the company prides itself on maintaining a healthy community-minded business with ethical and charitable social principles. Rebecca worked directly with NH State Senator Molly Kelly to help pass the NH Benefit Corp Legislation. WS Badger was one of the first certified B corporations in New Hampshire. Rebecca is author of 5 Reasons Why the Safe Cosmetics Act Makes Sense for Small Business (GreenBiz 2011).  In college at University of Massachusetts, Rebecca was Co-Chair of the Amherst Fair Trade Town committee, and recipient of both the school’s humanitarian award and 2009 Award for Outstanding Community Service and Engagement.  Rebecca has also been a Wilderness expedition leader in Vermont and professional sailor in the Caribbean.  (www.badgerbalm.com)

For those of my clients who have interest in social entrepreneurship, I hope this past ENET presentation and my slides from this event will be of benefit.  If you have any questions or needs in this field, please do let me know.

Gaming CEOs traded salary for stocks. Their ‘gamble’ is set to pay off

 Two weeks ago, on December 18, 2020, I was quoted on the utility of corporate CEOs taking restricted stock units (RSUs) in lieu of cash bonuses, in an article, with the title above, published in the  Las Vegas Review-Journal.

The newspaper that published this article, Las Vegas Review-Journal is the largest circulating daily newspaper in Nevada and ranked as one of the top 25 newspapers in the United States by circulation. https://en.wikipedia.org/wiki/Las_Vegas_Review-Journal

The article was about casino company CEO compensation, and how a number of Las Vegas-based CEOs had reduced their salaries in exchange for RSUs amid the pandemic, with the reporter  wondering what their compensation might look like down the road.

In the course of our interview, I suggested a number of benefits from this exchange executive compensation strategy of a cash bonus exchanged for RSUs – both to benefit the executive personally but to benefit the company and company stakeholders, including the following:

• Deferral of taxation that would come from immediate payment of the bonus, and deferral of taxation on the unvested portion until vesting has later occurred.
• Leverage of the amount of bonus magnified by the growth potential of the RSU, still further enhanced by the current low value due to the pandemic
• Assurance of a future payout to the CEO by use of RSUs rather than options because RSUs after vesting always retain some value.  RSUs effectively have a floor on value. They can never go underwater and become worthless as often happens with stock options.
• Use of the extra RSUs / redemption strategy to minimize effective taxation as RSUs vest, where in this way the company would typically pay for or assist in payment of the taxation, and the executive is more willing to pay a portion of the taxes since vesting has occurred.
• The benefit to company morale from the “vote of confidence in the company’s future” by the CEO choosing company stock over cash.
• The potential cascading benefit to the company with current employees and future hires who are heartened by the example of the man or woman at the top choosing company equity over an immediate cash payout.
• Benefit to investors, alliance partners and other stakeholders by enhanced “alignment” of the CEO’s financial prospects tied to company growth.

To see this full article on CEO use of RSUs in the Las Vegas Review-Journal , go to LINK:

Gaming CEOs traded salary for stocks. Their ‘gamble’ is set to pay off.

 Or https://www.executiveemploymentattorney.com/wp-content/uploads/2021/01/Attorney-Rob-Adelson-in-Casino-CEOs-trade-bonuses-for-stock-Las-Vegas-Review-Journal.pdf

The business reporter who authored this article, Bailey Schultz, said she had found me and reached out to me after reading an earlier article I wrote on RSUs that was published in CEO World.  That article, published February 28, 2017, was entitled “The Advantage of RSUs in Your CEO Compensation Package.” 

My 2017 RSUs article, targeted toward CEOs, C-Suite executives and other senior level executives, discussing the benefits of RSUs as a key part and often the most important part of their compensation package.  The article discussed how RSUs are most useful in mature companies where the CEO or C-suite executive takes a position where stock has considerable value, but growth is still expected in the public company or perhaps an IPO or liquidity event is not far off or in a turnaround situation in a mature company where there is no assurance of appreciation and the CEO needs assurance of a floor in his or her equity value.   

As part of my overall discussion of RSUs, my 2017 article covered these topics –

• What are RSUs?  When are RSUs paid out? 
• How are RSUs taxed?   How do you pay the taxes that come due on RSUs?
• When are RSUs most useful?  When are RSUs least useful? 
• What sort of RSU package should a CEO or C-suite executive look for? 
• Key Terms to negotiate in RSU grants

To see my full article, go to LINK:   http://ceoworld.biz/2017/02/28/advantage-rsus-ceo-compensation-package/   or http://www.executiveemploymentattorney.com/articles-section/the-advantage-of-rsus-in-your-ceo-compensation-package/

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who might benefit or whose companies might benefit from the use of RSUs as part of the executive compensation package. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.

Holiday Greetings 2020

 

This holiday card and photograph are used here with the permission of wild life photographer Jerry Acton who enjoys sharing the beauty of nature from his home in New York’s Southern Tier. www.jerryacton.com

All Best wishes to you and yours, for a joyous holiday season and
For success, prosperity, health and happiness,
In the coming year, 2021.

