Executive Severance Agreements & Why You Should Plan Ahead

  1. EEOC-Employment Law
  2. Executive Severance Agreements & Why You Should Plan Ahead
Executive severance agreements plan

Executive severance agreements may sound like a negative way to start a new job, but they are a critical element in protecting your future. We have all heard the quote by Allen Lakein that “Failing to plan is planning to fail.” If you are an executive considering new employment, contact the knowledgeable attorneys at The Crone Law Firm for guidance in negotiating and drafting an effective severance agreement.

Executive Severance Agreements

It is common for your executive employment contract to contain a severance provision in it, even if you are an at-will employee. An at-will employee can be terminated at any time by the company’s board for any reason that is not prohibited under state or federal law. If you are not an at-will employee, it is likely that you have more significant leverage when things begin to change.

It is vital to negotiate your severance terms at the beginning of your employment with the company because this is when you have the most power and leverage. The company is pursuing you, so take advantage of it while discussing the terms of your employment contract.

However, if you are up against serious competition for the position, it may be wise to wait to discuss your severance terms until after you have had time to prove yourself. An experienced lawyer can help you make this decision regarding the best timing to approach the topic with your new employer.

Why should I negotiate my severance?

It may seem odd to negotiate your severance terms during the hiring process, but it is essential because without your severance agreement being in writing, you may not be entitled to severance pay. Do not put yourself into the position of relying on the company’s goodwill to give you severance pay if the company downsizes, merges, or is closed.

What do I ask for in my severance package?

No two employees are identical, so it is possible that no two severance packages are the same. It all comes down to what you negotiate. Again, having a knowledgeable lawyer on your side can significantly impact the benefits included in your severance deal.

It is common for a severance package to include a lump sum payment, but you can also ask to receive payments made over a certain period. You will want to consider the amount of your salary, any equity you have gained, and bonuses received. The severance package for a CEO can be complicated and extensive.

Non-Compete Clauses

Most employers include a non-compete clause in an executive severance agreement. The law requires the non-compete provisions to be reasonable since their goal is to limit your ability to find a new job in your area of expertise. You should have your lawyer review your non-compete agreement before you sign it.


A severance clause may also include a release of claims against the company. You should discuss the releases with your attorney before agreeing to them. You may be releasing claims of wrongful termination, discrimination, or other similar charges that you could have against the company in the future. An executive should pay particular attention in confirming you are not releasing your right to indemnification or other similar insurance coverage the company provides to officers and directors if litigation occurs after you depart your employment.

Contact Our Experienced Legal Team Today

Let’s go get some justice! If you’ve been treated unfairly at work and are wondering if you should take action, contact us and we’ll help you evaluate the merits of your case. Once you know, you can decide what you want to do.

The Crone Law Firm is one of the few firms in Tennessee, Arkansas, Missouri, Illinois, Kansas, and the Southeast to focus exclusively on employment law matters. We are passionate about resolving your workplace disputes and we know the law inside and out. Call us at 901-737-7740 to see how we can help.

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