How to write an offer letter for a CEO or a cofounder
A CEO or cofounder offer letter carries more weight than a routine hire. It sets the role, the reporting line to the board, the pay structure, the term, and the exit terms. For a cofounder, the equity and vesting sit in separate founder documents, not in the letter itself.
Most offer letter advice is written for a junior joiner. A CEO is a different animal. So is a cofounder who is putting their name on the company. Get the letter wrong at this level and you are arguing about it later, when the stakes are higher and goodwill is thinner. This page walks through what belongs in each letter, what belongs somewhere else, and the small number of legal steps you cannot skip.
What a CEO offer letter has to get right
A good CEO letter reads like a sober contract, not a welcome note. The person on the other side is being asked to run the company, so the letter has to be exact about what that means and where the limits sit. Vague scope at the top invites a dispute you will not win cheaply.
Work through these in order. Each one has bitten a founder who left it out.
- Title and mandate. Name the role, and say plainly what the CEO decides alone and what needs the board. Latitude without a boundary is the usual source of trouble.
- Reporting line. The CEO reports to the board, not to a single founder. Say so, and name who chairs it.
- Term. A senior role often runs for a fixed period with renewal, rather than an open ended one. State the length and how it renews.
- Compensation. Set out the whole package, fixed pay, any variable tied to targets, and the statutory heads. Keep the salary structure legible so payroll and any auditor can follow it.
- Notice and separation. Longer notice on both sides is normal at this level. Spell out garden leave if you want it.
- Confidentiality and intellectual property. A CEO sees everything, so assignment of work product and a confidentiality clause are not optional.
- Restraint on competing and on poaching staff. Keep it reasonable in time and scope, since Indian courts read wide restraints narrowly.
- Conditions. Make the offer subject to background checks, references, and the board approval below. That way a red flag lets you step back cleanly.
If you already have a house style for a standard hire, start from your offer letter format and add the executive layers on top. The bones are the same. The clauses just carry more freight.
Where a CEO letter parts ways with an ordinary offer
The difference is not the wording. It is who has the authority to make the promise. A line manager can hire an analyst. Nobody can appoint a CEO by themselves if that CEO is also a director or a key managerial person of the company.
In that case, company law routes the appointment through the board, and sometimes a shareholders' vote as well. Your letter should say, in as many words, that the appointment is subject to that approval and takes effect only once it is passed. Skip that line and you have made a promise the company has not actually authorised. This is the single step founders most often miss, and it is the one a diligence lawyer flags first.
Pay is governed too. A public company faces limits on how much it can pay its top management, set by company law and measured against profit. A private company has more room, but the board still has to record the decision. None of this is exotic. Your company secretary handles it every year. Give them the draft before it goes out, not after.
One more distinction worth keeping straight is the letter itself versus what follows it. The offer letter, appointment letter and joining letter are three documents that do three jobs, and at senior level people tend to blur them. The offer proposes. The appointment confirms. The joining records the start. Keep them distinct and the paper trail holds up.
A cofounder needs more than an offer letter
Here is the part people get wrong most. A cofounder is usually a shareholder, not only an employee. So an offer letter, on its own, cannot capture the deal. It can set the salaried role and the reporting line. It cannot hold the equity, and the equity is the whole point.
Ownership is the reason a cofounder arrangement is not a normal hire. Shares are usually earned over time, not handed over on day one. A common pattern is a four year schedule with a one year cliff, so a founder who walks in month six leaves with nothing vested, and one who stays earns their tranche month by month after that. Where the shares come from, and what happens to the unvested part if the founder exits, belongs in a founders' agreement and the company's shareholding documents. Issuing shares to a founder runs through company law and needs board and shareholder approval.
So a cofounder deal is really two instruments that have to agree with each other.
| The offer or appointment letter | The founders' and shareholding documents |
|---|---|
| Role, title and reporting line | Shareholding and how it is issued |
| Salary and statutory pay heads | Vesting schedule and the cliff |
| Notice period and separation | What happens to unvested shares on exit |
| Confidentiality and assignment of work | Transfer restrictions and rights on a sale |
| Board approval reference | Decision rights between the founders |
The letter and the agreement should never contradict each other. When they do, the contradiction surfaces at the worst moment, usually a fundraise or a falling out. Draft them together, and let your company secretary or a startup lawyer own the equity side. Offrd does not touch that part, and says so plainly further down.
