Mark Whitney was recently quoted in an article appearing in Massachusetts Lawyers Weekly concerning severance agreements and their impact of release language on equity rights of senior executives. The article entitled "Severance terms extinguished exec’s right to shares, options" discussed a recent Massachusetts Appeals Court decision which ruled against a former executive of a software company.
Employment Law For Individuals | Severance Package Evaluation/Negotiation
A significant portion of WLG's practice is helping executives who have been presented with a proposed separation package. This can be a confusing and difficult time for people as they contemplate their next move in life. These situations often raise a variety of questions:
- Why was I selected instead of someone else?
- Is the amount I am being offered fair?
- What do companies usually offer in similar circumstances?
- I believe that the amount I am being offered is different from other packages I am aware of with other employees. Does this matter?
- Should I ask for more and, if so, how much?
- Do I have a claim against my employer?
- How does a potential legal claim impact the severance process?
- Am I eligible to collect unemployment benefits?
- What about my incentive compensation?
- Do I still get paid my commissions?
- Can I still ask for my annual bonus?
- I am nearly vested in my stock options. Will I lose all of them?
- What happens to my group health insurance?
WLG assists clients in answering these and other pressing questions. The answers to these questions depend on the circumstances of your discharge and the proposed terms of the separation documents.
Timing is a very important part of considering a severance package. Depending on your age (39 or younger / 40 or older) you could be offered 21 or fewer days to review the documents and sign the separation agreement. If you are part of a group layoff, you could be provided as many as 45 days to review the documents. You may also be afforded a 7-day period to revoke your signature on the document. And many times, employers do not handle these timing issues correctly, which can provide you with additional leverage.
It is also very important to evaluate whether the employer is seeking to impose new obligations upon you through the separation package process. For example, you may not be bound by restrictive covenants (non-solitication / non-compete / non-disclosure) but the separation package seeks to impose new restrictions, or possibly more stringent restrictions. Oftentimes, employers use the separation package to clean up ambiguities that may exist in older documents, perhaps caused by prior corporate changes and mergers. You do not have to agree to new obligations, and in many cases, you should insist on being properly compensated for agreeing to new restrictions. Also, refusing to agree to new restrictions could vastly improve your prospects for subsequent employment. These are all important factors to consider in the separation process.
In addition to the issues highlighted above, numerous other issues exist in the separation package evaluation process. WLG provides valuable insight, support, and advice along the way to help you through this difficult time. Please visit WLG's testimonials page to see a glimpse of what some of our prior clients have experienced.