Executive Employment Contract: Definition & Sample

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What is an Executive Employment Contract?

An executive employment contract is an employment agreement between a company and an executive. These written contracts outline things like an executive's compensation, duties, bonuses, as well as competition, and confidentiality. Executive employment contracts are used in many types of businesses, including non-profits.

There are other things an executive employment contract can include, but its purpose is to make known to the company and, typically a senior executive, what is expected of them and how they will be compensated. An executive may be referred to as the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, or something similar.

Common Sections in Executive Employment Contracts

Below is a list of common sections included in Executive Employment Contracts. These sections are linked to the below sample agreement for you to explore.

Executive Employment Contract Sample

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is entered into this 2nd day of April, 2012, by and between Mohamad Ali (“ Executive ”) and Aspect Software, Inc. (the “ Company ” or “ Employer ”), and shall become effective upon Executive’s commencement of employment (the “ Effective Date ”) which is expected to commence on April 16, 2012. The Company and Executive agree that unless Executive has commenced employment with the Company as of April 16, 2012 (or such later date as agreed by each of the Company and Executive) this Agreement shall be null and void and of no further effect.

WHEREAS, in accordance with the foregoing, the Company and Executive desire to enter into this Agreement to set forth the terms of Executive’s employment with the Company, effective as of the Effective Date.

NOW, THEREFORE, intending to be legally bound and in consideration of the mutual covenants and conditions herein contained, the parties hereby agree as follows:

(a) “ Accrued Compensation ” means all compensation, reimbursements and other amounts earned by, payable to, or accrued and vested for Executive through and including Executive’s Date of Termination, but not paid as of Executive’s Date of Termination, including, but not limited to, (i) Base Salary; (ii) Executive’s Incentive Bonus for the fiscal year that ended immediately prior to Executive’s Date of Termination, to the extent such Incentive Bonus was accrued and earned by, but not yet paid to, Executive as of Executive’s Date of Termination; (iii) pay for accrued, but unused, vacation; and (iv) reimbursable business expenses incurred by Executive on behalf of Employer. Employer shall pay to Executive (or to Executive’s estate) a lump sum cash payment of all Accrued Compensation, payable within ten (10) days after Executive’s Date of Termination, and Executive (or Executive’s estate) shall receive any vested benefits Executive in accordance with the terms of any applicable benefit plans and programs of Employer.

(b) “ Cause ” means (i) (A) material failure by Executive to carry out or comply with any lawful and reasonable directive of the Board consistent with the terms of this Agreement, or (B) willful failure by Executive to substantially perform Executive’s duties and responsibilities under this Agreement which, in either case, is not promptly remedied within 10 days after the Company gives Executive written notice specifying such failure or breach in reasonable detail; (ii) the commission by Executive of (A) a felony or (B) any other crime involving moral turpitude (it being understood that in the event that, subsequent to a termination by the Company for Cause based solely on this clause (ii), Executive is determined by a court or other tribunal not to have committed the applicable offense then Executive shall have the right to receive Severance pursuant to and in accordance with Section 3.1 below); (iii) the commission by Executive of theft, fraud, breach of trust or any material act of dishonesty involving the Company or its subsidiaries or, in their capacities as such, any of its customers, suppliers or other business relations, or (iv) a material violation by Executive of the code of conduct of the Company or its subsidiaries (to the extent such code of conduct has been provided to or made available to Executive) or of any statutory or common law duty of loyalty to the Company or its subsidiaries, which is not promptly remedied (if such violation is capable of being remedied) within no less than 10 days after the Company gives Executive written notice specifying such breach in reasonable detail.

(c) “ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(d) “ Confidential Information ” means any and all information of the Company, whether or not in writing, that is not generally known by others with whom the Company competes or does business, or with whom it plans to compete or do business, and any and all information, which, if disclosed, would assist in competition against the Company, including but not limited to: (i) all proprietary information of the Company, including but not limited to the products and services, technical data, methods, processes, know-how, developments, inventions, and formulae of the Company; (ii) the development, research, testing, marketing and financial activities and strategic plans of the Company; (iii) the manner in which the Company operates; (iv) its costs and sources of supply; (v) the identity and special needs of the customers, prospective customers and subcontractors of the Company; and (vi) the people and organizations with whom the Company has business relationships and the substance of those relationships.

Without limiting the generality of the foregoing, Confidential Information shall specifically include: (i) any and all product testing methodologies, product test results, research and development plans and initiatives, marketing research, plans and analyses, strategic business plans and budgets and technology grids; (ii) any and all vendor, supplier and purchase records, including without limitation the identity of contacts at any vendor, any list of vendors or suppliers, any lists of purchase transactions and/or prices paid; and (iii) any and all customer lists and customer and sales records, including without limitation the identity of contacts at purchasers, any list of purchasers, and any list of sales transactions and/or prices charged by the Company.

