I’m Matt Ruggles. I’ve been practicing employment law in California for over 30 years, and I’ve helped executives negotiate every kind of severance you can imagine. One of the smartest and most overlooked strategies is what I call a negotiated exit, sometimes referred to as an executive exit agreement or a structured exit arrangement.
Here’s the idea: instead of waiting to be fired or walking away with nothing, you step forward and propose a clean separation. You say to the company, “This isn’t working, and here’s how we’re going to end it.” In response, the company pays you severance in exchange for your agreement not to sue. On paper it gets dressed up as a separation agreement, a transition package, or just a severance negotiation, but the structure is the same. They pay, you release your claims, and both sides avoid a drawn-out mess.
The difference from resigning is leverage. If you resign, you give up all bargaining power. If you wait to be terminated, you risk leaving empty-handed and tarnishing your reputation. A negotiated exit flips the script. You’re not asking for charity. You’re offering the company exactly what they want: a way to get rid of you, but on terms that also protect you.
I wrote this blog to give you a clear overview of what a negotiated exit is, why it works, and how to approach it the right way. Think of it as a strategy guide for executives who want to leave on their own terms, with leverage intact and severance secured.
What Is a Negotiated Exit Agreement for Executives in California?
Now that you know what I mean by a negotiated exit, let’s break it down more formally.
A negotiated exit, or structured exit agreement, is when you separate from your company on mutually agreed terms rather than waiting to be terminated or just handing in your resignation. It’s not you storming out, and it’s not them showing you the door. It’s a proactive move where you say, “This isn’t working, and here’s the way I propose we end it.”
How a Negotiated Exit Differs From Resignation or Termination
That agreement almost always takes a written form. Sometimes it’s called a separation agreement, other times a transition package, and sometimes it’s simply a severance negotiation. No matter the label, the idea is the same: the company pays you severance in exchange for your release of claims. In plain English, they’re paying you to walk away clean.
The key difference between this and simply resigning is leverage. If you resign, you leave with nothing, and the company doesn’t owe you a dime. If you wait for them to terminate you, you’re at their mercy, and you risk walking away with no severance and a mark against your career. A negotiated exit flips the script. You’re not passively waiting. You’re putting the option on the table that they probably want anyway, getting rid of you, but you’re doing it in a way that requires them to pay you fairly for the privilege
Why Executives Overlook Structured Exit Agreements
That’s why I call it unique. Most executives don’t even realize it’s on the menu. But once you see the dynamics clearly, it’s obvious: you’re better off approaching your employer with a structured, professional proposal than gambling on what they might decide to do with you.
Why Senior Leaders Choose a Negotiated Exit in California
The reason senior leaders choose a negotiated exit usually comes down to this: things aren’t getting better, they’re getting worse. And if you’ve been in the game as long as I have, you know where that road leads. I’ve seen it thousands of times. Once the company starts rescinding promotions, piling on responsibilities without compensation, or showing you they don’t trust you, it’s only a matter of time before you’re managed out. The smart move is to take control of your exit before they make that call for you.
Reason #1: Protecting Reputation and Professional Brand
Your professional reputation is one of your most valuable assets. If you resign abruptly or wait to be fired, you risk leaving on terms that you can’t explain cleanly to the next employer. With a negotiated exit, you protect your brand by walking away under a mutual separation. Instead of answering “Why were you fired?” you can say, “We mutually agreed to part ways.” That matters because no one wants to walk into their next interview carrying the stigma of termination.
Reason #2: Securing Severance Pay to Bridge to New Employment
The primary reason we negotiate is money, but not as a reward for the executive’s past success at the job, but to bridge the gap to your next role. In today’s market, especially at the executive level, finding comparable employment can take months. Understanding how to measure that payment is key to potential success.
Too often, executive demand an outsized severance package because the executive contends “I earned it.” That is a serious mistake that makes the severance negotiation much easier to simply decline. Pegging the severance payment to how long it will take you to obtain comparable subsequent employment is the best method for determining how much to ask for.
Reason #3: Avoiding the Stigma of Termination or Unexplained Resignation
If you wait to get fired, you don’t control the story. And even if you try not to mention it, a termination has a way of surfacing and you don’t want to be stuck explaining away a decision the company made against you. On the flip side, if you just resign, it can look like you walked away from a solid job for no reason. Both options undermine your career story. A structured exit removes the guesswork. It allows you to leave with an agreement in hand that explains itself: a negotiated, professional separation.
