Contracts of employment for board members and top executives include many financial stipulations. Ensuring that these comply with the company's own rules calls for legal expertise, an understanding of the company's compensation systems and – last but not least – an awareness of any possible impact on disclosure and accounting obligations.

As is often the case, the devil is in the detail. It is vital that the company is clear about what happens to share-based compensation at the end of the contract, what age limits apply and whether severance agreements are in line with the rules on multi-year compensation, for example. It must be clear exactly what the company aims to achieve, so that both parties understand this and it can form the basis of the employment contract.

hkp/// group drafts plan documents for internal or external legal teams, who then review and approve them. We check whether the provisions in the contracts have the desired effect in terms of steering. Our consultants also draw up information documents that can be used for discussions between the company and those affected, showing how the variable compensation or pension scheme works and giving examples using actual figures. These documents can help managers with limited legal knowledge understand the thinking behind incentive schemes.

If required, our experts also discuss contract details with those affected, saving the company or department efforts or providing specific expertise on certain topics.

Author Dr. Jan Dörrwächter

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