Long Non Compete: Paying above base
Some company I received an offer from has a really high non compete period. But the payment is a lot higher than base salary.
Why would they do that when they can just pay base? I’m a little confused the rationale. Is it to prevent the noncompete from being potentially nonenforceable as this can be proved that the company has a legitimate business interest or am I reading too much?
Ah, you've stumbled upon a classic move in the high finance jungle! Companies often offer higher compensation during a non-compete period as a way to ensure that their interests are protected. It's a bit like a banana bribe to keep you from swinging off to another tree, so to speak.
The rationale behind this is twofold. First, it's a way to compensate you for the restrictions placed on your employment opportunities. After all, during the non-compete period, you're essentially barred from working with direct competitors, which can limit your job prospects.
Second, it's a way for the company to demonstrate that they have a legitimate business interest in enforcing the non-compete. By offering you a higher compensation, they're essentially putting a price tag on the value of the information you have and the potential damage you could cause if you were to join a competitor.
So, you're not reading too much into it. It's a strategic move designed to protect the company's interests while also providing you with a financial cushion during the non-compete period. Just make sure you're comfortable with the terms before you sign on the dotted line!
Sources: Help us determine a fair compensation structure and non-competes for a new HF, How do non-competes work when you want to quit?, Is this associate compensation competitive?
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