Reason #4: Controlling the Departure Narrative for Future Roles
The bottom line is narrative control. Do you want to tell the story of being terminated, or of walking out with a package and a plan? A negotiated exit lets you shape how your departure is seen by colleagues, future employers, and even your own professional network. You can say, “It was a mutual decision, and I left on good terms,” instead of fumbling through excuses about why things went south. That’s not just spin, it’s about protecting your future opportunities.
If your current employer is already backing away from promises, scaling back your role, or signaling that you’re not in their long-term plans, you’re better off owning your exit. I’ve seen too many executives wait and hope things will turn around, only to get blindsided by a termination they should have seen coming.
If you’re an executive in California considering a negotiated exit, don’t leave money or protections on the table. Call the Ruggles Law Firm at 916-758-8058 for a free, confidential evaluation of your situation.
Why Employers Agree to Negotiated Exit Agreements
Executives sometimes ask me, “Why would the company ever pay me to leave?” Let me give you the blunt truth: because it’s in their best interest, not yours.
Reason #1: Minimizing Legal Risk Through Severance
From the employer’s perspective, you’re a problem they want off their plate. Once we send a letter demanding an exit plan and payment, the employer knows if they don’t work with us, we’re going to sue them. And I don’t bluff. I’ve filed hundreds of lawsuits up and down California. Even if they win, it’s still a loss for the employer because they have to pay their lawyers to defend the lawsuit, the company must spend precious time on the lawsuit, and most lawsuits are uncomfortable, expensive affairs. Many employers would much rather cut a check and move on.
Reason #2: Managing Executive Transitions Smoothly
The alternative for them is trying to “manage you out.” That’s a big pain for the employer. HR meetings, fake performance reviews, months of games just to get rid of you. A negotiated exit lets them skip all that. They get what they want right now (you out) and they don’t have to waste a year pretending they’re giving you a fair shot when everyone knows they’ve already made up their mind.
Reason #3: Preserving Company Brand and Morale
They also don’t want a messy fight with a senior leader poisoning morale or making them look bad. If they drag it out, people inside the company start talking. Shareholders start asking questions. With a negotiated exit, they get to put out the line, “We mutually agreed to part ways.” It sounds clean. Nobody asks too many questions.
Reason #4: Ensuring Confidentiality and Finality
And make no mistake, the employer wants closure. They don’t want you walking out the door with a potential claim hanging over their head. Severance buys them peace. You sign, you waive your claims, and it’s done. Final. Over. That’s worth a lot to most employers.
So why do they agree? Because compared to a lawsuit, compared to months of HR nonsense, compared to the hit on morale and brand, paying you severance to leave is the cheapest, cleanest solution. It’s not charity. It’s damage control.
Timing Your Negotiated Exit as a California Executive
One of the biggest mistakes I see executives make is waiting too long. They sit there hoping things will turn around when the truth is staring them in the face. Let me be clear: if things are getting worse, not better, it’s only a matter of time before they push you out.
Signs the Employment Relationship Is Breaking Down
You know the signs. Promotions promised and then yanked back. Responsibilities doubled without support. Suddenly you’re not in the loop on big decisions. Those aren’t small things. They’re signals the company doesn’t see you in their long-term future. If you’re seeing those red flags, you’re already on borrowed time.
Reorganizations, New Leadership, and Strategic Shifts
Anytime there’s a reorg or new leadership, the risk goes up. A new CEO, a private equity buyout, a “strategic shift.” All of those mean the old guard gets thinned out. If you’re not part of their new vision, you’re a target. I’ve seen executives hang on thinking they can prove themselves to new leadership. Nine times out of ten, they get cut anyway.
Using Bonus Cycles and Equity Vesting as Leverage
Timing isn’t just about survival, it’s about leverage. If you’re close to a bonus payout, equity vesting, or a contract renewal, that’s the moment to move. Companies don’t want the fight, and they’d rather pay you cleanly than risk a dispute over money you almost earned. Done right, you can walk away with severance plus what you were already owed.
