A severance package for an executive or senior professional can involve much more than a few weeks of salary. Bonuses, commissions, equity, deferred compensation, benefits, restrictive covenants, confidentiality obligations, and the circumstances surrounding the termination can all affect what the agreement is actually worth.
Wall, McLean & Gallagher represents executives and senior-level employees, not employers, in employment matters throughout Montana. We review and negotiate severance agreements for executives, physicians, senior managers, business leaders, and other highly compensated professionals whose departures involve significant financial or professional interests.
For an executive, the answer often depends on what is being offered, what you are being asked to give up, and what remains unresolved when your employment ends. A severance agreement typically requires the employee to release legal claims against the employer. Once signed, that release can sharply limit your options.
Our review looks beyond the stated severance payment. We examine the agreement alongside employment contracts, compensation plans, offer letters, equity documents, amendments, and other terms that may affect what you are owed.
Issues we regularly look for include:
A larger severance payment does not necessarily make an agreement favorable if other provisions interfere with compensation or the employee’s next position.
An employer’s first severance offer is not necessarily its last. The circumstances of the departure, the executive’s contract, potential legal claims, compensation that remains unpaid, and the employer’s own interests in resolving the matter can affect negotiations.
Wall, McLean & Gallagher can evaluate the complete package and identify terms worth challenging or changing. Depending on the situation, negotiations may address the amount and duration of severance, treatment of a pending bonus, commissions, equity, benefits, restrictive covenants, references, confidentiality, or how the executive’s departure will be characterized.
For senior employees, those non-cash terms can matter long after the severance payments stop.
Compensation is often one of the most contested parts of an executive departure. A company may take the position that a bonus is discretionary, that commissions were not earned before termination, or that equity is forfeited when employment ends.
Those conclusions should not simply be assumed from the severance offer.
Employment agreements, compensation plans, past payment practices, termination provisions, vesting schedules, and the timing of the termination can affect the analysis. A termination shortly before a large bonus, commission payment, equity vesting date, or other compensation event may also raise questions that should be addressed before signing a release.
For an executive preparing for the next position, restrictions on future work may be as important as the severance payment itself.
A severance agreement may contain or reaffirm provisions dealing with competitors, customers, employees, confidential information, or trade secrets. Existing restrictions from an employment agreement may also become an issue during the separation process.
We review how those provisions may affect a planned move to another company, a new business venture, client relationships, or continued work within the same industry. Where appropriate, restrictive terms can also become part of the severance negotiation.
Severance is generally offered in exchange for something from the employee. One of the most significant terms is often a release of claims.
Depending on the circumstances, an executive may have potential claims involving an employment contract, unpaid compensation, discrimination, retaliation, or the events surrounding termination. Signing first and investigating those issues later can be a costly sequence.
The agreement may impose continuing obligations as well. Confidentiality, cooperation, non-disparagement, return-of-property requirements, and restrictions concerning company information can remain in effect after the employment relationship is over.
Executive severance issues also arise outside traditional corporate leadership. Physicians and other healthcare professionals, senior sales professionals, financial professionals, managers, and business leaders may have compensation structures and contractual obligations that make a departure more complicated.
For a physician, for example, separation may involve productivity compensation, ownership interests, patient relationships, tail coverage, restrictive covenants, or where the physician can practice next. Senior sales professionals may have substantial commissions or incentive compensation tied to deals that remain in progress when employment ends.
Wall, McLean & Gallagher is based in Helena and represents executives and senior-level employees throughout Montana. Our employment practice is employee-side. We do not represent employers in employment matters.
If you have received an executive severance package, are negotiating the terms of your departure, or have questions about compensation and restrictions after termination, we can review the documents and the circumstances surrounding your departure before you sign.
Contact Wall, McLean & Gallagher to discuss your severance agreement with a Helena executive employment attorney.
