You might be wondering how to negotiate an executive severance package from the perspective an an experienced California employment lawyer. The truth is, success comes down to strategy, timing, and knowing where the leverage lies.
I’m Matt Ruggles, and I’ve been practicing employment law in California for more than 30 years. Over the course of my career, I’ve successfully negotiated many executive severance agreements that increased compensation and protected careers. I thought it would be useful to walk through a real-world example of a successful high-value severance negotiation.
Of course, I’ve changed the names to protect confidentiality, but what follows is a case study that shows step-by-step how strategy, legal expertise, and negotiation tactics can secure a better outcome. Read on to see what an actual successful executive severance agreement negotiation looks like.
Stage 1: Initial Contact. Why Legal Counsel Matters When You Negotiate an Executive Severance Package
Our case study begins in the San Francisco Bay Area, where “John,” a seasoned Chief Marketing Officer at a mid-sized tech company, learned that his termination was imminent. The company presented him with a severance package that looked polished on paper but fell far short of recognizing his contributions and ignored several of his legal entitlements. Many executives in his position make the mistake of signing quickly out of shock or pressure, but John decided to pause and that decision changed the entire trajectory of his case.
The first call John made was to legal counsel. From the outset, our approach was threefold:
Part 1: Consulting a Lawyer to Negotiate an Executive Severance Package
We began with a comprehensive review of John’s situation. That meant analyzing his rights under California employment law, identifying potential legal claims, and assessing the company’s exposure if it failed to negotiate fairly. This early assessment revealed leverage points John never would have spotted on his own.
Part 2: Reviewing Your Employment Agreement Before Severance Negotiation
Next, we dug into the details of his employment agreement. Severance clauses, stock option vesting schedules, and the scope of his non-compete and non-solicitation provisions all had hidden implications. For example, we flagged that certain stock options could accelerate if termination occurred without cause, a provision the company conveniently ignored in its initial offer.
Part 3: Clarifying Goals in Executive Severance Package Negotiations
Finally, we worked with John to define his priorities. His focus was clear: secure financial stability for the coming year, protect his reputation in the industry, and negotiate more reasonable restrictive covenants so his career could continue without unnecessary roadblocks. By zeroing in on these objectives, we built a strategy around what mattered most instead of diluting our efforts across every possible issue.
By engaging counsel immediately, John avoided what is perhaps the most common rookie mistake in severance negotiations: trying to handle the initial discussions himself. Executives who begin negotiating without legal representation often commit to terms they don’t fully understand, or worse, tip their hand to the company and weaken their leverage. By starting with legal guidance, John entered the process prepared, protected, and in a position of strength rather than scrambling to undo early missteps later.
If you are an executive in need of severance negotiation, don’t leave your future to chance. Call the Ruggles Law Firm at 916-758-8058 to protect your rights and maximize your outcome.
Stage 2: Background and Leverage. What Strengthens Your Executive Severance Package Negotiation
Before we could negotiate, it was critical to understand John’s background and what he brought to the table. Every executive severance negotiation hinges on leverage, and that leverage often comes directly from an executive’s track record and contractual rights. In John’s case, several factors immediately stood out.
Professional Experience as Leverage in Negotiating an Executive Severance Package
John had more than 20 years of marketing leadership under his belt, with a history of producing measurable results. That kind of résumé doesn’t just make someone employable, it reinforces the argument that the company had benefited enormously from his expertise.
Why Tenure and Contributions Strengthen Executive Severance Package Negotiations
He had spent eight years at the company, a substantial tenure in the Bay Area’s fast-moving tech sector. During that time, he wasn’t a placeholder executive; he drove revenue growth and expanded market share in a highly competitive space. His contributions could be quantified, which gave us concrete talking points to support higher compensation.
Employment Agreement Clauses That Affect Severance Package Negotiation
The contract itself contained both strengths and weaknesses. It promised six months of severance as a standard, provided for stock option vesting upon termination, and included a one-year non-compete clause. On its face, the agreement set a baseline, but it also contained opportunities. For example, while six months of severance was written in, John’s contributions easily justified pushing for more. And the one-year non-compete was ripe for negotiation, since overly restrictive covenants in California raise serious enforceability questions.
Personal Priorities to Keep in Mind When You Negotiate an Executive Severance Package
Just as important as the contract were John’s own priorities. He wanted to maintain confidentiality, minimize disruption to his career, and secure his financial stability during the transition. By surfacing these priorities early, we were able to anchor the negotiation around outcomes that mattered to him personally rather than chasing every theoretical gain.
Taken together, this background analysis provided both the foundation and the roadmap for our strategy. It allowed us to separate what was realistic from what was aspirational and ensured that every demand we made was backed by either contractual rights, documented contributions, or clear personal objectives. In other words, we entered the negotiation with leverage, and we knew exactly how to use it.
To learn more about how to use leverage effectively in your severance negotiations, read my blog: How to Use Leverage in Severance Negotiation
Stage 3: Framing the Negotiation. The First Demand in Negotiating an Executive Severance Package
With John’s background and leverage points clearly established, the next step was to frame the negotiation through a carefully crafted demand letter. A demand letter is more than a wish list, it’s the foundation for the entire negotiation. It sets the tone, demonstrates seriousness, and shows the company that the executive is prepared to pursue his or her rights if necessary.
