Re: Executive Compensation Offer Letter
First and foremost, you need to contact an attorney with an accounting background. One who can readily understand your business and the intentions of the offer. It is important the the attorney swiftly address your need for the specific performance that is sought.
Many matters apply but most important is that the offer, should it come to contract, will provide the proper incentive for the individual to perform and that it does so on a continuing basis. Various taxation effects apply and an informed executive will recognize this in a tendered offer (or have counsel that does.)
A contract may form through a letter of offer so care is needed on your part. Typically a process of negotiation occurs after the offer is made whereby the individual seeks to satisfy his/her personal goals or needs. It is important that such be properly incorporated into the contract otherwise the executive's performance may not come to the anticipated fruition.
Your initial offer needs to take many factors into account. You should contact an attorney before making the offer.
There are a variety of incentive plans that may apply such as: stock appreciation rights (SARS), stock options (convertible or liquidated upon exercise), long term incentive plan (LTIP), equity swaps or conversions, key man life insurance, income sharing (aka profit sharing although such is not typically applicable to executive compensation) and a variety of stipulated performance plans.
My experience is well suited to your needs. Contact me for a free initial discussion.
G. Joseph Holthaus III
(410) 799-9002
(410) 750-2567 (effective 01/23/2005)
P.O. Box 1702
Ellicott City, Maryland 21041
