I am a corporate officer in a publicly traded company that is going through some very rough times (I report directly to the CEO). He recently issued a press release in which he announced that he was bringing in an investment banking organization to assist with a new course of action related to the future of the company. At the same time, he told me that he was eliminating my position entirely and gave me the option to either resign (and accept a severance agreement) or be terminated (without cause). Of note, I do not have an employment contract and work in an "At Will" state.
When I received the severance agreement, I found it to be substantially less than what I expected. While it offers a cash payout for me to resign, it requires me to give up a great deal of unvested restricted stock options that I had been granted as a component of my annual bonus/incentive plan. It also includes a great deal of restrictive legal language related to non-solicitation of company employees, forfeiture of my right to sue or counter-sue the company, stringent restrictions on company 'confidential information,' a non-disparagement clause, and other constraints that are standard with an executive severance agreement.
Essentially, the severance agreement provides the same overall cash compensation that I would receive if I simply accepted termination (the restricted stock vests immediately in the event of a termination for anything other than 'Cause'). I have consulted an attorney who was able to assist me with compensation negotiations as well as change some of the more onerous contract language. However, he was not able to provide any advice as to how termination might be interpreted over resignation.
At this point, I am inclined to reject the severance offer, accept termination, and receive the accelerated stock vesting. This route would also enable me to avoid the legal constraints contained in the severance agreement.
I apologize for the length of this question, but I need an HR perspective as to how future employers might view my departure as a 'Termination' vs. a 'Resignation'. Any thoughts from senior HR executives with experience in this realm would be greatly appreciated.
P.S. It is my belief that when my CEO is eventually contacted by a potential employer for a referral (which will happen), his feedback will not be biased by my decision to accept termination over severance.
From United States, Jonesboro
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When I received the severance agreement, I found it to be substantially less than what I expected. While it offers a cash payout for me to resign, it requires me to give up a great deal of unvested restricted stock options that I had been granted as a component of my annual bonus/incentive plan. It also includes a great deal of restrictive legal language related to non-solicitation of company employees, forfeiture of my right to sue or counter-sue the company, stringent restrictions on company 'confidential information,' a non-disparagement clause, and other constraints that are standard with an executive severance agreement.
Essentially, the severance agreement provides the same overall cash compensation that I would receive if I simply accepted termination (the restricted stock vests immediately in the event of a termination for anything other than 'Cause'). I have consulted an attorney who was able to assist me with compensation negotiations as well as change some of the more onerous contract language. However, he was not able to provide any advice as to how termination might be interpreted over resignation.
At this point, I am inclined to reject the severance offer, accept termination, and receive the accelerated stock vesting. This route would also enable me to avoid the legal constraints contained in the severance agreement.
I apologize for the length of this question, but I need an HR perspective as to how future employers might view my departure as a 'Termination' vs. a 'Resignation'. Any thoughts from senior HR executives with experience in this realm would be greatly appreciated.
P.S. It is my belief that when my CEO is eventually contacted by a potential employer for a referral (which will happen), his feedback will not be biased by my decision to accept termination over severance.
From United States, Jonesboro
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Dear Member,
Kindly make your query in bullet points so that it will be easier for us to address. Please outline the pros and cons of both Termination and Severance Agreements.
Also, could you provide details on what your appointment letter states regarding your termination?
Thank you.
From India, Coimbatore
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746Kindly make your query in bullet points so that it will be easier for us to address. Please outline the pros and cons of both Termination and Severance Agreements.
Also, could you provide details on what your appointment letter states regarding your termination?
Thank you.
From India, Coimbatore
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Termination-emp loyment_563.pdf
Resignation Letter.jpg
SECURITY AGREEMENT.doc