One quick thought before we dive in here: If you haven’t listened recently to the music of the late James Brown, or you have never listened to him at all, do make it a point to punch up his classic “Papa’s Got A Brand New Bag” on the music library app of your choice (aka Apple Music, Spotify, etc.) as you read this.

Or at some point today. Maybe the next time you are in the car.

There was a smattering of press coverage last week about the announcement that Nexstar’s Founder and CEO, Perry Sook, had a new contract approved by the company’s board of directors (which Sook also chairs) to continue in his current position through March of 2029. The latest employment agreement continues Sook’s current base compensation of $3 million a year, along with a bonus plan that could earn him up to an additional $6 million each year. There are also additional benefits, befitting a person leading a multi-billion-dollar corporation, such as use of a company car, company air transportation (including reimbursing him up to $500K for “use of an aircraft for personal matters.” Also included are the usual employee benefits, such as insurance and paid time off.

We certainly don’t begrudge Mr. Sook his new deal. While 9 million dollars is an unimaginable level of compensation to most of us, it isn’t out of line with what other CEOs of major corporations are paid for their services.

After all, in the course of the next few years, Mr. Sook will be navigating the proposed merger of Nexstar and TEGNA, a transaction valued at more than $6 billion that will catapult Nexstar, already the nation’s largest broadcast television station owner, into a position of national dominance.

Assuming, of course, that the deal clears the regulatory hurdles, both known and unknown, that lie ahead.

Compensation is a term of art in business. It can include more than just a salary and benefits, which every employee typically receives. At the executive level of corporations, there are additional avenues to acknowledge and reward the work of those who lead the enterprise. One typical means for this is called "long-term incentive compensation awards,” which involve giving select employees shares of the company's stock that vest over time. According to his contract, Mr. Sook will continue to receive "long-term incentive compensation awards” from Nexstar. Those awards have been handsome in recent years. They boosted his total compensation to nearly $36 million in 2024 alone.

You can read the details of Mr. Sook’s new employment agreement for yourself (because such things have to be filed with the SEC for publicly traded companies). Click here for a link to do so via Justia.com

(We’ll warn you that reading it may remind you of any reasons that you chose not to attend law school when you had the chance.)

One thing we noticed in reading through the agreement was the provisions under which both Nexstar and Mr. Sook can terminate the contract. Having such provisions in an employment agreement is relatively standard, both parties want to know what will happen in the event of a significant life event, such as disability or death, along with the ability for the company to terminate employment “for cause,” such as being convicted of a felony, failing or refusing to perform the duties of the job, or breaking some other provision of the agreement. Such agreements also include a provision for terminating the contract for any other reasons, usually referred to as being “not for cause.”

In Mr. Sook’s employment agreement, there is such a provision in which a majority of the company’s board of directors can terminate his employment for any reason it determines, simply by presenting him with thirty days' notice in writing. The agreement also includes provisions where Mr. Sook can terminate his employment agreement as well, either with “good reason” or without.

This may be the point at which Perry Sook’s employment agreement differs a bit from those of others in his company, especially those who appear on-air for the company’s 200-plus local television stations. While we haven’t seen an on-air employment agreement from a Nexstar station recently, those who have tell us they are relatively one-sided and primarily written in the company’s favor. We are not aware of any provisions that allow an employee to choose to leave their employment, whether for “good reason” or not, as the case may be.

Nexstar certainly isn’t alone in this practice. Legal departments write most employment agreements to be as favorable to the employer as possible. But we have heard from numerous employees (and agents or lawyers who represent them) that such language has become even less “employee-friendly” in recent years. This comes with a more “take it or leave it” approach when presented to new and current employees. Some broadcast companies provide for “buy-out” provisions under which employees must pay a fee to end their employment. The explanation for doing so is the claim that the employee’s departure will materially harm the employer.

Of course, should the employer decide, for whatever reason, to terminate employment, the employee will only receive their owed wages for a short period, such as 30 days or even just 2 weeks.

Then there is the question of the parts of an employment agreement that remain in place after employment has ended. This is where the dreaded “non-compete” clauses come into play—assuming that the state where the agreement is governed still permits such language. (In recent years, a growing number of states have outlawed or restricted the use of “non-compete agreements.”) 

Because Texas allows non-compete language in employment agreements, Mr. Sook’s agreement includes a “non-compete covenant” that restricts him from working in television for a competitor in any market where Nexstar owns (or has agreed to acquire) a station. The covenant also prevents him from doing business with any client the company may have during the one year after his employment ends.

In addition, after his employment ends, he cannot try to “hire, solicit, employ or contract with respect to employment” any other officer or employee of the company. That is known as “non-solicit” language, which is typically associated with non-compete provisions in an employment agreement.

The reason that Mr. Sook’s employment agreement contains the non-compete and non-solicit language is understandable. If Perry left Nexstar one day, either by his choice or the company’s, it wouldn’t be in the company’s best interest to have him join a competitor or start a new broadcasting company with his intimate knowledge of Nexstar’s operations and an unrestricted ability to poach key talent to join him elsewhere.

It is quite debatable whether an anchor or reporter at a small-market station would be as significant a loss if they departed before their employment agreement ended. However, in states that still allow non-compete language, this provision prevents them from going to work “across the street” for a competitor for a defined period of time (typically 6 months to 1 year).

We’ll add that honoring a one-year non-compete is much easier when your compensation has totaled $150 million-plus over the past five years. Naturally, "your mileage may vary,” as the saying goes.

But you definitely would be able to listen to some of the greatest hits from “The Godfather of Soul”, and probably with a very big smile on your face.

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(Our lawyer asks that we tell you that nothing in this article should be construed as legal or financial advice of any kind. Seeking professional assistance for any legal matters you may be a party to is always recommended.)