How executives negotiate severance after a merger or layoff is rarely discussed openly, even though mergers are routinely sold as exercises in efficiency, synergy, and strategic alignment. For corporate executives, however, mergers often carry a quieter subtext: redundancy, reshuffling, and difficult personnel decisions made behind closed doors.
For senior executives, especially CFOs, the risk is not merely that a role becomes duplicative. It is that prior events, internal conflicts, or inconvenient truths can quietly shape who is selected for termination once the merger dust settles.
I am Matt Ruggles, and I have been practicing employment law in California for more than 30 years. I have represented many C-suite executives in severance negotiations after they were laid off due to a merger, as well as for many other reasons. This issue comes up constantly in my conversations with executives every week: how severance negotiations actually work in the real world. Every negotiation is different, and every executive’s situation is unique. That said, one of the most useful ways to understand the process is to walk through a successful negotiation we have already completed, because it shows how leverage is identified and used in practice.
This case study illustrates how early legal counsel, careful investigation, and disciplined negotiation allowed a California-based CFO of a national company to significantly increase his severance package by six figures after being selected for termination during a merger. The key leverage was not bravado or threats, but a credible retaliation concern supported by contemporaneous internal communications.
For a deeper dive into strategies to increase severance, read my detailed blog: How to Maximize Your Severance Offer in California.
I have been negotiating executive severance packages in California for decades, and I know how these situations actually play out. If you have been terminated and are reviewing a severance offer, call me at the Ruggles Law Firm at 916-758-8058.
Why Executives Are Selected for Termination After a Merger
Our client was the Chief Financial Officer of a national company with operations across multiple states. When the company announced it was entering into a merger, he did what prudent executives do: he evaluated his own exposure.
At first glance, the risk appeared straightforward. The acquiring entity already had a CFO. Redundancy seemed inevitable, and the client reasonably assumed that his position might be eliminated as part of post-merger consolidation.
Anticipating that possibility, he sought legal advice early (before any termination decision was formally announced). That first decision turned out to be the most important one he made.
During our initial conversations, we focused on what many executives overlook: not just whether termination might occur, but why the executive might be selected.
If you’ve been laid off and are staring at a severance agreement, read my blog: California Severance Negotiation After Layoffs: What to Know Before You Sign.
How Protected Activity Can Affect Executive Severance Negotiation
As we conducted our intake and background review, a more complicated picture emerged.
Months earlier, the CFO had been interviewed by government investigators in connection with an investigation into alleged financial misconduct at the company. Importantly:
- The CFO was not accused of wrongdoing.
- He cooperated fully and truthfully.
- His testimony contradicted certain internal narratives the company had previously advanced.
While the CFO did exactly what regulators and the law expect, his cooperation created internal friction. Other executives complained privately that his testimony was “unhelpful” and “made things harder.” Those comments never rose to the level of formal discipline, but they lingered.
When the merger was announced, the client began to suspect that his cooperation, rather than pure redundancy, may have influenced the decision to select him for termination.
That suspicion mattered.
Under California law, retaliation against an employee for engaging in protected activity is unlawful. Protected activity includes cooperating with government investigators, reporting suspected wrongdoing, or participating truthfully in an investigation. Both the Fair Employment and Housing Act (FEHA) and California Labor Code section 1102.5 prohibit employers from taking adverse employment action based on this type of conduct, even when the employer later characterizes the termination as part of a merger, layoff, or reduction in force.
If you’re curious why wrongful termination lawsuits under the FEHA often backfire on employers, read my blog: Wrongful Termination Lawsuits Under the FEHA: A Costly Gamble for Employers.
Using Internal Emails and Timing to Strengthen Executive Severance Negotiation
Before taking any aggressive position, we did what executive-level employment disputes demand: we investigated.
Through our early fact-gathering, we learned of internal emails exchanged by senior leadership shortly before the layoff decision was finalized. Several of those emails were close in time to discussions about:
- The CFO’s testimony to investigators, and
- The upcoming merger-related terminations.
One email, in particular, appeared to directly link the two topics in a way that raised a red flag. While no email explicitly said “we are laying him off because he testified,” the proximity, tone, and context strongly suggested that his cooperation was part of the decision-making calculus.
From a litigation standpoint, this was meaningful evidence. From a business standpoint, it was even more important.
The company now faced a real risk that a merger-related termination could be reframed as a retaliation claim i.e. one involving a senior executive, government cooperation, and written internal communications.
If you want to learn how to use leverage to improve your severance deal, read my article: How To Use Leverage in Severance Negotiation.
Executive Severance Negotiation Strategy Without Triggering Litigation
Even with strong evidence, resolving executive severance disputes is rarely about proving who is “right” in a courtroom.
