CHIEF EXECUTIVE OFFICER’S
SERVICE CONTRACT
CEO’s and others with the responsibility for the day-to-day management and who referees directly to the
Board of Directors can use this standard contract.
[This CEO’s contract is based on a public limited company, and must be adjusted according to the relevant
company set up, which may be a private limited company, a partnership, a private company or others.
Please note that in places marked with italics, you need to add information or make a choice among several
options.]
The Danish Society of Engineers
31-33 Kalvebod Brygge
ida@ida.dk
DK-1780 Copenhagen V
ida.dk
+45 33 18 48 48
CEO Service Contract
Side 2
CHIEF EXECUTIVE OFFICER’S SERVICE CONTRACT
The undersigned parties
[insert name]
[insert address]
[insert postal code and city/town]
[insert date of birth]
(in the following the CEO)
and
[insert name]
[insert address]
[insert postal code and city/town]
[insert CVR no./VAT no.]
(in the following the Company)
have today concluded this CEO’s service contract:
1.
COMMENCEMENT OF SERVICE
1.1
The Chief Executive Officer (CEO) will commence service with the Company as from [insert
date]. The primary place of service being [insert address].
2.
SCOPE AND RESPONSIBILITIES
2.1
In compliance with the statutory rules and with responsibility to the Board, the CEO is to attend to all the business of the Company. The CEO is to undertake the day-to-day management and refer to the Company’s Board.
2.2
The CEO is to employ and dismiss the Company’s staff and determine the fields of work and
powers of the staff.
2.3
The CEO is to be registered with the Danish Commerce and Companies Agency.
2.4
The other functions and responsibilities of the CEO appear from the position description which
is to be determined by the Board and updated in mutual agreement between the Board and
the CEO. Any material changes to the position description will have to be negotiated between
the Board and the CEO.
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2.5
The position description is appended as Appendix 1, and it is an integral part of this contract.
2.6
The CEO’s participation in and remuneration as a Board member and/or CEO in present or
future subsidiaries of the Company is to be subject to separate agreement.
3.
THE CEO’S FUNCTIONS ETC.
3.1
The CEO undertakes to devote all his/her abilities and all his/her know-how to the service of
the Company and to attend to the Company’s interests in the best possible manner. Employment is on full-time terms, and the CEO has been informed that during some periods the position may call for a considerable amount of work beyond the usual working hours and that work
must be performed in accordance with the Company’s requirements.
3.2
The CEO may not without the written consent of the Board hold any other salaried positions/posts. If the CEO wants to take up honorary offices, which may conflict with his/her position with the Company, the CEO must have the Board’s written consent.
3.3
Despite the above, the Company has been informed and accepted that the CEO holds the
offices outlined in Appendix 2, which is an integral part of this Contract.
4.
RELATIONSHIP WITH THE BOARD
4.1
In relation to the Board, the CEO is responsible for the Company’s business being conducted
in compliance with the Board’s directions and in compliance with the Company’s Articles and
governing law from time to time.
4.2
Any issues of an extraordinary nature or of material importance must be submitted to the
Board or the Chairman of the Board.
4.3
The CEO moreover undertakes to keep the Company’s Board posted of all matters concerning the Company, which are deemed to be of interest to the Board.
4.4
The CEO has a right to attend and speak at Board meetings, unless the Board in the specific
case decides otherwise.
4.5
The relationship between the Board and the CEO has been detailed in the appended Executive Committee Instructions (the mandate and communication between the Board and the Executive Committee must be determined).
5.
TRADE SECRETS, CONFIDENTIALITY AND INVENTIONS
5.1
The CEO has specifically been informed of section 19 of the Danish Marketing Practices Act
relating to trade secrets and technical drawings.
5.2
The CEO is under secrecy in regard to anything that comes to his/her attention during the
execution of the duties as CEO, except for matters, which by their nature should be brought to
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the knowledge of a third party. This duty to keep secret also applies after the CEO has left
his/her position with the Company.
