{"id":4179,"date":"2011-12-19T07:16:37","date_gmt":"2011-12-19T14:16:37","guid":{"rendered":"http:\/\/www.keytlaw.com\/azllclaw\/?p=4179"},"modified":"2018-05-22T18:46:19","modified_gmt":"2018-05-23T01:46:19","slug":"incentive-compensation-creates-partnership","status":"publish","type":"post","link":"https:\/\/www.keytlaw.com\/azllclaw\/2011\/12\/incentive-compensation-creates-partnership\/","title":{"rendered":"Ohio LLC’s Incentive Compensation Creates Partnership With Former Employee"},"content":{"rendered":"

LLC Law Monitor<\/em><\/strong>:\u00a0 “Business acquirors sometimes give the acquired company\u2019s management financial incentives to enhance the acquired company\u2019s value. These are often structured as bonus compensation for achieving defined milestones, and sometimes include equity in the acquired company or in the buyer.\u00a0 In a recent Ohio case the buyer of a company\u2019s assets provided incentive compensation to the company\u2019s management, based on the profits of a division of the company. The employee was later terminated, and claimed the company had entered into a partnership with him and then breached its fiduciary obligations.”<\/p>\n

KEYTLaw recommendation:\u00a0 This type of provision should be in a written employment agreement that provides for a compensation bonus in an amount equal to the profits of a specific entity or division of an entity.\u00a0 Be sure to define profits precisely.\u00a0 The agreement should state that the provision does not create a partnership, joint venture, ownership interest in the entity or any other arrangement other that the employer \/ employee relationship and that it does not cause the employer (or the entity if it is not the employer) to owe any fiduciary duties to the employee.<\/p>\n","protected":false},"excerpt":{"rendered":"

LLC Law Monitor:\u00a0 “Business acquirors sometimes give the acquired company\u2019s management financial incentives to enhance the acquired company\u2019s value. These are often structured as bonus compensation for achieving defined milestones, and sometimes include equity in the acquired company or in the buyer.\u00a0 In a recent Ohio case the buyer of a company\u2019s assets provided incentive compensation to the company\u2019s management, based on the profits of a division of the company. The employee was later terminated, and claimed the company had entered into a partnership with him and then breached its fiduciary obligations.” KEYTLaw recommendation:\u00a0 This type of provision should be in a written employment agreement that provides for a compensation bonus in an amount equal to the profits of a specific entity or division of an entity.\u00a0 Be sure to define profits precisely.\u00a0 The agreement should state that the provision does not create a partnership, joint venture, ownership interest in the entity or any other arrangement other that the employer \/ employee relationship and that it does not cause the employer (or the entity if it is not the employer) to owe any fiduciary duties to the employee.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[6,37],"tags":[],"class_list":["post-4179","post","type-post","status-publish","format-standard","hentry","category-lawsuits","category-operating-llcs"],"yoast_head":"\nOhio LLC's Incentive Compensation Creates Partnership With Former Employee<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.keytlaw.com\/azllclaw\/2011\/12\/incentive-compensation-creates-partnership\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ohio LLC's Incentive Compensation Creates Partnership With Former Employee\" \/>\n<meta property=\"og:description\" content=\"LLC Law Monitor:\u00a0 “Business acquirors sometimes give the acquired company\u2019s management financial incentives to enhance the acquired company\u2019s value. These are often structured as bonus compensation for achieving defined milestones, and sometimes include equity in the acquired company or in the buyer.\u00a0 In a recent Ohio case the buyer of a company\u2019s assets provided incentive compensation to the company\u2019s management, based on the profits of a division of the company. The employee was later terminated, and claimed the company had entered into a partnership with him and then breached its fiduciary obligations.” KEYTLaw recommendation:\u00a0 This type of provision should be in a written employment agreement that provides for a compensation bonus in an amount equal to the profits of a specific entity or division of an entity.\u00a0 Be sure to define profits precisely.\u00a0 The agreement should state that the provision does not create a partnership, joint venture, ownership interest in the entity or any other arrangement other that the employer \/ employee relationship and that it does not cause the employer (or the entity if it is not the employer) to owe any fiduciary duties to the employee.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.keytlaw.com\/azllclaw\/2011\/12\/incentive-compensation-creates-partnership\/\" \/>\n<meta property=\"og:site_name\" content=\"Arizona LLC Law\" \/>\n<meta property=\"article:publisher\" 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