Pharma executives often face complex negotiations when entering new roles, but some overlook key questions that can affect their careers. In an industry known for frequent restructurings and acquisitions, the details of an employment agreement can be more important than headline compensation.
Michael Pietrack, practice lead for Kaye/Bassman’s life sciences recruiting team and host of The Pharmaverse Podcast, discussed this issue with Howard Matalon, JD, a partner at OlenderFeldman who has advised executives for over 30 years. Matalon outlined four essential questions every C-suite executive should ask before signing an employment agreement.
Matalon advises executives to first confirm whether the company offers severance and change in control plans. “Ask whether the company has a severance plan and a change in control plan,” he said. If such protections exist, they should be confirmed in writing; if not, they should be included directly in the offer letter. He explained that industry standard severance is six months for vice presidents, nine months for senior vice presidents, and twelve months for C-suite leaders. “If you are in the upper ranks and getting a severance under six months, that’s an area that should be negotiated.”
Change in control provisions also require attention. Some companies use a “double trigger” structure where unvested equity only accelerates if both a sale occurs and the executive loses their job within a set period. This can disadvantage newer hires compared to others who may cash out immediately.
The definitions of “cause” and “good reason” are also critical to review. Cause should refer to serious misconduct like willful insubordination or breaches of confidentiality—not vague issues like underperformance. “You should never accept a cause provision that is vague or overly broad in its definition,” Matalon noted. He added that having a cure period is vital: “Without a cure period, they can just fire you on the spot and you get nothing.” A cure period allows time to address any alleged issue before termination.
Good reason clauses allow executives to leave with protections if their role or compensation changes significantly after events like acquisitions. According to Matalon: “It allows the executive to trigger severance when the company materially changes the deal.” This clause becomes especially important if leadership positions are downgraded following corporate transactions.
Executives are encouraged to examine potential risks hidden within terms related to role clarity, bonus structures, and protection measures such as indemnification under directors’ and officers’ policies. For example, unclear titles or reporting lines could later be changed without breaching agreements; bonus structures described as "up to" certain percentages may result in no payout; bonuses paid after year-end could be lost if employment ends beforehand; annual salary reviews should also be specified in writing.
Non-compete clauses represent another major consideration since they may restrict future career moves even after involuntary termination. Executives need clear definitions of what constitutes competing business—especially given large pharma companies' diverse operations—and might negotiate carve-outs allowing work outside direct competition areas. Non-compete duration should align with severance periods; historically these matched one-to-one but rising salaries have led some firms away from this standard.
Matalon summarized: “You really have to think long and hard about these provisions and how they affect your career trajectory.” If companies stop paying severance during non-compete periods—potentially breaching agreements—executives must provide formal notice before taking action.
He concluded by emphasizing that strong agreements promote clarity rather than mistrust: understanding negotiable terms helps protect careers amid industry volatility.
This article does not constitute legal advice; executives are urged to consult qualified attorneys regarding specific situations.