5.3
When the CEO leaves his/her position – for whatever reason – all material belonging to the
Company or a subsidiary and which is in the CEO’s possession must be returned to the Company.
5.4
It has been agreed that the Danish Act on Employees' Inventions is to apply in regard to any
inventions the CEO might make in the course of service with the Company.
6.
SALARY, BONUS AND SALARY ADJUSTMENTS
6.1
Upon commencement of service, the CEO’s annual salary will be DKK [insert amount], one
twelfth of which is to be paid monthly in arrears on the last banking day of each month.
6.2
In addition the Company is to pay contributions to a pension scheme of the CEO’s choice.
The pension contribution, constituting [insert per cent] % of the salary is to be paid monthly in
arrears in connection with the payment of salary.
6.3
The CEO’s remuneration is to be negotiated in January each year, starting January [insert
year]. The CEO is to receive an annual bonus/commission on profits amounting to [insert per
cent] % of the net profit for the year before tax and deductions. The bonus/commission will be
payable 8 days after the adoption of the financial statements at the annual general meeting.
Upon the termination of this Contract the CEO will be entitled to a pro rata share (in terms of
time) of the bonus/commission for the previous part of the financial year.
6.4
The CEO is entitled to participate in the Company’ share option scheme, cf. Appendix 3,
which is an integral part of this Contract.
7.
COMPANY CAR
7.1
During the CEO's Service with the Company, the Company will make a car at a value of DKK
[insert amount] available to the CEO and pay all related costs.
7.2
When leaving his/her position, the CEO undertakes to return the car in accordance with
clause 14 of this Contract.
7.3
If the CEO is laid off, the CEO will, according to the circumstances, be entitled to keep the car
during the period of notice, unless the parties agree that the car is to be returned, after which
the CEO is to receive compensation corresponding to the value for tax purposes.
7.4
When the CEO leaves his/her position, the parties may agree that the CEO takes over the car
at the value for tax purposes.
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8.
OTHER BENEFITS
8.1
The Company will make a PC and a printer available at the CEO's residence and pay all related installation and operating costs as well as the costs of an ISDN or ADSL connection.
8.2
The Company will pay the costs for a telephone subscription for the CEO as well as the call
charges.
8.3
The Company will make a mobile telephone available to the CEO and pay the call charges.
8.4
In addition, the Company will pay all expenses towards membership fees/subscriptions,
newspapers and magazines to the extent agreed with the Chairman of the Board.
8.5
The fiscal consequences to the CEO of the private disposal of the above facilities will be of no
concern to the Company.
9.
SICKNESS
9.1
If the CEO falls sick, this will not be deemed to be breach of contract, and the CEO is entitled
to a full salary during his/her sickness.
10.
TRAVEL AND ENTERTAINMENT
10.1
The CEO's travel and entertainment expenses paid in the service of the Company are to be
refunded according to vouchers submitted or as agreed.
10.2
The CEO is entitled to receive an amount on account to cover travel and entertainment expenses.
10.3
If the CEO's spouse also participates in travels at the request of the Board, the related expenses will also be reimbursed.
11.
MANAGEMENT TRAINING
11.1
The CEO is entitled to suitable management training to be paid by the Company. The CEO is
to plan such training himself/herself and keep the Chairman of the Board duly informed.
12.
HOLIDAYS
12.1
The CEO is entitled to 6 weeks' paid holiday per calendar year. The Company will pay a holiday supplement of 3 per cent of the salary (cf. 6 above) earned in the Company in the previous income year.
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12.2
The CEO will decide when his/her holiday leave is to be taken, with due consideration to the
interests of the Company, and he/she is to keep the Chairman of the Board duly informed.
12.3
Upon his/her resignation the CEO will be entitled to a 12.5 per cent holiday allowance. Upon
resignation the allowance is to be payable in cash together with the last salary payment.
13.
INSURANCE
13.1
The Company will take out a professional indemnification insurance policy to cover the CEO’s
services under the auspices of the companies.
