Executive Employment Contracts in California: What to Negotiate Before You Sign

By Daniel Yesayan

7 min read

A practical guide for California executives reviewing offer letters, equity grants, severance triggers, and restrictive covenants before signing.

Why Executive Contracts Deserve a Closer Look

California executives operate under a unique set of rules: non-competes are largely unenforceable, equity vesting is highly negotiable, and severance triggers can determine years of future income. Before signing any offer, review the four areas below with employment counsel.

1. Compensation & Equity

Look beyond base salary. Confirm bonus targets are formula-driven (not purely discretionary), that RSUs and options have a clear vesting schedule, and that double-trigger acceleration applies on a change of control.

2. Severance & Good Reason

Strong executive packages define "Good Reason" broadly — pay cuts, demotion, or relocation should each entitle you to severance as if terminated without cause.

3. Restrictive Covenants

Under California Business & Professions Code §16600, non-competes are void. However, non-solicitation of employees and customer non-solicits are increasingly being struck down too. Push back on any clause that survives termination.

4. Indemnification & D&O Coverage

Insist on indemnification for acts within the scope of your role and confirmation of Directors & Officers insurance both during and after employment (run-off / tail coverage).

Talk to a California Employment Attorney

Before signing, have an attorney review the full offer package — small clauses can cost you millions in disputed equity or unpaid severance later.