tablebear is right on both counts, it's to improve their negotiating position.Also be aware that the people you are dealing with today may not be in the same position in a few years time.A scenario that's easy to see is where a new boss comes in, he isn't a great fan of your work, and certainly ain't your friend. Want this guy to have a two year veto on getting paid ?Your firm may get taken over and shaft you on bonus, what are you going to do... leave ?oops you can't so if they offer to pay you in equity in a non-listed firm, you'll be happy with that OK ?The term "similar trading strategies" completely bewilders me.I'd bet money that their strategies have mean reversion in them.That's not a deep insight of mine, just an observation that a large of all strategies have some MR in there somewhere, it's not unknown for there to be relatively little else.Maybe also volume weighting, maybe they use regression to estimate some values ?Perhaps they use C++ ?You should see where I'm going here...To someone outside the industry, ie a court, I would given even money that I could knock up a strategy "similar" to yours, even though I have never seen it, and you haven't actually said you have one.If I were your headhunter (and by this point you ought to be wishing I was), I'd already have done a couple of things...First I'd have got a reassuringly expensive lawyer to check the contract, that lawyer needs to be familiar with the very specific laws where the contract is hosted. Be aware that just because you are in NY and the firm is in NY, it may not be NY law, or it may be, it's like that.Oh yes, and the law may change during the life of the contract. Enjoy.If there is no cost to screwing with you, but a potential downside of you competing against them, then they have a strong incentive.Also, if you disclose to a future employer that you have this term, it's going to be really rather tougher to get a job, and after a two year break, your career is unlikely to be so good.It may even be the case that it makes you someone they choose to fire. Given the choice of letting go two employees of equal value in a team, one with a short non-compete, one with a longer one, the incentive is to fire they guy who will compete with them less, which in this case is you. So we have to take the worst case scenario, but negotiate as if we are bestest friends.I'd certainly push hard for compensation that reduces their incentive to screw you, and gives you income if they veto your next job.For a start you need a good leaver/bad leaver clause. Basically if they fire you without good cause, or make you redundant, then the shut out period is cut hard, and it is longer if you quit.A good structure is that they must pay you a fixed % of your pay including bonus for as long as they want you not to work.A basic piece of economics is that zero price = infinite demandThis needs a little finesse, because stopping you taking job A may mean that it takes a while for decent job B to turn up.Another counter offer is to say you will give X notice and Y gardening leave where you can't work for anyone else, but again you are paid.tablbear asks:"I wonder how it might affect raises, promotions and bonuses while you are still working at their firm though.Bonuses are incentives not to leave, if your incentive to leave is reduced, then the pressure is downward on your bonus.
Last edited by DominicConnor
on January 20th, 2011, 11:00 pm, edited 1 time in total.