Why Timing Directly Impacts Severance Negotiation Power
Here’s the ice water: your leverage only goes down after termination. Once they’ve fired you, you’re negotiating from a hole. But if you make the move while you’re still employed, you’re more in control. You’re offering them the solution they want – getting rid of you – but on your terms. That’s why timing isn’t just important; it’s everything.
What Are the Best Kinds of Leverage in Severance Negotiation?
Not all leverage is equal. The strongest leverage creates genuine legal or reputational risk for the employer i.e. risk they may wish to avoid by offering a better severance package.
The most effective leverage in employment negotiations often stems from potential legal claims arising out of your employer’s conduct during your employment or at the time of your termination. If your termination followed a protected activity such as reporting unpaid wages, raising safety concerns, or requesting an accommodation for a temporary disability, you may have legal rights under California law. These legal claims create risk for the employer, including potential liability, litigation costs, and reputational harm.
Credible claims often fall under the following statutes:
- Labor Code § 1102.5 – Protects employees who report unlawful or noncompliant conduct by their employer, whether internally or to a government agency. Employers may not retaliate against workers for disclosing illegal activity.
- Labor Code § 6310 – Prohibits retaliation against employees who report unsafe working conditions or other violations of occupational safety and health laws.
- Government Code § 12940 (FEHA) – Prohibits discrimination, harassment, and retaliation based on protected characteristics such as race, gender, disability, age, and more. Also protects employees who request accommodations or complain about discrimination or harassment.
- Labor Code § 200 – Defines wages and compensation subject to protection under the Labor Code.
- Labor Code § 201–203 – Requires prompt payment of wages upon termination. Waiting time penalties may apply if the employer delays final pay.
- Labor Code § 204 – Requires regular, timely payment of wages during employment.
- Labor Code § 221 – Prohibits employers from recovering wages already paid to an employee, even if the employee did not meet a quota or sales goal, unless authorized by law.
- Labor Code § 226 – Requires employers to provide accurate itemized wage statements showing hours worked, pay rates, and other required information.
- Labor Code § 1194 – Allows employees to recover unpaid minimum wages or overtime, plus interest and attorney’s fees.
If you want to understand how leverage works when negotiating severance, read my blog, How To Use Leverage in Severance Negotiation.
How to Calculate Executive Severance Pay in California
Let’s get one thing straight: severance isn’t a gold star for past performance. It’s not a thank-you note from the company. The principle is simple: severance is there to bridge the gap until you land another comparable job. That’s it.
Seniority and Length of Service Considerations
The longer you’ve been with the company, the more runway you can usually negotiate. But don’t kid yourself, even with long tenure, companies don’t hand out unlimited amounts of severance payments. They calculate risk and cost. If you’ve been there a year, six months of severance is the absolute max you’ll see, and that’s on your best day and their worst day, meaning you will likely get less.
Market Search Time for Comparable Executive Roles
At the executive level, the job market isn’t fast. Finding a new role can take months. That’s why I usually frame the ask in terms of months rather than years. Anything beyond that is rare unless you’ve got major leverage. Think of it this way: the severance should cover a realistic search period, not fund early retirement.
Bonuses, Unvested Stock, Retirement Contributions
Don’t forget the extras. If your bonus cycle is coming up, or you’ve got equity about to vest, those are bargaining chips. Same goes for retirement contributions that would have been made if you’d stayed. A strong negotiation pulls these into the package. Otherwise, you’re leaving money on the table.
Health Coverage, COBRA, and Benefits Continuation
Health insurance is expensive, and employers know it. Pushing for COBRA coverage or continued benefits for the length of severance is standard. It doesn’t cost them much compared to writing you a bigger check, and it saves you thousands.
Balancing Reasonable Demands With Firm Negotiation
Here’s the balance: don’t come in asking for the moon, but don’t sell yourself short either. If you ask for something outrageous, you lose credibility. If you ask for too little, you leave real money behind. The sweet spot is positioning yourself as reasonable but firm.
The goal is not to win the lottery. The goal is to leave with enough runway to land your next role without panic. That’s how you calculate severance. Strategically, not emotionally.
If you want to know how to calculate your severance pay demand effectively, read my blog, Severance Pay Demand: How to Calculate Effectively.
