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Sterling Employment Law

Michigan football coach signs lucrative employment contract

Terms of employment contracts should be well-negotiated for the best deal. Recently, the seven-year employment contract of University of Michigan's new football coach was revealed and the contract's value was far more than anticipated. He will earn close to $40.1 million over seven years.

According to the contract, the coach's remuneration is only $500,000 per year, but he will receive $4.5 million in additional compensation. Those figures will be revised by 10 percent at the end of three and five years, respectively. The contract also contains a provision for revision of the coach's pay per prevalent market value at the end of five years, based on his performance over the last five years.

The employment contract for the football coach also includes a clause to incorporate a deferred compensation package after next season. Deferred compensation can add many more millions of dollars to the compensation, if previous instances are anything to go by.

The termination clause of the contract specifies that if Michigan fires the coach without reason, he will be entitled to his base salary and additional benefits for the term of the contract remaining at the time of termination. However, the coach will have an obligation to make reasonable efforts to obtain other employment. The compensation he is entitled to receive from Michigan will be reduced by the amount that he gets paid from that employment.

Along with the above-mentioned components, a sum of four to five million dollars has been allotted for an assistant coaching pool. Other perks in the package include private jet services for recruitment purposes, as well as for personal use, at the expense of the University. The University of Michigan has agreed to pay for a fair number of best available seats for home football tickets under the contract. He is even entitled to an apparel allowance.

The coach is also being reimbursed for the legal fees that he incurred in negotiating his contract. He has also been provided with a maximum of five million dollars for any legal cost that may arise from the coach's previous contract. He will even earn incentives based on the performance of the team. He is obligated under the employment contract to inform the athletic director if he engages in any negotiation for any other employment that will lead to his termination. Transparency is very important in this situation.

Source: Detroit Free Press, "Jim Harbaugh contract: Salary, buyout details revealed," Mark Snyder, Jan. 23, 2015

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