Presentation on theme: "The Business and Behaviours Behind Executive Agreements"— Presentation transcript:
1 The Business and Behaviours Behind Executive Agreements April 24th, 2013Presented by: Margo Crawford, Business Sherpa Group
2 TERMS OF ENGAGEMENT Aligning Sport Organization Objectives within 2Aligning Sport Organization Objectives withinExecutive Agreements
3 Margo Crawford 25+ years in Human Resources Introduction325+ years in Human ResourcesRecipient of the Vision Award for Human Resources Professional of the YearCo-founded one of Ottawa's most successful start-up companies (Meriton Networks)Extensive experience with both the private and public sector.Held executive and consulting positions and with the corporate, high technology, education and school board, Not-for Profit and local sectorsNumerous Board positionsPresident of Nakkertok Nordic Ski Club
4 Business Sherpa Group Includes: 4Business Sherpa GroupIncludes:Experienced HR professionals (on-site or virtual)Access to compensation dataExecutive HR leadership supportRecruitment, HR policies and employment terms, benefits, performance management, workforce/talent managementHR ExecutiveStrategic supportSounding boardMentoringWorkforce AnalyticsHR reportingWorkforce planningRecruitmentDedicated full cycle recruiter on-site or virtualCompensationMarket analysisCompensation PlanningHR GeneralistPoliciesHR programsRecruiting supportGeneral HRThe company controls the resource dials to best suit their business needs.
5 Today we are going to share experiences learned from: Executive Agreements5Today we are going to share experiences learned from:Drafting & negotiating executive agreementsWorking with small organizations through changeWorking closely with Boards hiring executivesWorking closely with Executive DirectorsPRACTICAL HR ADVICE … NOT LEGAL ADVICE
6 AGENDA Why this topic Stakeholders Trigger events Best practices Executive Agreements6AGENDAWhy this topicStakeholdersTrigger eventsBest practicesSamples
7 Why this is an important topic? Executive Agreements7Why this is an important topic?What is best for the sport organization?Happy and satisfied membershipHappy and engaged Executive DirectorAn organization that performs to its potentialContract NegotiationsWhat is being asked/offered?What is the impact?Future changes?
8 Negotiating Executive Agreements 8The BEST result for the organization is a balanced agreementEmployment Terms:- salary- vacation- benefits- termination notice- bonus or incentive payExecutive Covenants:- faithful duty- no conflicting obligations- non-compete; non-solicitation- IP protection- confidential information protection - resignation noticeNegotiations focus hereThe offer to ExecutiveWhat is controllable nowExecutive’s termsEmployer’s termsOffer to ED is in exchange for organization’s needs
9 CONTRACT TERMS – Goals & Objectives Who Cares & Why?9StakeholdersCONTRACT TERMS – Goals & ObjectivesExecutiveBoard of DirectorsCorporationMembers/ shareholdersPublic3rd Party ???Please enter what you think the objectives of the Executive and Board are in the boxes below
10 CONTRACT TERMS – Goals & Objectives Who Cares & Why?10StakeholdersCONTRACT TERMS – Goals & ObjectivesSecurity– income protection; reasonable notice; ability to become employed againReputation – graceful exit; references; public perceptionEthics – professional, legal compliance, the right thing to do, good governanceCreate Value – ongoing value creation for members, shareholders, publicFair compensation – fairly paid for work and effort, and rewarded for performanceRetention – stay on a steady path, limit unwanted turnoverProtect assets – IP, confidential information, members, customersMitigate Risk – protect corporation; liability and legal exposurePerformance – a fully engaged and performing teamSuccession – ability to have seamless succession in key executive rolesExecutive✓Board of Directors✓Corporation✓Members/ shareholders✓Public✓3rd Party ???✓
12 A clear goal or objective to be achieved. Organization Life Cycles12On-going Business(+2 years)Pre-event period (≤ 2 years)Trigger eventPost-event period (≤ 2 years)On-going Business(+2 years)What is a Trigger Event?A known event that will result in a fundamental change to the organization.A clear goal or objective to be achieved.A 3rd party becomes interested or involved.
13 Organization Life Cycles 13On-going Business(+2 years)Pre-event period (≤ 2 years)Trigger eventPost-event period (≤ 2 years)On-going Business(+2 years)Please enter what you would consider to be a trigger event in the box below
14 What is best for the organization is less clear. Organization Life Cycles14On-going Business(+2 years)Pre-event period (≤ 2 years)Trigger eventPost-event period (≤ 2 years)On-going Business(+2 years)Type of Trigger EventExample3rd PartyKnown corporate cycleOlympics – impact of performance of sportFunders; Canadian Olympic Committee; public; ??Funding decisionMajor grant funding applicationFunding agencyDeparture of ExecutiveEnd of a fixed term contractNew Executive entering corporationMacro-economic or political decisionNFP Act change Oct 2014Government agency or political influencersBoard of Directors changesRotational Boards; new chairs, etc.New Board membersSo what?Creates pressureUnknown outcomesNew stakeholder(s)What is best for the organization is less clear.
