Forced Out or Let Go? What Every Executive Needs to Know Before Signing a Severance Agreement

Losing an executive role isn’t just a career change. It hits deeper. 

Your calendar clears, emails stop, and decisions you once made without hesitation now feel uncertain. You’re handed a severance agreement with pages of legal language, deadlines, and clauses that sound straightforward, but rarely are.

You’re expected to process everything quickly. Stay composed. Make the right call. But the truth is, your next move needs more than quick decisions. It needs clarity. It needs leverage. And most of all, it needs someone in your corner who knows what’s at stake and how to protect what you’ve built.

Our business transaction lawyers at Horn Wright, LLP, represent high-level professionals across New York in exactly this position. We take complex severance agreements and translate them into real choices - negotiating terms that reflect your value and protect your future. 

Golden Parachutes. Stock Options. All the Big Stuff. Don’t Let Them Slip Through Your Fingers

You’ve built more than a job title. Over the years, you’ve earned equity, incentive bonuses, and long-term comp structures that aren’t always protected when your role ends. If you don’t speak up now, you could lose what you worked years to earn.

• Golden Parachutes: These are large payouts offered during mergers or high-level terminations. But if your package exceeds three times your base compensation, you could face a 20% excise tax under Section 280G. That could turn a strong exit into a financial loss.
• Stock Options and Equity: Restricted Stock Units (RSUs), performance shares, and options are often tied to employment. If the agreement doesn’t include accelerated vesting or extended exercise windows, you risk losing a significant part of your comp.
• Deferred Compensation: These payouts may be tied to a long-term plan, but if it doesn’t follow Section 409A requirements, the Internal Revenue Service (IRS) could trigger taxes and penalties, on top of the regular rate.
• Tax Gross-Ups: These provisions were designed to offset severance-related tax burdens, but they’re becoming rare. If your deal includes one, make sure it actually covers all expected liabilities, not just income tax.

Talk to commercial contract attorneys in New York who know how these clauses really work and can help you preserve what you’re owed.

They’ll Try to Shrink Your Severance. Here’s How to Make Sure They Don’t.

When an executive is asked to leave, the company may try to protect its bottom line by minimizing exit package. That often means presenting a polished agreement that looks “fair” on the surface but leaves out things you rightfully deserve. The key is to slow the process down and examine every line with a fine-tooth comb.

Base Salary Continuation

Some companies try to limit salary payouts to the bare minimum by tying them to vague policy references or undefined “standards.” Push for a fixed dollar amount, clearly stated, with dates and payment intervals explicitly laid out. You don’t want surprises later due to internal interpretation or shifting definitions.

Bonuses

Even if the bonus isn’t guaranteed in writing, it may be part of your established pattern of compensation. If you’ve received bonuses consistently over the years, that history becomes part of your negotiation leverage. Make sure the agreement clarifies eligibility, even if you're no longer technically employed at payout time.

Health Coverage

It’s not enough to know you'll "have Consolidated Omnibus Reconciliation Act (COBRA) access." You need to know who’s paying for it and for how long. Coverage gaps can become expensive quickly, especially for executives with families or ongoing treatment. Push for employer-paid premiums or reimbursements spelled out month by month.

Retirement Benefits

Many executives assume they’ve “lost” retirement perks once they exit, but some benefits can still be secured with the right language. For example, you can negotiate for company contributions through the end of the calendar year or based on a vesting schedule adjustment. Also consider negotiating for advisory services to help restructure your portfolio post-exit.

Outplacement Services

Outplacement isn't just for mid-level roles. It can be tailored for C-suite leaders too. Ask for access to firms that specialize in board placement, industry pivoting, or private equity recruitment. This support can save you months of job-search limbo and position you more competitively in your next role.

Thinking about your next venture? This is also the time to ask about business formation legal services and how severance terms might affect your next step.

Non-Competes Can Kill Momentum. Reclaim Your Freedom.

Post-employment restrictions don’t just impact where you work next. They shape how soon you can move forward. Too often, executives assume these clauses are set in stone, when in reality, they’re often negotiable or even unenforceable. Addressing them early is key to keeping your career options open.