Confidential Information also includes any information that the Company may receive or has received from customers, subcontractors, suppliers or others, with any understanding, express or implied, that the information would not be disclosed.

Notwithstanding the foregoing, Confidential Information does not include information that (i) is known or becomes known to the public in general (other than as a result of a breach of Section 4.1 hereof by Executive), (ii) is or has been independently developed or conceived by Executive without use of the Company’s Confidential Information or (iii) is or has been made known or disclosed to Executive by a third party without a breach of any obligation of confidentiality such third party may have to the Company of which Executive is aware.

(e) “ Date of Termination ” means the date that the termination of Executive’s employment with Employer is effective on account of Executive’s death, Executive’s Disability, termination by Employer for Cause or without Cause, or by Executive with or without Good Reason, as the case may be.

(f) “ Disability ” means (i) Executive has, as determined by a doctor selected by Executive and acceptable to the Company (such acceptance not to be unreasonably withheld), suffered a physical or mental illness or injury that has impaired Executive’s ability to substantially perform Executive’s full-time duties with Employer, with or without reasonable accommodation, for a period of one-hundred eighty (180) consecutive days and that qualifies Executive for benefits under Employer’s group long-term disability plan, and (ii) Executive has not substantially returned to full time employment before the Date of Termination specified in the notice of termination.

(g) “ Equity Value ” means, as of a given date, the aggregate fair market value of the consideration (including, without limitation, cash or other property) received by all of the shareholders of Aspect Software

Group Holdings, Ltd. (“ Parent ”) or Company, as applicable, on account of their equity interest in the Parent or Company were a Sale of the Company to be consummated on such date, as determined by the Board in good faith and, with respect to any securities included in such consideration that are not immediately able to be sold by the recipient thereof on a public exchange, including discounts for lack of marketability or control.

(h) “ Good Reason ” means, without Executive’s express written consent (which may be withheld for any reason or no reason), of any of the events or conditions described in the following subsections (i) through (v), provided that Executive provides notice to Employer within sixty (60) days following the date which the Executive initially has actual knowledge of the occurrence of any such event or condition and Employer does not fully correct the situation within thirty (30) days after such notice of Good Reason:

Any resignation for Good Reason following the thirty (30) day correction period set forth above must occur no later than the date that is six (6) months following the date which the Executive initially has actual knowledge of the occurrence of one of the foregoing events or conditions without Executive’s express written consent.

(i) “ Material Competitor ” means an entity, or a division or subsidiary of a multi-division entity or holding company, which engages in business in one or more of the fields in which the Company conducts business and from which the Company derives at least 10% of its annual gross revenues, as determined on the Executive’s Date of Termination of employment with the Company or an affiliate, as applicable.

(j) “ Person ” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust and any other entity or organization, other than the Company.

(k) “ Sale of the Company ” shall have the meaning set forth in the Parent’s 2003 Share Purchase and Option Plan.

2.1. Duties and Responsibilities and Extent of Service . During the Employment Period, Executive shall serve as the Chief Executive Officer (“ CEO ”) of the Employer’s Workforce Optimization Division. In such role, Executive will report to the Board of Directors of Employer (the “ Board ”) and shall devote substantially all of his business time and attention and his best efforts and ability to the operations of Employer and its subsidiaries. Executive shall be responsible for running Employer’s day-to-day operations and shall perform faithfully, diligently and competently the duties and responsibilities of a CEO and such other duties and responsibilities as directed by the Board and are consistent with such position. The foregoing shall not be construed as preventing Executive from (a) making passive investments in other businesses or enterprises consistent with Employer’s code of conduct, or (b) engaging in any other business activity consistent with Employer’s code of conduct; provided that Executive seeks and obtains the prior approval of the Board before engaging in any other business activity. In addition, it shall not be a violation of this Agreement for Executive to participate in civic or charitable activities, deliver lectures, fulfill speaking engagements, teach at educational institutions, and/or manage personal investments (subject to the immediately preceding sentence); provided that such activities do not interfere in any substantial respect with the performance of Executive’s responsibilities as an employee in accordance with this Agreement. Executive may also serve on one or more corporate boards of another company (and committees thereof) upon giving advance notice to the Board prior to commencing service on any other corporate board.

2.2. Base Salary . For all the services rendered by Executive hereunder, during the Employment Period, Employer shall pay Executive a base salary at the annual rate of $600,000, payable semimonthly in accordance with Employer’s normal payroll practices. Executive’s base salary shall be reviewed annually by the Board (or the compensation committee of the Board), pursuant to Employer’s normal compensation and performance review policies for senior level executives, and may be increased but not decreased. The amount of any increase for each year shall be determined accordingly. For purposes of this Agreement, the term “ Base Salary ” shall mean the amount of Executive’s base salary established from time to time pursuant to this Section 2.2 .

