We help companies design severance programs. What ought to go into an executive termination package?
Here is a framework.
The items listed within this sample are intended to give an example of items which are appropriate to be included in severance arrangements. They may not be suited to each and every situation in your firm.
For a detailed discussion, contact Maryanne Peabody at Board Options, Inc. 617-371-2990
BOARD OPTIONS, INC.
Boston, MA
Tel: 617-371-2990
www.boardoptions.com
ECONOMIC SECURITY PROGRAM FOR:
MARY JONES
We value your past services to the firm and have designed a program for your consideration with the following objectives:
Minimize the financial and emotional trauma associated with leaving the firm.
Insure a quick and smooth transition for you to a new and productive job.
Each of the elements of this program will be discussed separately.
Cash Compensation
- Full salary for the next Y weeks plus 50% salary for four weeks thereafter. Should you find new employment prior to July 31, 200x, you will receive the remainder of the money which would have been paid to you in the form of a lump sum.
If you do not find employment prior to July 31, 200x, then your final check will be mailed to you on July 31, 199X.
If you do find employment prior to July 31, 200x the remaining money will be sent to you as a lump sum.
- During the time you are on this program, you will not be eligible to participate in our bonus program. Your full-time commitment should be towards helping yourself to obtain new and fruitful employment.
- You are eligible to apply for and to collect unemployment insurance, consistent with the Regulations of the Commonwealth. Should you elect to resign, the firm will not contest your right to receive unemployment insurance benefits. You only need state that you resigned "under pressure."
- Full discretion over the use of your pension benefits. Please contact the Personnel Director regarding how to collect your pension funds and initiate roll-overs.
Benefits
- Full benefits for the next five months or until you begin employment, whichever is sooner. The firm will continue to pay its regular contribution to your health insurance program for this time period. Thereafter, you can elect to continue to maintain your existing policy under the COBRA program. The cost to you will be 102% of our corporate premium. This benefit will be extended for you until 30 days following your first day of employment.
- Full use of the firm's telephone answering and voice mail facilities so that potential employers can call you at the firm.
- Vacation accrued up to the day you began this program can be taken in cash as a lump sum or on a regular salary basis. No vacation time will accrue once you are on the program. Your earned vacation is an item which is entirely separate from the 20 week salary continuation program discussed earlier.
Work Commitment
- During the next twenty weeks, you will continue to be an employee of the firm. Your responsibility during this period will be to secure new and fruitful work for yourself.
The firm will try not to add to the burden of this task by asking you to perform additional work related to normal operations. During the salary continuation period, we may call upon your assistance and advice. Should you find these requests detract from your job search ability, we are open to discussing it with you. You can physically use your office until x date.
- During the time of this salary continuation program, you continue to be an employee of the firm. As an employee of the firm, you are expected to conduct yourself in a professional manner and avoid actions or statements which would do harm to the firm or to its employees.
- During the next twenty weeks, your position will be "consultant" to the firm. This arrangement allows you to conduct your job search while still employed with the firm.
Communication
In terms of internal communication of your status within the corporation, it is important that there be a clear and consistent message from all parties. You may elect to resign or be fired. Should you elect to resign from your present position, please submit a letter to me no later than (FIVE WORKING DAYS FROM THE DATE OF THE PRESENTATION OF THIS DOCUMENT).
In terms of external communication of your work history to potential employers, I will work with you on the contents. In this way, you will know exactly what will and will not be said about your performance.
Executive retained search Services
We have retained the services of Board Options, Inc. to provide you with assistance in the planning and execution of your job search. An explanation of these services is enclosed along with this document.
***
As I said, our goal in creating this plan is to minimize the personal and the financial discomfort that this decision must create for you. It is in that spirit that we developed this plan.
This decision has been particularly difficult for me to reach. I genuinely believe, however, that it is in everyone's best interests that you get a new start in a new organization. At the same time, I sincerely regret that things did not work out.
_______________________________
William Jones
President
(Date)
THIS DRAFT SHOULD BE REVIEWED BY AN ATTORNEY WHO SPECIALIZES IN EMPLOYMENT LAW IN YOUR STATE.
THE ATTORNEY SHOULD ADVISE YOU WHETHER OR NOT THE EMPLOYEE SHOULD BE REQUESTED TO SIGN A RELEASE OF LIABILITY STATEMENT IN RETURN FOR THE ABOVE BENEFITS AS WELL AS THE WORDING OF THAT RELEASE.
