Big Dollar Severance Packages - How to Get Them
The CEO of a California hospital was recently fired and given a severance package worth nearly $1 million. See story. How did he do it? How can you get fired and walk away with a million dollars?
It requires advance planning. The CEO was protected by a severance pay clause in his written employment agreement that guaranteed him 18 months pay if he was fired without cause. These clauses are enforceable. Also, the CEO's employment agreement provided a "non-disparagement" clause that prevented the hospital from saying anything bad about him. Not a bad deal.
How did he do it? First, he had the leverage to request it because he had an important skill that the company needed. Second, he probably had a good employment lawyer who knew to ask for it and how to draft the provision for him. Anyone who is negotiating a high level position with a company should be sure to get help in drafting the employment contract because severance pay provisions can make a big difference.
The lesson here is that advance planning can make your life much easier in the future if things go wrong at work. No one wants to think about getting fired when you are getting hired, but that is the best time to protect yourself. If you find yourself negotiating an employment contract, make sure you include a severance pay clause. If you wait to ask for severance pay after things turn ugly, then it is too late and you will have little leverage.
If you don't have an employment contract that contains a severance pay provision, then you should look at your companies policy manual. Some companies actually set out severance pay guidelines or formulas and those can be used as well. If your company has such a policy, then you should get a copy asap and keep it at home. Sometimes companies terminate employees without notice and cut off their access to company materials and then it is too late. Again, advance planning is the key.
