Executive severance packages are typically outlined in employment contracts. They vary widely depending on one’s position, company policies and the circumstances of a particular separation. However, severance package issues aren’t always cut and dry once an agreement has been signed.
Renegotiating a severance package can be an important step for executives seeking fair compensation, protection of their reputation and financial security during a major employment transition.
Primary considerations
Executives might consider renegotiating their severance packages under several circumstances. For example, if an initial offer does not fully reflect their contributions or the terms seem restrictive, it might be wise to push back instead of simply signing on the dotted line. Or, if the separation is sudden, perhaps due to an unexpected downsizing, an executive may feel that their package does not adequately account for lost earnings or anticipated incentives.
Similarly, executives who are asked to sign restrictive covenants, such as non-compete or non-solicitation clauses, may wish to negotiate for higher compensation to offset the impact these limitations may have on future employment opportunities. In some cases, severance packages can also be renegotiated if there are indications of potential legal claims. If a separation involves possible discrimination, breach of contract or retaliation, an executive may be able to leverage these factors to improve their package terms.
Renegotiating an executive severance package can be challenging. That’s why it’s wise not to do it on your own. Having experienced legal guidance can help executives identify leverage points and negotiate terms that better align with their needs and career goals.