Compensation and benefits provided to an executive upon involuntary termination, typically including cash severance, benefits continuation, equity treatment, and other transition support.
Executive severance packages are negotiated as part of the initial employment agreement and serve as a financial safety net in case the executive-employer relationship ends prematurely. Standard components include cash severance (typically 6-24 months of base salary), pro-rated bonus, benefits continuation (COBRA coverage), accelerated or partial equity vesting, outplacement services, and legal fee reimbursement for agreement review. Severance terms vary significantly by seniority level, company size, and industry. CEOs typically negotiate 18-24 months of severance; other C-suite officers negotiate 12-18 months. Severance agreements usually include mutual non-disparagement clauses, non-competition restrictions, and release of claims. Executive search firms help candidates evaluate and negotiate severance provisions as part of offer negotiations.
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