The First Demand Letter in Negotiating an Executive Severance Package
Our letter asked for three core improvements to the company’s offer:
- Financial Compensation: We requested 12 months of salary, double what his contract provided, to reflect John’s eight years of service and his measurable impact on the company’s growth. Our demand for additional money was carefully considered; asking for too much is one of the most common errors most people make when negotiating a severance agreement on their own.
- Equity Compensation: We demanded immediate acceleration of stock options. Without acceleration, John risked losing substantial equity he had already earned through performance.
- Non-Compete Elimination: We sought to eliminate the non-compete provision entirely because non-competes in California generally are unenforceable.
Using Legal Risks as Leverage in Executive Severance Package Negotiation
The letter was not just about numbers. It emphasized John’s achievements, including the revenue and market share growth he had driven. It also laid out the company’s potential legal exposure if it refused to negotiate fairly. Specifically, we raised the risks of claims tied to breach of contract and age discrimination, both of which would have been costly and embarrassing for the company to litigate. By combining legal leverage with business justification, we made it clear that this was not an empty threat but rather a demand backed by fact and law.
If you want to maximize your exit package, read my blog: Boost Your Executive Severance Pay: Demand Letter Tactics
Considering severance negotiation? If you are an executive facing termination, the right negotiation strategy can make all the difference. Contact the Ruggles Law Firm at 916-758-8058 for a confidential consultation.
How Companies Typically Respond in Executive Severance Negotiations
The company replied with an offer that essentially mirrored the contract baseline:
- Six months of salary.
- Standard stock option vesting.
- The original one-year non-compete clause.
In other words, their message was: take the default deal and move on.
The Gap Exposed: Why the First Offer in Severance Negotiation Is Not the Final Word
While the company’s response was predictable, it created the exact dynamic we wanted. There was now a clear gap between John’s expectations and the company’s offer, a gap that could only be bridged through further negotiation. The opening round established our seriousness, put the company on notice of its risks, and ensured that John was no longer just an employee at the mercy of HR. He was an executive with legal counsel, a strategy, and leverage.
This stage proved what every executive should know: the first demand matters. It frames the entire discussion, puts pressure on the company to defend its position, and creates room to negotiate toward a stronger outcome.
Stage 4: How Strategy Closes the Gap in Executive Severance Package Negotiations
Once the company made its predictable low response, the real work of negotiation began. Negotiating an executive severance package is not just about pushing for more money; it’s about applying pressure in the right places, demonstrating leverage, and creating solutions that make settlement more attractive than conflict. Here’s how we closed the gap between John’s demands and the company’s initial offer.
Tactic #1: Leverage Legal and Financial Risks When Negotiating an Executive Severance Package
We made it clear that the company had real exposure if it refused to negotiate in good faith. John’s employment history and age meant there were potential claims for breach of contract and age discrimination that could not be dismissed lightly. We spelled out the costs of litigation, financial, reputational, and cultural, and emphasized that a negotiated settlement was the smarter, cleaner option.
Tactic #2: Using Executive Contributions as Proof in Severance Package Negotiations
We did not let the conversation drift into vague HR language. Instead, we documented John’s tangible contributions: eight years of revenue growth, expansion of market share, and leadership during critical growth phases in the Bay Area’s hyper-competitive tech environment. We framed these achievements as more than résumé highlights. They were proof that John had delivered measurable value, and compensation should reflect that.
Tactic #3: Creative Solutions That Help Negotiate an Executive Severance Package
A stalemate often breaks when you introduce creativity. To address the company’s concern about cash flow, we proposed phased severance payments rather than a single lump sum. We also suggested a mutual non-disparagement agreement, which protected John’s reputation while reassuring the company that he would not criticize them publicly. These provisions reframed the negotiation as a two-way solution, not just a demand for concessions.
Tactic #4: Iterative Counteroffers in Executive Severance Negotiation Strategy
Negotiations rarely resolve in a single round. Over several exchanges, we maintained a balance of firmness and flexibility. Each counteroffer reiterated John’s key priorities: financial security, protection of stock option value, and reduced restrictions on his career. By keeping the focus consistent, we avoided being pulled into distractions and steadily narrowed the gap between the parties.
In the end, the process worked exactly as intended. The company realized that resolving the matter through negotiation was less risky and more cost-effective than testing its luck in court. More importantly, John’s priorities remained front and center throughout, ensuring that the concessions made along the way did not undermine his long-term interests.
To understand the strategies that make the biggest difference in severance discussions, read my blog: How to Negotiate Severance Like an Employment Lawyer
Stage 5: Final Results. What a Successful Executive Severance Package Negotiation Looks Like
After several rounds of back-and-forth, the negotiation reached a conclusion that reflected both leverage and strategy. John did not get every single demand met, but he secured an outcome that was far stronger than the company’s initial offer and directly aligned with his priorities.
