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Executive Compensation

Executive compensation is a term that refers broadly to the array of different types of
compensation sometimes offered to upper management and other key employees. Apart from
typically high base salaries, common examples of executive compensation include bonuses,
commissions, qualified and non-qualified deferred compensation, stock and stock options, rich
severance packages, and certain non-monetary perks.

When a relationship between a corporation and one of its key employees or founders ends, the
reputations and intense feelings involved can lead to hardline disputes on compensation. Cantrell
Zwetsch, P.A., is experienced at handling executive compensation and related severance disputes
involving executives, founders, and other key employees.

WHY HIRE CANTRELL ZWETSCH

Cantrell Zwetsch, P.A. is an elite litigation boutique that has deep experience handling high-
value executive compensation disputes, where reputations built over the course of decades are
often also at stake. We represent both plaintiffs and defendants. When possible, we structure our
fees in ways that ensure our clients know that we have real skin in the outcome. Our clients
include c-suite executives, owners in business divorces, sales professionals, and other key
employees for large and mid-sized companies.

We have substantial experience across most industries, including healthcare, investment funds,
staffing/recruiting, hospitality, manufacturing, technology, financial services, insurance, and real
estate.

WHAT WE HANDLE

The executive compensation dispute attorneys at Cantrell Zwetsch, P.A. regularly advise on and
successfully resolve compensation disputes. Examples of the types of compensation disputes we
are hired to handle are provided below.

Severance and “For Cause” Disputes

Cantrell Zwetsch, P.A. is very experienced at handling severance disputes, including disputes
over “for cause” provisions, claw-back provisions, and similar provisions that allow a company
to not pay compensation or require an employee to return compensation.

Most executive compensation disputes arise in connection with a voluntary or involuntary
termination. Depending on the compensation package, an employer may be obligated to continue
paying compensation, providing medical benefits, or providing other fringe benefits for a time.

Often, however, such obligations are conditioned on an employee complying with certain post-
employment restrictive covenants or not being terminated “for cause.” Similarly, certain
bonuses, such as hiring bonuses and retention bonuses, may be conditioned on an employee
continuing employment for a certain period of time.

Factual disputes and protecting reputations can cause intense disagreements over entitlement to
compensation following an executive’s termination. At Cantrell Zwetsch, P.A., we are at the
forefront of successfully resolving high-stakes severance disputes.

Bonuses

Bonuses often comprise a significant portion of compensation packages for executives and other
key employees. There are many types of bonuses, such as hiring bonuses, retention bonuses, and
performance bonuses. Bonus pay can be in cash, equity, or a combination of both. Bonuses are
often negotiated extensively, and the conditions of eligibility are critical to understanding
entitlement.

We have experience negotiating bonuses and successfully litigating entitlement to bonuses,
including disputes that impact entitlement, such as “for cause” termination provisions and claw-
back provisions. We are frequently called on by both companies and executives to handle these
important disputes.

Stock

At Cantrell Zwetsch, P.A., we have successfully litigated numerous stock disputes, including
those in the context of business divorces, wrongful termination claims, and valuations.

Equity is often a major component of executive compensation. While there are many types of
equity offered to executives and other high-level employees, some common examples include:

  • Stock Options. Stock options provide an employee a right to buy a set amount of
    company shares at a particular price and within a particular time frame. The price at
    which the employee can purchase the stock option is called the grant price and is
    typically the market price at the time the option is granted.

  • Performance Stocks. Performance stocks are an incentive-based form of stock
    compensation that are offered to employees if certain targets are met.

  • Restricted Stock. Restricted stock is company stock that is offered to employees as part
    of a vesting schedule. The vesting schedule provides incentive to the employee to remain
    with the company for a certain time period.

  • Phantom Stock. So-called “phantom stock” is not actually stock. Rather, it is an
    agreement to pay an employee compensation that is tied to the value of company stock at
    some designated time in the future. By tying the compensation to the value of the
    company stock, the interests of the employee and company are more aligned.

Non-Qualified Deferred Compensation

Deferred compensation is income that an employee earns in one year but is not paid out until a
specified later date. A vesting schedule is often applied to deferred compensation. A primarybenefit of deferred compensation is tax deferral, given that the income is typically not taxed until the date it vests or is received. The deferred income may also accrue interest or dividends through investments before it is taxed.

As part of their compensation package, executives and other high-level employees are often
offered non-qualified deferred compensation, which is not subject to the requirements of the
Employee Requirement Income Security Act (ERISA), but is subject to Internal Revenue Code
Section 409A. Unlike 401(k)s and other ERISA-regulated retirement plans, non-qualified
deferred compensation plans can be accessed before retirement without penalties.

Commissions

The amount, timing, and entitlement to payment of commissions are generally provided in a
written agreement, such as an employment agreement or compensation agreement. Verbal
agreements to pay commissions are generally enforceable. Post-employment entitlement to
commissions is often in dispute.

We know the laws concerning commissions, as well as the industry standards for amounts of
commissions and any conditions to payment. We routinely provide commission and other
compensation guidance, as well as related litigation services to companies and executives. In
addition to commission disputes with executives, we also handle commission disputes for sales
professionals in the recruiting/staffing, real estate, and financial services industries.

What to Look for In an Executive Compensation Attorney?

When looking for an executive compensation lawyer, you should compare the background of the
attorneys you are considering. Factors should include subject matter expertise, educational
background, past results, and what references say. We are glad to share references.

We handle all forms of employment litigation, including those relating to executive pay. We
handle these disputes throughout Florida and Georgia.

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