By Indeed Editorial Team
Updated February 22, 2021 | Published January 13, 2021
Updated February 22, 2021
Published January 13, 2021
As an executive employee, you may have the option to negotiate your severance package with your employer. Knowing how to negotiate your severance package can improve your chances of receiving a better offer in the long run. In this article, we explain what executive severance packages are and what they often include, list the steps for negotiating executive severance packages and provide you with tips for the negotiation process.
Related: Guide To Severance Pay
What are executive severance packages?
An executive severance package is an employment contract that details the benefits an executive-level employee will receive upon their departure from a company. Though the amount of severance pay is at your employer's discretion, you can typically negotiate it in your favor as an executive-level employee.
Usually, employees receive an amount commensurate with their length of employment at the company. It's worth noting that the amount of severance pay you receive as part of your severance package can be paid as a lump sum or over the course of a certain amount of weeks.
Related: What Is Severance Pay?
What can be included in executive severance packages?
Though severance packages consist of monetary compensation, they also include other elements to help you during your employment transition. Here's what you can often find in an executive severance package:
Your severance pay terms
Payment for unused sick days
Payment for unused vacation days
Continuation of insurance benefits
Retirement or 401(k) benefits
Stock options
Unemployment information and resources
Return of property
Non-compete clause
Confidentiality agreement
A release of claims and covenant not to sue the company
Information regarding references
How to negotiate executive severance packages
In the event of a layoff, it's best to negotiate your executive severance package at the beginning or the end of your employment with your current company. Knowing how to effectively negotiate can improve your chances of getting a better offer. Use the following steps to negotiate your executive severance package:
1. Assess your company's severance offer
If your company provides you with a severance package, take the time to consider what they're offering. Read through the package carefully to ensure you understand everything that's being offered. If you don't understand certain terms, look them up online for better clarity.
Be mindful of anything vague or misleading. If you don't find the severance package reasonable, consider negotiating it with your employer and make a note of what you want to address upon your negotiation.
2. Do your research
Research what severance packages look like for people with your level of experience. For example, as an executive-level employee, you can research what executives typically receive in terms of severance pay and an overall severance package. Based on the information you find, you can come up with a more strategic proposal that's fair and reasonable for both you and your employer.
3. Know what you want to negotiate
Before meeting with your current or prospective employer, make sure you understand your personal and professional priorities. For example, it's common for employees to ask for more weeks of severance pay. You can also negotiate a longer length of benefits or full pay.
Once you know your goals, it's easier to frame your negotiation and easier to achieve your desired outcome. Also, knowing exactly what you want to achieve and keeping your goals in mind can help guide you through the negotiation process. You should also prepare a counter proposal with different options and alternatives if your employer rejects your initial proposal.
Also, consider how both you and your company can benefit from your proposal. When you present a mutually beneficial proposal, your employer is more likely to consider offering you what you want.
4. Speak with your prospective employer
Speak directly with your employer regarding the details of your executive severance package upon your hire or separation from the company. Present them with your proposal and make sure to negotiate a better severance package before signing anything. Also, make sure to focus on your personal and professional goals. Doing this can help you avoid getting distracted by offers that don't benefit you in the long term.
5. Use your leverage
During your negotiation, focus on any successes and accomplishments you've had with the company. Reminding them of your contributions to the company can influence their decision to give you a better severance package.
You can also consider any risks that present the greatest vulnerability to your employer. For example, most employers want to be known for being fair to their terminated employees.
If you appeal to their values as an employer, it's important for them to acknowledge that the severance package doesn't adequately provide enough funds to cover the expenses its former employees will endure during their employment transition. Appealing to their values makes them aware of your logic and may convince them to provide you with a better offer.
Related: How To Negotiate a Severance Package to Get the Best Benefits
Tips for negotiating executive severance packages
If you need additional help on how to handle your executive severance package negotiation, consider the following tips:
Get a second opinion
Before you agree to a severance package, consult with a professional. Consider getting the opinion of a lawyer, a business mentor or a career counselor or coach. These experts can provide you with helpful advice which is even more beneficial if you've never been through this type of situation before.
Not only can they help pinpoint misleading information, but they can also help you with your negotiating strategy or tactics. Getting this input can help you make a more strategic decision and a more strategic negotiation overall.
Be mindful of your behavior
As you negotiate with your employer, make sure to exhibit professional behavior. Even if you're unhappy about how the negotiation is going or where things landed, it's important to remain respectful and professional to maintain your reputation.
Get your severance package in writing
To prevent your employer from giving you a different severance package than the one you discussed, make sure to get your executive severance package in writing once it's offered. This gives you something to reference if they provide you with a different package than what you were expecting.
Know your limits
If you don't get the severance package you hoped for after your negotiation, know that it's OK to leave without signing the severance agreement. Depending on the situation, you may decide to leave your job without severance pay.
For example, your employer may limit your ability to seek new employment through a particular clause. In this case, you may find it in your best interest to leave without signing. Knowing your limits can help you make the most strategic decision if your employer isn't receptive to your proposal.
Speak with your coworkers
If your company laid off several executives at the same time, compare your severance package with the other employees who were let go. This can help you determine whether your offer is fair and if you should negotiate a better offer.