ROBERT A. ADELSON, ESQ.
Adelson & Associates, LLP
101 Federal Street, Suite 1900 ♦ Boston, MA 02110
(617) 204-5602 ♦ FAX:  (617) 204-5604
Email: rob@attorneyadelson.com
Blog: https://robadelson.wordpress.com/
Website: www.ExecutiveEmploymentAttorney.com
LinkedIn: https://www.linkedin.com/in/robert-adelson-b8a1557/
Twitter:  @AttorneyAdelson 

Two articles of mine, published since spring 2020, during the Covid-19/ coronavirus crisis, intended to aid executives facing issues related to the pandemic, that may interest you, are as follows:     

1. Working Remotely as a C-level Executive

Are you tempted by a C-level position in a company with great potential on the West Coast, in Texas or Upper Midwest, but don’t want to give up your home and uproot your family where you are living on the East Coast?  My article, published in October 2020, suggests negotiation strategies, in our new COVID world,  to build a comfort level with prospective employers, for those executives who would like to take up an executive employment opportunity as a remote CEO or C-level executive

• To see my CEOWorld magazine article, go to LINK:  https://ceoworld.biz/2020/10/02/working-remotely-as-a-c-level-executive-opportunities-and-considerations/    
• 
  
• Or my website at https://www.executiveemploymentattorney.com/working-remotely-as-a-c-level-executive-opportunities-and-considerations/
• 
  
• 2. How the Right Severance Triggers can protect against Changed Circumstances

Has a new employer cut your pay or reduced your duties due to COVID-19 disruptions to the company, or due to a non-COVID related loss of a key customer, loss of financing or other changed circumstances? My article published in May 2020, discusses how negotiating the right severance triggers in your job offer can protect you so you can move on and be made whole. 

To see my CEOWorld magazine article, go to LINK: https://ceoworld.biz/2020/05/27/triggering-executive-severance-to-protect-your-interests-in-case-of-covid-19-or-other-changed-circumstances/ 

Or on my website at https://www.executiveemploymentattorney.com/triggering-executive-severance-to-protect-your-interests-in-changed-circumstances/

Employment, Tax, Contracts and Business Law Services for
• CEOs, C-Level and Senior Executives
•  Early Stage Companies and Entrepreneurs
• Consultants and Service Providers

*The photo on this holiday card, that of a female bluebird, photographed by Jerry Acton, also graced the cover of Bluebird, Journal of the North American Bluebird Society 2009-2010 Winter edition – https://www.jerryacton.com/Galleries/Published-Photos/i-Swrj6NW   Once again, thank you to Jerry for sharing his fine work – making this wonderful winter wildlife image available for all of us to enjoy in this holiday season!

Negotiating a Custom CEO or C-level Executive Compensation Package

On November 5, 2020, CEOWorld magazine published an article I wrote on “Negotiating a Custom CEO or C-level Executive Compensation Package” . 

This new article is designed for  CEOs, C-level and senior executives, who are negotiating new job offers where the metrics of a routine Gartner or Mercer compensation survey are just not appropriate for that particular CEO or C-level executive compensation package, and the executive employment advisor is called upon to suggest, design and then lead the negotiations for a custom executive compensation package.

My article first suggests three situations well suited to justify development and deployment of a custom executive compensation package:

• Start-up and early stage company CEOs,
• Turnaround CEO situation, and
• Special needs executive recruitment – where a CEO or C-level executive has special attributes that fill a critical need for the company. 

My article then moves on to discuss that the custom package must not only make up for your loss of pay and benefits to leave your current employer, but even more so, to make up for three further critical intangibles as well, and hence – what should be included on your custom executive compensation package? And how much equity compensation should you ask for? 

The article then concludes with my suggestions for how the executive can achieve company “Buy-in” – how do you sell the custom CEO or C-level executive compensation package to an often skeptical employer?  This last part shares three of my best “sales” techniques:

• You (employer) want and need an “A” team player, this custom package will not only secure the services of a true A player but his or her successful recruitment  will help you to attract still more A team players to the company.
• You want alignment and this custom package greatly magnifies the alignment of this key executive hire with the growth goals of the company, and
• Success for my executive, even with this full custom package, means vastly greater success to the company’s stockholders, often 10x, 15x and even 20x pay back return for the company’s stockholders, if the CEO or C-level executive succeeds in his or her mission, and costs little or nothing if he or she does not succeed.

To see my full CEOWorld magazine. article, go to LINK:

https://ceoworld.biz/2020/11/05/negotiating-a-custom-ceo-or-c-level-executive-compensation-package/

 Or on my website at https://www.executiveemploymentattorney.com/negotiating-a-custom-ceo-or-c-level-executive-compensation-package/

This was my 31st article published in CEOWORLD over the last five years.  Previously, the editor advised that I can use “Featured in the CEOWOLRD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field.  See https://ceoworld.biz/author/robert-adelson/

With more than 12.4+ million-page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs, CFOs, CIOs, senior management executives, business leaders, and high net worth individuals worldwide.

It is my hope that this article will be of benefit to CEOs, C-level and senior executives who are considering job offers in situations where a custom executive compensation package is appropriate.  Feel free to tweet or share this article. If you or any colleague of yours has a need in this area, please do reach out to me at rob@attorneyadelson.com.