Contractual protection is strongest when negotiated before employment begins
When an employment agreement establishes severance or other protection, the firm analyzes the contractual rights and negotiates the related economics. Where the company has no obligation to provide severance, later discussions may be business-focused and results depend on the circumstances.
This overview is particularly relevant to senior executives facing a separation involving an employment agreement, material equity or deferred compensation, carried interest, a guarantee, or other significant contractual rights.
What we help you understand
- What the company is required to pay and what may be subject to negotiation
- What happens to bonus, equity, deferred compensation, and benefits
- What a release or post-employment restriction may require
- Whether payment timing and tax terms need attention
Key contractual rights to review
A separation review should identify the executive's contractual rights to salary, bonus, severance, benefits, equity, deferred compensation, carried interest, indemnification, expense reimbursement, and legal-fee contributions. It should also identify release conditions, payment timing, clawback provisions, and post-employment restrictions.
Release and preserved rights
A separation agreement often includes a broad release drafted on the employer's standard form. The release should be reviewed as part of the overall executive arrangement to ensure that the executive is not releasing claims or rights that should be preserved. This is a central part of an executive-level separation review.
Equity, carry and deferred compensation
Termination may affect vesting, forfeiture, repurchase rights, valuation, payment timing, carried interest, and deferred compensation. A separation agreement should not be evaluated independently from the underlying employment, equity, award, LLC, LP, and deferred-compensation documents.
Continuing restrictive covenants and forfeiture provisions
A separation agreement should be reviewed together with every document that may impose continuing restrictions or place compensation at risk after employment ends. An executive may be bound by restrictive covenants in an employment agreement, equity award, deferred-compensation arrangement, plan document, LLC or LP agreement, or other governing document. Those provisions may cover different conduct and apply for different periods. Deferred compensation, carried interest, equity, or other payments may also remain subject to forfeiture or clawback for specified conduct after employment ends. Before signing a separation agreement or beginning a new role, the executive should understand which restrictions and forfeiture provisions remain in effect and how they interact.
Business-focused severance negotiation
Where the employer has no contractual severance obligation, an executive may still seek a business resolution. The available leverage and outcome depend on the facts, the executive's role, the employer's objectives, existing contractual rights, and the value of an orderly separation. The firm does not promise a result or treat severance as automatically owed in the absence of an agreement.
Frequently asked questions
Can I obtain severance if I do not have an employment agreement?
Possibly, through a business-focused negotiation, but no legal entitlement should be assumed. The firm evaluates the executive compensation and contractual aspects of the situation; it does not evaluate or litigate stand-alone employment-law claims.
What contractual rights should be reviewed before signing a separation agreement?
The answer depends on the executive's documents and circumstances. The review may include severance, bonus or guarantee rights, equity, carried interest, deferred compensation, restrictive covenants, releases, indemnification, and any continuing obligations.
Why does the reason for termination matter?
The reason for termination can determine whether severance is payable, whether a bonus is earned, whether equity continues to vest or is forfeited, whether a repurchase right applies, when deferred compensation is paid, and whether restrictive covenants remain in effect. Resignation, termination without Cause, termination for Cause, disability, death, and resignation for Good Reason can have materially different consequences. The governing definitions, notice and cure provisions, and related documents should be reviewed together.
What happens to equity when I am terminated?
The answer depends on the employment agreement, equity award, and applicable governing documents. The reason for termination, vesting status, repurchase rights, valuation terms, and restrictive covenants can all matter.
Do you handle wrongful-termination or discrimination cases?
No. The firm does not evaluate or litigate stand-alone employment claims, including wrongful termination, discrimination, harassment, retaliation, wage-and-hour claims, unemployment matters, or similar workplace disputes.