2.3. Incentive Bonus . Executive shall be entitled to participate in Employer’s annual cash incentive bonus plan (the “ Plan ”), based on the same terms and conditions as in existence for other similarly situated senior officers of the Company and the terms of the Plan. The Board (or compensation committee thereof) may adjust the performance metrics and other terms as they relate to the Plan after consultation with Executive and other members of management (it being understood that Executive’s incentive bonus shall be based on the performance of the Company’s Workforce Optimization Division). Executive’s target annual bonus under the Plan shall be 80% of Base Salary (“ Target Bonus ”), but Executive’s actual incentive bonus (“ Incentive Bonus ”) for any fiscal year as determined by the Board (or the compensation committee thereof) may be higher but in no event shall exceed 125% of Base Salary; provided that Executive’s payout under the Plan shall be no less than $600,000 for Calendar Year 2012 (not subject to any proration). Any Incentive Bonus earned by Executive shall be paid to Executive when bonuses under the performance period in question are paid to similarly-situated employees of the Company, but in no event later than the last day to qualify such bonus as a “short-term deferral” under Treasury Regulation Section 1.409A-1(b)(4).

2.4. Transition Bonus . Employer shall pay to Executive two (2) transition bonuses of $350,000, payable on each of October 1, 2013 (“ First Transition Bonus ”) and October 1, 2014; provided that, except as otherwise provided for herein, Executive remains an employee of the Company on such dates.

2.5. Sale Bonus . Employer shall, or shall cause Parent to, pay to Executive a cash bonus (“ Sale Bonus ”) upon the Sale of the Company, as of the date of and in connection with the closing of a Sale of the Company, equal to 2.5% of the Equity Value of the Company to the extent such Equity Value exceeds $589,600,000; provided that such Sale Bonus shall in no circumstances exceed $1,100,000; and provided further that Executive remains an employee of the Company on such date. Set forth on Exhibit A is an example of the calculation of a hypothetical Sale Bonus. Notwithstanding the foregoing, if Executive’s employment with the Company is terminated by the Company without Cause or due to Executive’s resignation for Good Reason within three (3) months prior to the execution of a definitive agreement that results in the Sale of the Company contemplated by such Agreement, then the Company shall pay Executive the Sale Bonus as if Executive were still employed by the Company on the date of the Sale of the Company.

If any payment that Executive is eligible to receive as a Sale Bonus, when combined with any other payment or benefit Executive is eligible to receive as a result of a Sale of the Company that is a “change in control” of the Company (either solely as a result of such change in control or in connection with any other event) or the termination of Executive’s employment with any the Company, would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (“ Excise Tax ”), then such Sale Bonus shall be reduced to the Reduced Amount (as defined below). A payment shall not be considered a parachute payment for purposes of this paragraph if such payment is approved by the equity holders of the Company in accordance with Section 280G(b)(5) of the Code and the regulations thereunder (the “ Approval Exemption ”), and at the time of such approval, no stock or equity interests of the Company is readily tradable on an established securities market or otherwise. The Company will use its reasonable efforts to cause any potential parachute payments to be disclosed to and submitted for approval by the equity holders of the Company in accordance with the Approval Exemption. The “ Reduced Amount ” shall be the largest portion of the Bonus that would result in no portion of the Bonus being subject to the Excise Tax.

2.6. Retirement, Welfare and Other Benefit Plans and Programs . Executive shall be entitled to (a) participate in all employee retirement, welfare, and other benefit plans and programs made available to Employer’s senior level executives as a group or to its non-union U.S. employees generally, as such plans and programs may be in effect from time to time and subject to the eligibility requirements of the plan or program and (b) receive twenty-five (25) vacation days, seven (7) fixed holidays, seven (7) floating holidays and applicable sick leave in accordance with Employer’s vacation, holiday and other pay for time not worked policies as in effect from time to time. In addition, Executive shall be entitled to perquisites on the same terms and conditions as such perquisites are made available to other senior officers of Employer.

2.7. Reimbursement of Expenses . Executive shall be provided with reimbursement of reasonable expenses related to Executive’s employment by Employer in accordance with Employer’s normal business expense reimbursement practices; provided, however, that in no event will any taxable reimbursement be made to Executive after the end of the calendar year following the calendar year in which the expense was incurred.

2.8. Initial Stock Options Grant . On the Effective Date, the Company shall cause Parent to grant Executive an initial, one-time stock option grant to purchase a number of shares of common stock of Parent, as of the Effective Date pursuant to the Share Option Agreement attached hereto as Exhibit B .