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Involuntary Exits

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What to Consider

  • Negotiating Power: weigh what the employer is offering versus any claims you have, as well as any knowledge you have about your employer's past practices (see taxes).  SEE: RIFs and Opt-in Severance Plans.
  • Timing: do you have flexibility to negotiate when you finish up? Perhaps a paid leave or other transitional "garden leave" alternative is viable.
  • Compensation and Benefits: be sure to inventory all that you have, and how it may be impacted by your exit.
  • Noncompetition and Other Post-employment Restrictions: consider whether you can seek relief - and whether existing restrictions are likely to be enforceable. For general state-specific information, go here. 
  • Severance: be sure to consider seeking favorable terms (often through a friendly dialogue), but be careful not to empower your employer.  See Survey Data - Severance / Constructive DIscharge (Good Reason)
  • Tax Consequences: if you hold equity or equity awards, consider avenues toward capital gain treatment rather than ordinary income from severance.
  • Release Agreement: seek mutuality and avoid one-sided covenants, such as: mutual indemnities and non-disparagement provisions.
  • Dispute Resolution: first try to reach an amicable settlement on win-win terms. But be sure to know what leverage you have, how best to assert it, and what litigation would involve (e.g. arbitration?).


ARTICLES ABOUT INVOLUNTARY TERMINATION

Recent Litigation involving Executive Severance

Assemble Your "A" Team

You do not need an army in order to make smart decisions relating to your termination of employment. But you should bring together two professionals who will look out for your interests --

  1. An experienced attorney.
  2. A financial advisor.

ALSO: an executive coach may help you weigh the wide range of personal and professional choices that you are making - and could make.

Why have Legal Counsel?

It is tempting to be penny-wise at a time when your employment is terminating. However, the right legal counsel - meaning someone experienced with executive compensation, tax, and employment law - has the potential:

  • to alert you to reasonable exit-related "asks" (think broadly, for example: extra cash severance + accelerated vesting of stock awards + extra time to exercise stock options + release from non-compete);
  • to make your "asks" - and to take the heat for them (you can blame your lawyer and backtrack if your employer feels you have asked for too much);
  • to alert you to claims that you may be releasing, and any leverage you may have from considering them; 
  • to suggest tax-favored payment alternatives, including equity settlements that may convert ordinary income into capital gains; and
  • to negotiate the terms of severance agreements, because tough counsel is often needed in order to assure an even-handed outcome.

Legal Counsel

Why involve a financial advisor?

There are many "money" choices associated with a termination of employment. A skilled financial advisor is able to help you make smart choices with respect to --

  • your retirement plan benefits, 
  • your stock awards, 
  • your overall investment strategy, and
  • your long-term financial planning.

Financial Advisors

Executive Coach (or Mentor)

Epictetus: "First say to yourself what you would be; then do what you have to do."


There is no substitute for experience when you get ready to evaluate your career and business goals, because that should not be done in a vacuum. Instead, those goals should take into account your personal situation - from where you are now to where you want to go.  

Executive Coaches

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