Executive Severance Packages: Definition and How To Negotiate

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.

How Much is a Good Severance Package?

What can be included in executive severance packages?

Even though severance packages include financial compensation, they also have other components to support you as you change jobs. What’s typically included in an executive severance package is as follows:

What are executive severance packages?

An employment contract that specifies the benefits an executive-level employee will receive after leaving a company is known as an executive severance package. Even though the sum of your severance pay is up to your employer’s discretion, as an executive-level worker, you can typically negotiate it in your favor.

Employees typically receive a salary commensurate with the number of years they have worked for the company. It’s important to keep in mind that the severance pay you receive as part of your severance package may be paid in full or over a specific number of weeks.

How to negotiate executive severance packages

It is best to negotiate your executive severance package at the beginning or end of your employment with your current company in the event of a layoff. Your chances of receiving a better offer can increase if you know how to negotiate effectively. Use the following steps to negotiate your executive severance package:

1. Assess your companys severance offer

If your employer offers you a severance package, carefully consider the benefits they are providing. Make sure you understand everything in the package by carefully reading it. To get a clearer understanding of certain terms, look them up online.

Be mindful of anything vague or misleading. Make a list of the issues you want to discuss during your negotiation with your employer if you don’t think the severance package is fair.

2. Do your research

Find out what severance packages for employees with your level of experience look like. For instance, as an executive-level worker, you can look up the standard severance pay and severance package for executives. You can develop a more strategic proposal that is reasonable and fair for both you and your employer based on the information you find.

3. Know what you want to negotiate

Make sure you are aware of your personal and professional priorities before meeting with your current or prospective employer. Employees frequently request additional weeks of severance pay, for instance. Additionally, you can bargain for full pay or a longer period of benefits.

Knowing your objectives makes it simpler to frame negotiations and achieve desired results. Additionally, being clear on your objectives and keeping them in mind can help you navigate the negotiation process. If your employer rejects your initial proposal, you should also prepare a counter proposal with alternative options.

Additionally, think about how your proposal will benefit both you and your business. When you make a proposal that benefits both parties, your employer is more likely to give you what you want.

4. Speak with your prospective employer

When you join the company or leave it, talk with your employer about the specifics of your executive severance package. Before agreeing to anything, present them with your proposal and make sure to bargain for a better severance package. Focus on your professional and personal objectives as well. By doing this, you can prevent yourself from becoming sidetracked by offers that won’t be ultimately beneficial to you.

5. Use your leverage

Focus on any wins and achievements you’ve had with the company during the negotiation. The decision to give you a better severance package may be influenced by your contributions to the company.

You can also take into account any risks that put your employer at the greatest risk. For instance, the majority of employers want to be recognized for treating their fired employees fairly.

It’s crucial for them to acknowledge that the severance package doesn’t adequately cover the costs its former employees will incur during their employment transition if you make an employer appeal to their values. Making an appeal to their morals makes them understand your reasoning and may persuade them to make you a better offer.

Tips for negotiating executive severance packages

The following advice can be helpful if you need more guidance on how to handle your executive severance package negotiation:

Get a second opinion

Consult with an expert before accepting a severance package. Think about consulting a lawyer, a business mentor, a career counselor, or a coach. If you’ve never encountered this kind of situation before, these experts can give you insightful advice that will be even more helpful.

They can assist you with your negotiating strategy or tactics in addition to assisting you in identifying false information. Having this information can help you make more strategic decisions and negotiate more strategically as a whole.

Be mindful of your behavior

Keep your negotiations with your employer professional by acting appropriately. It’s crucial to remain polite and professional throughout the negotiation, even if you’re unhappy with how things turned out. This will help you keep your reputation intact.

Get your severance package in writing

Once your executive severance package is offered, make sure to get it in writing to avoid your employer giving you a different severance package than the one you discussed. This gives you something to refer to if they give you a package that is different from what you were anticipating.

Know your limits

Knowing that it’s acceptable to leave without signing the severance agreement if you don’t receive the severance package you were hoping for after negotiations You might decide to leave your job without receiving severance pay depending on the circumstances.

For instance, a specific clause in your employment contract may restrict your ability to look for work elsewhere. You might decide that leaving without signing is in your best interests in this situation. Knowing your boundaries will enable you to make the best strategic choice if your employer rejects your proposal.

Speak with your coworkers

Compare your severance package to those of the other fired employees if your company fired several executives at once. This can assist you in determining the fairness of your offer and whether you should negotiate for a better one.


What is a typical CEO severance package?

One to two weeks of pay are typically paid as severance for each year an employee worked for the company. Executive ranks can also receive severance packages; some are given six to twelve months’ salary and a prorated bonus in the event that their employment is terminated.

How much severance is normal for executives?

The standard procedure is to seek four weeks of severance pay for each year of employment. Middle managers and executives usually receive a higher amount. For instance, some executives may be paid for more than a year. You might enter a higher tax bracket if your lump-sum severance payment is sizable.

Why do executives get severance packages?

Prevalence of Payment Triggers and Related Definitions Executive severance benefits typically start to accrue after an executive leaves their job without cause. An executive’s voluntary termination of employment for a good reason is a less frequent reason for executive severance benefits to be paid out.

What is the most common severance package?

Standard separation packages provide one to two weeks of salary per year of employment. Insurance benefits, help finding a new job, and other benefits can be negotiated. Typically, you have seven days after signing a severance agreement to change your mind after accepting it.

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