Why You Need a Lawyer for Executive Severance Negotiation
If you’re thinking about walking into HR and trying to negotiate your own exit, stop. That’s one of the fastest ways to blow it. Executives are used to running the show, but this isn’t the place to freestyle. You need a lawyer leading the conversation. Here’s why.
Reason #1: Keeping Negotiations Professional and Strategic
When it’s your career on the line, it’s personal. And personal means emotional. If you sit across the table and start venting about broken promises or unfair treatment, you’ve already lost leverage. A lawyer keeps it professional. We take your story and present it as a legal and business issue, not a therapy session.
Reason #2: Raising Potential Claims Without Escalating Conflict
You can’t just say, “I’ll sue you.” That turns into a war. What we do is imply the claims may exist. We make it clear that if the company doesn’t deal fairly, litigation is on the table. And that’s not an idle threat, I’ve filed hundreds of lawsuits across California. Companies know that if I’m involved, the risk is real. But by framing it the right way, we push them toward settlement instead of a courtroom fight.
Reason #3: Using an Employment Lawyer to Gain Leverage
When a letter comes from me instead of you, it sends a signal: this person isn’t messing around. They’ve lawyered up, and they’ve chosen someone who sues companies for a living. That changes the entire calculation. Without that, they might brush you off. With it, they pick up the phone.
Reason #4: Ensuring Severance Agreements Are Enforceable
Even if you get a deal on your own, the fine print can bury you. Non-competes, non-disparagement clauses, clawbacks, I’ve seen executives sign away rights they didn’t even realize they had. Part of my job is making sure the agreement protects you, not just them. Because once you sign, you don’t get a do-over.
Reviewing and Responding to Employer Severance Proposals
Once the company comes back with their proposal, that’s when you have to read it with a clear head. On the surface, it may look fine. But I’ve been doing this long enough to tell you: the devil is always in the details.
Positive Employer Responses You May Encounter
Every once in a while, you’ll get an employer that plays it straight. They want to move on cleanly, they’re willing to pay a fair amount, and they don’t try to sneak in poison pills. That’s the best-case scenario. But let’s not kid ourselves because it’s not the norm.
Common Negative Responses and Lowball Offers
More often, you’ll see the other side of the spectrum. Lowball offers that wouldn’t even cover a month of expenses. Threats like, “Take it or we’ll just terminate you.” Or sometimes, they flat-out refuse to negotiate at all. That’s when you know they’re testing you i.e. trying to see if you’ll fold. If you don’t have someone like me pushing back, that’s usually where executives cave.
Reading Between the Lines of Severance Proposals
Don’t just look at the number on the front page. Read between the lines. What’s in the release? Are they trying to block you from ever working in your industry again with a non-compete? Are they stuffing in non-disparagement so broad you couldn’t even tell your spouse what happened? Are they dangling a “bonus” while quietly taking away your stock or benefits? If you only read the top-line severance number, you’ll miss the landmines buried underneath.
Deciding Whether to Accept, Counter, or Escalate Negotiations
The decision point is simple: does this deal give you real protection and a fair bridge to your next job, or is it just hush money dressed up as severance? If it’s the former, you might accept. If it’s the latter, you counter. And if they keep stonewalling, you escalate. That’s when we remind them that the alternative isn’t you walking away quietly, it’s your lawyer filing a lawsuit. And companies know once that happens, it gets expensive fast
If you are considering a structured exit or California executive severance negotiation, call the Ruggles Law Firm at 916-758-8058 for a confidential consultation.”
Bridging the Gap in Executive Severance Negotiation
Sometimes the company’s number and your number aren’t even in the same zip code. That doesn’t mean the deal is dead. It means we get creative. The worst thing you can do is dig in your heels and demand “X months or nothing.” That makes you look unreasonable, and once you lose credibility, the negotiation is over.
Breaking Compensation Into Components
Severance isn’t just one check. It’s cash, health coverage, equity, bonuses, retirement contributions. If the company balks at writing a bigger check, maybe we press for COBRA coverage, accelerated vesting, or payout of earned bonuses. Breaking it apart often makes the number easier for them to swallow and sometimes it adds up to more for you than the straight cash you were chasing.
Creative Solutions for Executive Severance Packages
I’ve had executives land consulting roles for a few months as part of their package. It saves the company face, they can say you’re “transitioning,” and it keeps money flowing to you. Extended vesting on stock is another lever. Even outplacement services can be thrown in if this benefit saves you thousands of dollars while you search. These aren’t throwaways; they’re tools to close the gap.
