Congratulations! You have been offered the role of CFO at a company you are excited about. You’re buzzed, and pleased with yourself, and so you should be. However…
… keep the following in mind:
- From my experience, most CFO roles last an average of 3 years. The time to prepare for your next job is today.
- The best time to negotiate the terms of your employment is when you begin your employment.
- Be sure to have an employment contract. An offer letter may not be sufficient to protect you.
- Have the employment contract reviewed by competent counsel before signing.
- Do not resign from your previous role without ALL the details being worked out.
- A proper employment agreement not only protects you, it protects your new employer as well.
Now, let’s take a look at some things you should be looking for in an employment contract.
(Please note: I am not offering legal advice. I am reviewing points worth considering when negotiating your CFO employment agreement. For specific advice with regards to your employment situation, I recommend discussing it with competent counsel.)
Issues to consider for your employment agreement.
- Base compensation – you know how this works. You want more and they want to give you less. This is where all those years of sharpening your negotiation skills come into play.
- Upside – regular bonuses, special bonuses, stock based compensation etc. – many conflicts arise because of lack of clarity on how this works. Be sure it’s clear.
- Severance – you may be asked to leave. It happens. Having clarity on what happens if you are asked to leave is important not only for your cash flow after you leave, but for your reputation as well.
- Notice – you love your new job, but a better one might come along. What will your responsibilities be upon leaving?
- Restrictive covenants – usually includes non-disclosure and non-competition clauses, but may include others. It may be detrimental to your new employer for you to take your next job at a direct competitor. Ensure that the time limits on these restrictive covenants are reasonable, and get competent legal advice as to their reasonability.
- Relocation – there should be no guessing games when it comes to relocation for your new role. Will they cover moving expenses? Transition costs? Cover your ‘out-of-the-money’ mortgage? Clarity here is key.
- Other benefits – What will be offered in insurance (health, life, disability)? Will there be a car? Access to the corporate jet?
Issues outside your employment agreement that you will want to have a clear understanding of prior to accepting:
- Office – I have seen CFOs get off on the wrong foot when they get an office that was not what they were expecting. It can really sour the relationship.
- Resource support – Will you get an Executive assistant? Will you share one? Will you get to choose your own? (See Does a CFO need a PA?)
- Allowable expenses – What expenses will you be allowed to charge to the company? Is there a policy for executives?
- Professional Development – You should have a budget for allowing you to attend conferences you deem necessary to ensure you are on top of your game. You don’t need to be going hat in hand to the CEO each time.
- Coaching – Does your CEO have a Coach? If he or she does, then you should have the budget for one too. If your CEO doesn’t have one, you should recommend that he or she gets one. (See 5 Reasons why you need an Executive Coach)
- Team Headcount or Staff Budget – Before accepting the role as CFO, you need to know what the cost of your team is, and get clarity on the leeway you will have to make changes you feel are necessary to deliver to the rest of the company. (See A Strong CFO needs a Strong Finance Team)
- Onboarding – Ask what the plan for “Onboarding” is. You might get blank looks. Make sure that you have an onboarding plan that allows you to develop the internal relationships necessary for success. (If you want to know more about Onboarding, we will be posting a Blog on the topic soon. Click on the “Sign me Up” Button on the right to get blog updates directly in your email inbox).
In special situations, keep this in mind: When the company’s risk increases, so does yours.
- Restructuring – if you start off in a restructuring situation, or you are called upon during your mandate to turn the company around – you need to address the following situations.
- Bonuses. If you accomplish the goals set out, you should have potential for an upside. Be clear on what the upside is.
- Getting paid. You’re working hard for the company. If the company has no cash, and you’re busting your chops, what is the guarantee you will get paid.
- What happens on bankruptcy, buy-out, new investment etc. How do you protect yourself and your career? Work these things out in advance.
Remember, a key reason your new company is hiring you because you are supposed to be a great negotiator! Show them how you negotiate a win for all sides.