Executive Agreements and Incentive Plans
The relationship with senior executives raises different needs from an ordinary employment contract: the executive has access to the company’s most sensitive information, may join a competitor on leaving, and a significant part of their pay is tied to performance. We draft senior executive agreements together with non-compete, confidentiality, bonus and share option plans.
What is a senior executive agreement?
A senior executive agreement is the contract concluded with the company’s general manager, deputy general managers and similar key executives, containing more detailed provisions than a standard employment contract. Powers and responsibilities, pay and benefits, performance-based payments, confidentiality, non-compete and exit terms are its main elements.
Employer representatives who manage the business as a whole, and their deputies, do not benefit from the job security provisions of the Labour Law. For these executives, it is all the more important to set out exit terms and compensation clearly in the agreement.
How is a non-compete obligation set up for an executive?
Under the Turkish Code of Obligations, a non-compete must be in writing and limited in terms of place, time and type of business, and except in special circumstances it cannot exceed two years. For the restriction to be effective, we recommend providing in the agreement for a contractual penalty in case of breach and, where possible, a payment to the executive during the restricted period.
Scope
- Preparing executive agreements and non-compete, confidentiality and bonus/option plans for senior executives
- Structuring board membership and the employment relationship together
- Setting exit terms, compensation and handover processes
- Negotiation and termination of the agreement when executives leave
How We Work
- Defining the executive’s role and powers and the company’s expectations
- Setting the legal framework for salary, bonus and long-term incentives
- Drafting confidentiality, non-compete, non-solicitation of customers and non-solicitation of employees provisions
- Writing exit terms and compensation into the agreement
- Negotiating the agreement with the executive and preparing it for signature
Team
Frequently Asked Questions
Does the general manager benefit from job security?
Employer representatives who direct and manage the business as a whole, and their deputies, do not benefit from the job security provisions, meaning they cannot bring a reinstatement claim. Their other rights, such as severance and notice pay, continue; this is why the exit terms should be set out clearly in the agreement.
Is a bonus payment an acquired right?
If the conditions of the bonus are not clearly set out in the agreement or the bonus plan, a bonus that is paid regularly may be regarded as part of the salary. How it is calculated, when it will not be paid and what happens on departure should be set out in writing.
What can be done against an executive who breaches the non-compete?
If the agreement provides for a contractual penalty, the penalty can be claimed; compensation for the loss suffered can also be sought. If the agreement expressly provides for it and the employer has a legitimate interest, an order ending the competing activity can also be requested.
Can a board member also be an employee?
Yes. In a joint stock company, board membership and the employment contract are separate relationships, and one person can serve both as a board member and as general manager. In that case, the rights, pay and termination conditions of the two relationships should be set out separately.
Would you like to discuss this service? Schedule a meeting with us — the first meeting is free of charge.
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