15 What is best for the organization? Organization’s ObjectivesTrigger event15Pre-event period (≤ 2 years)On-going Business(+2 years)Post-event period (≤ 2 years)On-going Business(+2 years)What is best for the organization?Organization performing at its potentialHappy and engaged MembershipHappy and engaged EDStabilityProtect assets & mitigate risksHow do executive agreements achieve this?Performance incentives/rewardsFair pay, benefits, vacationNotice of termination/ resignationIntellectual property (IP) protection; confidentiality; non-solicitation; non-competition clauses
16 Dynamics Change Deadline approaches and certain results are expected Organization’s ObjectivesTrigger event16Pre-event period (≤ 2 years)On-going Business(+2 years)Post-event period (≤ 2 years)On-going Business(+2 years)Dynamics ChangeDeadline approaches and certain results are expected3rd party enters the picture – assess/make decision on organizationKey employees feel uncertain….right when you need them focused and motivatedGreater need for stabilityExpectations increase around sustainability and ongoing performance
17 What is best for the organization? Organization’s ObjectivesTrigger event17Pre-event period (≤ 2 years)On-going Business(+2 years)Post-event period (≤ 2 years)On-going Business(+2 years)What is best for the organization?Organization performing at its potentialHappy and engaged MembershipHappy and engaged EDStabilityProtect assets & mitigate risksHit specific goals and milestonesHow do executive agreements achieve this?Performance incentives/rewardsFair pay, benefits, vacationNotice of termination/ resignationSpecial termination provisions connected with eventIP protection; confidentiality; non-solicitation; non-competition clausesSpecial incentive and performance rewards
18 Pre-event period (≤ 2 years) Executive Agreements Terms – Best Practices18Trigger eventPre-event period (≤ 2 years)On-going Business(+2 years)Post-event period(≤ 2 years)On-going Business(+2 years)Executive AgreementsSpecial AgreementsBase pay, benefits, vacation, pensionIncentive PayFixed term; period for notice of renewalFaithful duty; no conflicting obligations; abide by company policyTermination: notice period for termination without cause, resignation, or; frustration due to death or disabilityConfidentiality, non-disclosure and IP protection clauses; non-compete and non-solicitation clausesFair and reasonable…Defined period with fixed start and endLimited to key strategic employeesReward for achieving specific identified goals for organizationRetention incentive to remain after eventEarn-out bonus to achieve post-event goalsSpecial termination clauses for added protection pre/post event
19 Business as usual: Special events: IN SUMMARY….19Business as usual:Special events:KNOW THE PLAYERSKNOW THE PLAYERSUNDERSTAND OBJECTIVESUNDERSTAND OBJECTIVESCONSIDER BEHAVIOURSCONSIDER BEHAVIOURSLEGAL REVIEW!!BALANCED AGREEMENTSPECIAL AGREEMENTTrigger event = different objectives & new behaviours
22 Terms & Conditions Highlights 22Duties & responsibilitiesfiduciary with elevated expectations of an executiveIncentive CompensationRefer to planOrganization can change or eliminatePayment is not precedent for continued paymentVacationLimit carry forward; forfeiture if not usedTerminationProvision for termination notice – in exchange for releaseDefine certain ‘for cause’ conditionsProvision for resignation noticeNon-solicitation/competitionBe specific; narrow in geography; limited period of time
24 WHY? Special Incentive Agreements Trigger eventWHY?Special Incentive Agreements24Identify an acceptable bonus or incentive amount (% of base salary or fixed $$).Set clear & measurable targetsModel it to ensure it is self-funding$1.3MReward performanceRetentionDrive value$1.2M$1.1M$1MAdditional $$ to fund incentivesFinancial Performance$900K$800KThreshold of funds required for organization operations$700KDefined period of incentive program$600K$500KTimeFunding position at start (current)Funding position at end (close)
25 Generated an additional $52,000 beyond operational budget Special Incentive Agreements25Incentive Program: model the numbers to ensure the incentive is affordable and makes sense.Operating BudgetIncentive PlanningCurrent FYNext FYStretch GoalAvailable FundsBase SalaryIncentive %Incentive $$800,000$900,000$1,000,000$100,00020%$20,000$80,00010%$8,000$72,000$75,000$7,500$64,000$57,000$50,0005%$2,500$54,500$52,000Generated an additional $52,000 beyond operational budget
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