If you’re curious to learn about the specifics of negotiating terms in an executive severance agreement, read my blog, How to Negotiate Executive Severance Agreement Terms.
Considering Phased Exits or Transition Roles
A phased exit is another card to play. Instead of a hard cutoff, you stay on for a transition period with pay and benefits intact. It gives the company continuity and you more runway. The key is framing it as a win for them, not just you.
How Executives Stay Professional and Credible in Negotiations
Here’s the ice water: the moment you sound greedy or emotional, you lose. Companies will not pay someone they think is unstable or trying to score a windfall. They’ll fight instead. The way you win these negotiations is by staying professional, reasonable, and firm. You want them thinking, “This is a clean solution,” not “This guy’s out of his mind.”
That’s how you bridge the gap. With strategy, not stubbornness.
Closing the Negotiated Exit Agreement in California
If you’ve made it this far, don’t let your guard down. I’ve seen too many executives fight hard to get a package and then sign a lopsided agreement that undercuts everything they just won. Closing is where you need to slow down and make sure every word protects you.
Confirming All Critical Terms in Writing
Severance pay is obvious, but it’s not the only thing that matters. Benefits, equity, bonuses, retirement contributions, COBRA coverage must all be nailed down in writing. And don’t forget the soft stuff: references, confidentiality, and non-disparagement. If those aren’t clear, you could end up with money in your pocket but a reputation in tatters.
Carefully Reviewing the Written Agreement With Your Lawyer
This is not the time to skim. I don’t care how good the number looks, if the agreement has hidden traps, you’ll regret it. I’ve seen executives sign away rights they didn’t know they had, or agree to terms that made them un-hirable in their industry. Your lawyer reviews every line. That’s how you make sure the deal you think you’re signing is the one you actually get.
Considering Tax Implications and Scope of Release
Severance isn’t free money. The IRS will get its cut, and if you don’t plan for it, the numbers can look a lot smaller after taxes. The scope of release – that’s the legal language where you’re giving up your claims – matters more than anything. If it’s too broad, you could be waiving rights you don’t even realize you’re giving away.
Protecting Your Career for the Next Chapter
The point of a negotiated exit isn’t just surviving today. It’s setting yourself up for tomorrow. A clean agreement protects your finances, your reputation, and your ability to step into your next role without baggage. That’s what you’re buying when you close it right: stability and a clear runway to the next chapter.
Frequently Asked Questions About Negotiated Exits for Executives in California
What does a negotiated exit agreement mean for executives in California?
A negotiated exit is a structured severance agreement that allows an executive to leave on mutually agreed terms, often with severance pay and benefits, instead of facing termination or resigning without compensation.
How much severance can an executive negotiate in a California exit agreement?
While it varies by leverage and circumstances, most executives can realistically negotiate four to six months of pay, plus benefits continuation, and potentially bonuses or equity vesting if the timing is right.
When should executives start negotiating an exit in California?
The best time is while still employed. Once an executive is terminated, leverage drops significantly. Warning signs like reduced responsibilities, reorganizations, or withheld promotions are signals it’s time to consider negotiating.
Do I need a lawyer to handle California executive severance negotiations?
Yes. Employers take the negotiation more seriously when a lawyer is involved. An attorney ensures the agreement protects your rights, avoids hidden traps, and maximizes your severance package.
Conclusion
A negotiated exit isn’t a soft landing, it’s a strategy. Instead of sitting around waiting to be fired or walking away empty-handed, you take control and set the terms. You’re trading your legal claims, strong or weak, for certainty, money in your pocket, and a clean break. That’s a smarter play than hoping the company does right by you, because usually they won’t.
The goal is simple: secure a severance package that bridges you to your next opportunity while protecting your career and your reputation. When done right, you walk out the door with pay, benefits, and a mutual separation, not a pink slip or a scarlet letter on your résumé.
I’ve been practicing employment law in California for over 30 years, and I’ve helped executives at every level negotiate these exits. If you’re at that point where the writing is on the wall, don’t wait until the company makes its move. Call me. We’ll talk about whether a negotiated exit makes sense for you, and if it does, we’ll make sure you don’t leave money on the table.
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.
