A sizeable number of companies include restrictive covenants in their equity award agreements, such as non-compete, non-solicitation, confidentiality and/or non-disparagement provisions. If a grantee violates the provisions, companies can forfeit the award (if still outstanding at the time of the violation), claw back any shares or proceeds related to the shares (i.e., sale proceeds and dividends) or seek an injunction to cease the employee’s violation of the applicable covenant. The restrictive covenants typically are not tailored by jurisdiction but, rather, of a “one-size-fits-all” variety. As a result, companies should not be surprised to learn that the covenants rarely are enforceable as written, especially the non-compete and non-solicitation covenants.
I think it is fairly well-known that non-competes are generally not enforceable in California, except in a few narrow circumstances (such as a selling shareholder or partnership dissolution). The same cannot be said for other jurisdictions (whether other U.S. states or non-U.S. countries), but it is very unlikely that the “one-size-fits-all” approach will work.