NEW YORK: The new heads of Exxon Mobil, Lockheed Martin and PepsiCo do not have one, and some corporate governance experts say shareholders are better off as a result.

It is an employment contract, and it has been in the spotlight since a number of prominent chief executives have been ousted with golden goodbyes Robert Nardelli’s $210 million exit package from Home Depot being the most recent. Employment contracts have been blamed for virtually guaranteeing such huge payouts even when an executive fails.

“Time and time again, the smoking gun of any major compensation problem is in the form of a contract that was executed at a earlier date,” said Patrick McGurn of Institutional Shareholder Services, a proxy advisory firm. “It was at the heart of Home Depot. People never imagine when they ink these contracts that it could go wrong.”

Yet while they may be tarred by controversy, employment agreements are still common at many large corporations.

“Rumors of the employment contract’s demise are greatly exaggerated,” said Jannice Koors, a managing director at Pearl Meyer & Partners. “As long as you need to do things to lure top executives from positions they are already in, you are going to have to offer them some kind of protection to get them to say yes.”

Today, 56 chief executives at the biggest 100 companies in the United States signed a contract before starting their jobs, according to an analysis by Equilar, a compensation research firm based in San Mateo, California.

Executives who are being recruited by outside companies argue that they need contracts because of the risks involved.

And indeed, among the 15 executives who were recruited from outside in the past three years, about 80 percent had an employment or severance contract; among the 10 executives who were promoted, 60 percent had a contract.

While every agreement is different, they generally set out the terms of a new executive’s salary, bonus, perks and stock awards. They also describe what happens to the executive’s pay package in the event that he or she is fired or the company is acquired.

In theory, the agreements work to ensure employment conditions while providing some protection for the company if things do not work out. A company might agree to certain amount of severance pay, for example, to contractually prevent a chief executive from immediately working for a competitor or poaching top staff.

In practice, however, many of the agreements appear to be negotiated in the executive’s favor. Among the poor practices, compensation experts say: Guaranteeing bonuses two or three years after the executive has been at the helm; offering so-called evergreen clauses that automatically renew the contract every few years, narrowly defining the conditions for which an executive can be fired, and providing lucrative severance payouts.

“It’s not that employment agreements are bad,” said Paul Hodgson, senior analyst at the Corporate Library, a governance watchdog group. “It’s what’s in them.”

Consider a recent analysis by James Reda, an independent compensation consultant in New York, that examined a poorly negotiated severance agreement’s impact. The average American worker might receive about two weeks worth of salary for every year they worked at a company, Reda said. The average chief executive without an agreement received the equivalent of about 18 weeks of salary for each year of service.

At Home Depot, Nardelli’s contract entitled him to 567 weeks of salary for each of the six years he was chief executive. Of course, that pales in comparison to Michael Ovitz, the former chief operating officer at Walt Disney. He took home the equivalent of 5,000 weeks of salary after he was ousted just over a year on the job.

Not every employment contract, however, calls for lavish severance payouts or income guarantees.

At Intuit, for example, Stephen Bennett, its chief executive, is entitled to severance pay equal to six months of his current salary, which was $1.1 million in 2005, and limited vesting of stock options and restricted stock awards he is not yet able to exercise. Likewise, Walgreen and Whole Foods hold the line on change-in-control payouts.

William Perez, Wrigley’s new chief executive who has been at three different companies in the past three years, said that “trust and fit” mattered when he has contemplated an employment contract.

At S.C. Johnson, where he rose through the ranks to become chief executive, Perez said he never had an employment agreement.

Nike, which has had a history of rejecting executives recruited from outside, was a different story. Perez said he was leaving behind a 34-year career to enter the “unpredictable world of Nike.”