Alaska Employment Law

Employment agreements between executives and their publicly traded companies are often attached to 10-K reports filed with the SEC.  SEC filings are available free, on-line.  These agreements can set a baseline for other parties who may be negotiating or litigating with the corporation on similar issues, such as non-compete clauses, severance packages, or job security.  

Yesterday’s Anchorage Daily News (B-1) carried an article about a possible severance pay out to Chugach Electric Association President Bill Stewart.  A review of Stewart’s Employment Agreement, attached to Chugach’s April 2, 2007, Annual Report (Form 10-K), shows the following:

Inflation indexing: Stewart’s annual Base Salary ($220,000 in July 2006) automatically increases by “the most current semi-annual Anchorage CPI-U index . . . The Base Salary shall not be decreased due to any reduction in the CPI-U index.”

Termination for cause:  The Agreement provides:

Chugach may terminate Stewart’s employment for ’cause’ immediately upon written notice to Stewart, provided, however, that Stewart has been given ten (10) days written notice of cause for termination and has failed to, or is unable to, cure such cause within that time.  Such notice shall specify in reasonable detail the acts or omissions that constitute cause for termination.  For purposes of this Agreement, ’cause’ means a business-related reason that is not arbitrary, capricious or illegal and which is based on facts (i) supported by substantial evidence and (ii) reasonably believed by the Board of Directors to be true.

Severance payment if terminated without cause: Base Salary ($220,000+/year) and benefits for remainder of term of the Agreement, without reduction for subsequent employment or failure to mitigate.

Non-competition: Post-termination restriction on competition is limited to 6 months.

Indemnification:  The Agreement provides:

Chugach shall indemnify Stewart (as a “protected person”) to the fullest extent permitted by AS 10.25.145 . . .. 

Chugach shall advance to Stewart all reasonable costs and expenses incurred by him in connection with a Proceeding within twenty (20) days after receipt by Chugach of a written request for such advance, accompanied by an itemized list of the actual or anticipated costs and expenses and Stewart’s written undertaking to repay to Chugach on demand the amount of such advance if it shall ultimately be determined that Stewart is not entitled to be indemnified against such costs and expenses. . . . 

The indemnification provided to Stewart hereunder is in addition to, and not in lieu of, any additional indemnification to which he may be entitled pursuant to Chugach’s Certificate of Incorporation or Bylaws, any insurance maintained by Chugach from time to time . . ..

Next: How to find these contracts