Question: Our Board of Directors fired our company’s CEO, and offered him a severance package. After that, but before he accepted it, they found out new information, and changed the terms of the severance offer. Can they do that?
Answer: Richard, “basic” contract law in almost all states says this about any kind of “offer”:
A. If an offer has been made, but not yet accepted, it can be changed or withdrawn.
B. If an offer has been made, AND it says that the person has a certain period of time to make up her or his mind, THEN it cannot be changed or withdrawn until that time period has elapsed. [Most severance offers give 21 days to make up your mind.] C. However, if an offer has been made, and the recipient of the offer has either (1) declined the offer, or (2) counter-offered, THEN the offer can be changed or withdrawn.
Most severance offers are not changed or withdrawn after being made, because that leaves the recipient either with nothing to lose, or little to lose, and often drives him or her to a lawyer, and puts them in the mood for suing.
If the “new information” you refer to has to do with the CEO taking monies or other things of value (such as charging personal items to company accounts), then the company would have a potential “claim” against the CEO, and that, in itself, would probably excuse any “severance change” the Board was considering.
Hope that helps.
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