7 important paragraphs to include in a CEO agreement


Lola Berbatovci
VD som sitter framför dator.
Make sure your CEO agreement is airtight.

Did you know that companies have to draw up a special agreement for their CEO? The CEO isn’t covered by the Employment Protection Act (LAS) and usually not by collective agreements either. This is why an ordinary employment agreement isn’t enough, and a special agreement that covers the extensive terms of employment must be drawn up. In other words, a CEO agreement.

1. What are the CEO’s responsibilities?

As CEO, you’re responsible for a company’s day-to-day operations and have ultimate responsibility according to, among other things, the Work Environment Act, the Environmental Code, the Tax Act, the Annual Accounts Act and the Accounting Act, as well as labor laws. So it’s important to clearly state in the agreement which areas of responsibility are included. You can also draw up a special CEO instruction that clarifies the division of work and responsibility within the board members and other functions.

2. What are the specifics concerning the CEO’s employment protection?

Since the CEO isn’t covered by LAS, it’s important to write down exactly what form of employment they have, how long the notice period is and how notice is given, as well as if, how and in which situations the company can fire them. Most often, the notice period is a few months and can be the same regardless of whether it concerns a dismissal or the CEO being fired. It’s also common to then receive a severance payment which means you also have to state how much that will be and when it will be paid out.

3. How and how much will the CEO be paid?

In addition to salary, the CEO can also receive a bonus for the work they perform. There are usually conditions for bonus payment. That is, goals that they have to reach to get the bonus. As well as when it’s paid out in that case. The agreement should also state when it’s time to renegotiate the compensation going forward.

4. Make sure you have a confidentiality clause

As CEO, you’re sitting on a lot of information that can be valuable for competing businesses. So it can be good to include a confidentiality clause in the agreement. In it, you specify what is confidential and may not be shared with external parties. This way, you can ensure that your trade secrets are protected both while the CEO is with you and after they have left the company.

5. Non-competing clauses are important

It is just as important to have a non-competing clause in the agreement. Through the clause, you can prevent the CEO from going to and working for a competitor immediately after employment with your company. Most often, this is done by offering compensation for the time they’re not allowed to work at competing businesses. However, it is important to remember that non-competing clauses can’t be too extensive. Make sure to check with a lawyer if your agreement holds up to be on the safe side.

6. What are the consequences for breach of contract?

If the CEO violates any of the terms of the agreement, it needs to be clearly stated what the consequences are. Most of the time, it usually means that they have to pay a fine. And you have to state how big the fine will be and whether the company has liability insurance to cover certain situations.

7. How do you resolve any disputes?

If a dispute arises between the company and the CEO, it’s easiest to resolve them in an arbitration court. Just because the process is faster, the verdict isn’t public and it isn’t possible to appeal either.

Write your contract today!

Do you need help drawing up a CEO agreement? Prepare one together with our lawyers for SEK 8,995 or on your own for SEK 799.

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