Keep It Short

The longer the restriction, the more leverage you give away unnecessarily. If your company insists on anything beyond 12 months, ask what risk they’re really trying to protect against. Shorter terms are not only more reasonable. They’re more likely to stand up in New York courts.

Limit the Region

Restrictions that span large territories rarely reflect the actual reach of your former position. If your influence was mostly within the New York city metro area, there’s no valid reason to be blocked from working nationwide. A narrower geographic scope helps ensure your clause remains enforceable and practical.

Define Competition Clearly

“Competitor” can mean very different things depending on the industry and that ambiguity can trap you. Ask for an exact list of prohibited companies or sectors so you’re not boxed out of opportunities unfairly. Without this detail, even startups or adjacent ventures could be interpreted as off-limits.

Tighten the NDA

A good non-disclosure agreement should protect company secrets, not silence your entire resume. Make sure it doesn’t prevent you from explaining past achievements or sharing general experience with future employers. Overreaching NDAs can discourage new companies from hiring you, fearing potential legal fallout.

Coordinate with Other Clauses

Your non-compete isn’t the only restriction in play - non-solicits and non-disparagement clauses often show up too. Look at how they work together, not just in isolation, to spot hidden conflicts or overlaps. When combined poorly, they can limit your movement far more than necessary.

If your departure is tied to a business deal, mergers and acquisitions lawyers can help ensure your severance terms don’t conflict with closing documents or asset transfers.

Behind Closed Doors: Tactics Employers Don’t Talk About

Executive exits aren’t always clean. And what seems routine on the surface often hides aggressive legal tactics.

• “Standard” Agreements: There’s no such thing. These are written by the company’s lawyers to serve the company’s interests. That’s why every detail should be reviewed.
• Deadlines Designed to Pressure: You may get 48 hours to sign, but you don’t have to accept that. Request an extension. Use the time to consult legal counsel.
• Broad Waivers: Some clauses waive your rights to bring legal claims, including for unpaid wages, wrongful termination, or discrimination. The U.S. Equal Employment Oopportunity Commission has guidance on this, and it’s worth reviewing.
• Overstuffed Restrictions: Your agreement may include multiple limitations: non-solicits, NDAs, and non-competes. If they overlap, they might be unenforceable, but they’ll still cause problems if not addressed up front.
• Strict Confidentiality: Watch out for language that prevents you from sharing agreement details with financial or legal advisors. You’re entitled to support during this process.

For solid corporate governance legal advice, don’t wait until a problem surfaces. Get clarity now before signing becomes a setback.

Your Agreement Should Reflect Your Value

Executive departures should be handled with strategy and foresight. Not because you’re demanding but because the stakes are high.

• You Have Negotiating Power: Don’t be talked out of using it. Executives are expected to push back. Employers build room into packages for negotiation.
• Your Comp Package Is Multi-Layered: Long-term incentive plans, deferred equity, and retention bonuses require specific treatment. Avoid vague language.
• Legal Triggers Are Everywhere: Employee Retirement Income Security Act (ERISA), tax law, and even securities disclosures can be affected by your severance terms. A single clause could have wide-reaching consequences.
• Reputation Follows You: Whether you're moving to a competitor, joining a board, or launching a venture, your exit affects how you're perceived. A well-structured agreement helps you leave on your terms.

If you’re selling ownership or liquidating your position, make sure your business sale and purchase agreements are New York aligned, especially in closely held companies or joint ventures.

Let Horn Wright, LLP, Protect Your Exit and Your Future

You’ve spent years building your success, and now it’s time to leave without sacrificing what you’ve earned. 

Our team of business transaction lawyers at Horn Wright, LLP, works directly with high-level professionals to safeguard compensation, clarify restrictive clauses, and lock in the terms that matter most.

It’s that precision and dedication that’s made us one of the leading law firms in America. You’ve done the hard work. Now let’s make your exit work for you.

 Contact our office today to schedule your free, no-obligation consultation.