13.2
The Company will pay an annual premium towards a full-time accident insurance for the CEO
subject to the usual insurance and premium conditions. Insurance cover is to be DKK [insert
amount] upon death or full disability.
13.3
The sum is to be payable to the CEO or his/her estate.
13.4
The Company will pay the annual premium towards a full-time accident insurance for the CEO
subject to the usual insurance and premium conditions. The insurance is to provide full cover
of all costs towards treatment by doctor’s order no matter where treatment is given in Denyear. The insurance sum and premium are to be adjusted annually in accordance with the insurance company's terms and conditions.
14.
TERMINATION
14.1
The Company may terminate the service relationship subject to [insert months] months' written notice, and the CEO may terminate subject to 3 months' written notice to take effect at the
end of a month. If the CEO is laid off, he/she will be entitled to full remuneration without any
set-off.
14.2
If the Company terminates this Contract without it being based on breach of contract or if the
CEO terminates this Contract due to breach on the part of the Company, the CEO will be entitled to cash severance pay corresponding to 12 months' salary, including pension contributions. This amount is to be paid as a lump sum in connection with the last salary payment.
14.3
If the Executive Board experiences any changes to its competencies, meaning that in hierarchical terms the CEO becomes a co-manager or is subordinated one or more CEOs, the CEO
will be entitled to consider his/her service relationship with the Company as cancelled subject
to a written demand to the Board within one month from the said change taking effect and at
the Company’s usual term of notice, meaning that the CEO is laid off without access to any
set-off. In this situation the CEO will be entitled to a severance pay of 18 months’ salary, including pension contributions.
14.4
If the Company changes hands fully or partially or the Company is merged with one or more
companies, transferred to a new owner, forms part of a new company structure, is subject to
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material changes or the like to its organisation and this results in hierarchical changes, subordination to one or more CEO’s, managing director or group management, the CEO will be entitled to consider his/her service relationship with the Company as cancelled subject to the
Company's usual term of notice, meaning that the CEO is laid off without access to any setoff. In this situation the CEO will be entitled to a severance pay of 18 months’ salary, including
pension contributions.
14.5
The deadline for the CEO’s claiming 14.4 above is one month from the shareholders in general meeting having finally adopted the change. In case of competence changes, which do not
require adoption by the shareholders in general meeting, the CEO must apply 14.4 above
within one month from the CEO having been notified of the change.
14.6
If the Company gives notice to the CEO and such notice is in the hands of the CEO after
his/her having been notified of the competence changes or after the rest of the Executive
Committee’s or the Board’s have contracted to merge etc., termination will not affect the
CEO’s claim for severance pay according to 14.3 and 14.4.
14.7
If the Company terminates the CEO’s service contract without breach on the part of the CEO,
the Company will pay the fees to a consulting firm, which is to be of the CEO’s choice and
which is to assist the CEO in finding new employment.
15.
BREACH OF CONTRACT
15.1
If either party is in material breach of its obligations under this Contract, the other party may
terminate without notice or terminate it with effect from any given date.
15.2
If termination or notice to quit is due to breach on the part of the CEO, he/she will only be
entitled to remuneration until the time his/her service ends.
16.
POST-SERVICE SALARY
16.1
If the CEO dies during his/her term of service, post-service salary will be paid as from the
month of death and for the following 6 months to the CEO's spouse/live-in partner or children
under the age of 24, whom the CEO has an obligation to maintain.
17.
COPIES OF THE CONTRACT, VENUE, ETC.
17.1
Any dispute between the Company and the CEO arising out of the employment relationship
established under this Contract will have to be settled by the ordinary courts of law if the parties cannot reach agreement by negotiation/mediation.
17.2
This Contract has been drawn up in two identical and signed copies, of which one remains
with the Company, and the other is submitted to the CEO.
17.3
Unless otherwise agreed, the provisions of the Danish Salaried Employees Act apply.
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*****
SIGNATURE
[insert city/town], [insert date]
[insert city/town], [insert date]
………………………………………
[insert name of the CEO]
………………………………………
The Company