The real challenge was strategic: how to present the issue in a way that encouraged resolution without triggering defensiveness, delay, or scorched-earth litigation.
We made a deliberate choice not to:
- Demand an outsized or punitive severance package,
- Threaten immediate litigation,
- Publicly accuse the company of retaliation, or
- Posture in a way that undermined the client’s reputation or future prospects.
Instead, we presented the issue business-to-business, grounded in risk analysis rather than accusation.
Our communication to the company did three things:
- Clearly identified the legal concern: that the timing and content of internal communications created a credible retaliation issue under California law.
- Explained the risk pragmatically: including litigation exposure, discovery into sensitive merger communications, and reputational considerations.
- Proposed a reasonable resolution: an enhanced severance package that fairly compensated the CFO and allowed all parties to move forward cleanly.
If you’d like to know how employment lawyers approach severance deals, read my guide: How to Negotiate Severance Like an Employment Lawyer.
Executive Severance Negotiation Results: Increasing Severance by Six Figures
That approach worked.
After reviewing the evidence and understanding the risk, the company engaged constructively. Rather than deny or delay, it worked with us to resolve the matter quickly and discreetly.
The severance offer was increased by a six-figure amount, along with improved terms that allowed the CFO to exit with dignity and financial security and without litigation.
Just as importantly, the resolution preserved professional relationships and avoided public conflict at a sensitive moment in the company’s merger process.
I do this work every week. I know where leverage exists and how severance negotiations succeed or fail. If you are considering a severance negotiation after a merger or layoff, call me at the Ruggles Law Firm at 916-758-8058.
Why Executive Severance Negotiation Requires Early Legal Strategy
This case underscores several critical lessons for corporate executives navigating mergers, investigations, or leadership transitions:
Lesson #1: Your best decision is often the earliest one.
Hiring legal counsel before termination decisions are finalized dramatically improves outcomes. Once decisions harden, leverage diminishes.
Lesson #2: Redundancy is not a shield for unlawful motive.
Even in a merger, employers cannot select executives for termination because of protected activity. Timing and documentation matter.
Lesson #3: Leverage is most effective when used realistically.
The goal is not to “win” a lawsuit but rather to persuade the employer that a fair severance package is better than unnecessary risk.
Lesson #4: Credibility matters.
Executives who approach these situations professionally, supported by counsel who understands both the law and the business realities, are far more likely to achieve favorable results.
If your employer says your severance offer is “non-negotiable,” read my blog: Non-Negotiable Severance in California: 5 Myths Dispelled By a Lawyer.
Executive Severance Negotiation FAQs (Merger and Layoff Scenarios)
Is executive severance negotiation possible after a merger or layoff?
Yes. Executive severance negotiation is often possible after a merger or layoff, even when the employer claims the decision was purely based on redundancy. Executives frequently have leverage tied to timing, internal communications, protected activity, or contractual obligations that can support a stronger severance package.
How is executive severance negotiation different from standard severance negotiations?
Executive severance negotiation typically involves higher stakes, more complex compensation structures, and greater legal risk for the employer. Executive severance packages often include bonuses, equity, deferred compensation, and reputational concerns that do not arise in standard severance negotiations after a layoff.
Can executives negotiate severance after a merger if their role was eliminated?
Yes. Even when a role is eliminated during a merger, negotiating severance after a merger is common. Employers cannot use a merger as cover for unlawful motives, and executives selected for termination may have leverage based on retaliation concerns, inconsistent selection criteria, or internal decision-making documents.
What leverage matters most in executive severance package negotiation?
The most effective leverage in executive severance package negotiation usually comes from risk, not threats. This includes evidence of protected activity, problematic timing, internal emails, inconsistent explanations, or exposure under California employment laws. Strong negotiations focus on realistic risk assessment, not confrontation.
Should an executive hire a lawyer for severance negotiation in California?
In most cases, yes. Negotiating severance in California as an executive often involves legal issues that are not obvious on the surface. Early involvement of an employment lawyer can significantly increase severance value and improve exit terms before positions harden and leverage is lost.
Final Thoughts: Executive Severance Negotiation After a Merger or Layoff
For this CFO, the outcome was not accidental. His best decision was his first one: retaining legal counsel at the outset, before assumptions became conclusions. His second best decision was agreeing to a strategy that used legal leverage intelligently without overreach.
In executive-level employment disputes, the strongest position is rarely the loudest one. It is the position that is informed, disciplined, and backed by evidence.
If you are a corporate executive facing uncertainty during a merger, investigation, or leadership transition, early advice can make the difference between accepting what is offered and negotiating what is fair.
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.