Negotiating Executive Severance Pay: Salary and Compensation Wins
The final deal provided John with ten months of salary, nearly double what his employment agreement required. That extra four months of pay translated into meaningful financial security during his transition and reinforced the value of pressing beyond the company’s “standard” offer.
Stock Options in Executive Severance Package Negotiation
We negotiated the acceleration of 50% of his stock options. This was a critical win. Without acceleration, John would have walked away from years of accumulated equity. With it, he retained a significant stake that recognized his contributions to the company’s growth and rewarded the value he had already built.
Reducing Restrictive Covenants When You Negotiate an Executive Severance Package
We successfully cut the non-compete period in half, from twelve months to six. In California’s fast-moving tech sector, even a few months on the sidelines can damage a career. Reducing the restriction gave John breathing room to pursue new opportunities without being unnecessarily tethered to his former employer.
Protecting Reputation in Executive Severance Package Negotiations
The company also agreed to terms that went beyond dollars. A mutual non-disparagement agreement protected John’s reputation in the industry, ensuring that neither side would speak negatively about the other. On top of that, the company offered professional outplacement services that helped John re-enter the market smoothly.
Summary of Negotiation Outcome
This resolution accomplished exactly what we set out to achieve: maximize financial security, preserve equity value, and protect John’s professional reputation. Just as important, it eliminated the risks and costs of litigation for both sides. The company avoided a public fight, and John transitioned out with a package that reflected his years of service and left him positioned for future success.
Key Takeaways: Lessons Learned on How to Negotiate an Executive Severance Package
Looking back on John’s case, several lessons stand out that apply to almost every executive severance negotiation.
Lesson #1: Why Legal Guidance Is Critical When You Negotiate an Executive Severance Package
The single most common mistake executives make is trying to handle severance discussions on their own. By the time an attorney gets involved, leverage has often been lost. The sooner you bring in counsel, the stronger your position will be.
Read my blog, 7 Employee Mistakes That Ruin Severance Negotiations, to learn the pitfalls that can cost you money and leverage.
Lesson #2: Understanding Your Employment Agreement Before Severance Negotiation
You cannot negotiate effectively if you don’t know what’s in your own contract. Severance clauses, stock option provisions, and restrictive covenants all carry weight and they can all be negotiated if you know where the weaknesses are.
Lesson #3: Finding Leverage Points in Executive Severance Package Negotiation
Your value to the company, potential legal claims, and internal company policies can all create pressure points. In John’s case, his long tenure and measurable contributions gave us the credibility to push beyond the “standard” package.
Lesson #4: Strategic and Collaborative Approaches to Negotiating Severance Packages
A negotiation is not a shouting match. It’s about framing solutions that work for both sides. By offering phased payments and non-disparagement clauses, we showed the company there was a path to resolution that protected everyone’s interests.
Lesson #5: Protecting Reputation During and After Executive Severance Negotiation
Compensation is only part of the story. Non-compete clauses, confidentiality, and non-disparagement agreements can have long-term career consequences. Make sure your severance agreement doesn’t just pay you. Make sure it positions you to move forward without unnecessary restrictions.
FAQs: Frequently Asked Questions on Negotiating an Executive Severance Package
When should I hire a lawyer to help me negotiate an executive severance package?
It’s best to involve counsel as soon as you learn your role may be ending. Waiting until after you’ve started negotiations on your own can weaken your leverage.
What parts of my contract matter most when I negotiate an executive severance package?
Severance pay clauses, stock option provisions, bonus eligibility, and non-compete restrictions are the big-ticket items. Each of these can dramatically affect both your compensation and your future career opportunities.
Can I negotiate an executive severance package even if my company already gave me a written offer?
Yes. A company’s first offer is rarely its final word. A skilled negotiation can often increase compensation, reduce restrictions, and add protections that weren’t on the table initially.
What leverage do executives usually have when they negotiate an executive severance package?
Leverage comes from your documented contributions, potential legal claims, and the company’s desire to avoid litigation or reputational damage. Executives with long tenures and measurable results often have more leverage than they realize.
How important is confidentiality when I negotiate an executive severance package?
Very. Confidentiality clauses and mutual non-disparagement terms can protect your reputation in the industry and ensure your exit doesn’t hinder future opportunities.
What mistakes should I avoid when trying to negotiate an executive severance package?
The most common mistake is starting negotiations without legal counsel. Others include focusing only on salary while overlooking equity, restrictive covenants, or reputation protections.
Can I negotiate an executive severance package without a lawyer?
You can try, but it puts you at a disadvantage. Companies know the law and often draft severance agreements to favor themselves. Without a lawyer, you may miss hidden leverage, accept restrictive terms, or leave significant money behind. An experienced employment lawyer can identify pressure points, protect your rights, and often secure a far better outcome than you could on your own.
How long does it take to negotiate an executive severance package?
Most executive severance negotiations take between 30 and 60 days. The timeline depends on the complexity of your compensation, the company’s willingness to negotiate, and how clearly your priorities are defined. With focused strategy and legal guidance, negotiations often resolve more quickly and on stronger terms.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no-obligation evaluation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