The pay section still follows Indian statutory rules
A large salary does not sit outside the labour rules. The same frame that governs a payslip for a clerk governs the one for a CEO. The numbers are bigger. The rules do not bend.
A written appointment letter is now mandatory for every worker, one of the changes in the four labour codes that took effect on 21 November 2025, per the Ministry of Labour and Employment. That obligation reaches the corner office too. On structure, the Code on Wages, 2019 sets a floor on how the package is split. If the allowances outside the wage definition cross half of total pay, the excess is treated as wages. Load a CEO package too heavily into allowances and the law simply reclassifies the surplus, which changes what provident fund and gratuity are worked out on.
The usual heads still apply. Provident fund runs within the wage ceiling of 15,000 rupees a month, set by the EPFO. Employee state insurance applies where the role qualifies by wage, and most CEO pay sits above that line. Gratuity accrues with service. Build these into the letter from the start, because retro fitting them after the first payroll is where errors codify themselves and stay hidden until an audit. If you want the mechanics, the way we run monthly payroll lays out each head.
Where Offrd fits, and where it does not
Straight answer, since you are dealing with a high stakes document. Offrd writes the letter. It generates a CEO or senior appointment letter with the salary structure and Indian statutory heads already worked in, in minutes, with your branding on it. When the figures are right on the page from the start, the rest of the paperwork downstream stays clean.
What Offrd does not do is the equity side. It does not draft your founders' agreement, set up a vesting schedule, run a cap table, or pass a board resolution. Those belong with your company secretary or a lawyer, and they should. Offrd handles the letter, not the ownership. That boundary is deliberate, and it keeps the tool honest about its remit.
More than 4,000 companies across 350 plus Indian cities use Offrd to produce this paperwork in minutes.
Generate the appointment letter with statutory pay built in, carry the same figures through onboarding, and see the full set of HR documents it covers. Pricing starts at 99 rupees a document, with 50 free credits on signup and nothing to commit to each month.
Frequently asked questions
Do you need an offer letter for a CEO?
Yes. Even at the top, a written appointment letter is required for every worker under the labour codes that took effect on 21 November 2025. A CEO letter should go further and reference the board approval behind the role, since the appointment is not the founder's to make alone.
Is an offer letter enough for a cofounder?
No. A letter can cover the salaried role and the reporting line. It cannot carry the equity. Share ownership, the vesting schedule, and what happens if a founder leaves early belong in a founders' agreement and the company's shareholding documents, drawn up with your company secretary or a lawyer.
What should a CEO offer letter include?
Title and mandate, the reporting line to the board, the term of the role, the full pay structure with statutory components, notice on both sides, confidentiality and assignment of intellectual property, any agreed restraint on competing, and the conditions the offer depends on such as background checks and board sign off.
How is a CEO's pay structured for compliance in India?
It follows the same frame as any salary. Provident fund applies within the wage ceiling, ESI where the role qualifies by wage, gratuity accrues with service, and the Code on Wages sets how much of the package can sit in allowances before it counts as wages. The figures are larger. The rules are the same.
Does the board have to approve a CEO appointment?
Where the CEO is also a director or a key managerial person, company law routes the appointment through the board, and in some cases a shareholders' vote. The offer letter should say the appointment is subject to that approval. Confirm the exact path for your company with your company secretary.
Can Offrd generate a CEO or cofounder offer letter?
Yes. Offrd produces the letter with the salary structure and Indian statutory components worked in, ready in minutes. It does not draft founders' agreements, vesting schedules or board resolutions. Those stay with your company secretary or lawyer. Offrd handles the letter, not the cap table.
Draft the letter right, the first time
Offrd builds the salary structure and Indian statutory heads into every appointment letter, so a senior hire starts from clean paper. Setup takes about two minutes.