Question: I am the general manager of a division of a large corporation. The corporation is trying to sell my division, and has determined that the chances of selling are improved a lot by offering me in the scope of the sale. They have presented a retention and severance agreement for my consideration.
I have worked for this company for four years, and am vested in the retirement program. I am 56 years old. What in terms of multiples of salary should I expect to get from the retention and severance agreement?
A Blog Reader, Hazelton, PA
Answer: Although I know just a few of the relevant facts of the matter, on the basis of my many years representing people in your circumstances, I can give you this feedback:
A. Retention: How long you are asked to stay on board in your present position to help the Buyer of your division is a function of how much the Buyer may need of your knowledge, experience and expertise. For example, if the Buyer is a competitor, and knows a great deal about your business, it may not need you to stay on board a long time; conversely, if it is unfamiliar with your business, or your locale, or your union employees, it may need you to stay on board a longer time. How long you are asked to stay on board is not a function of you or your age, or your tenure with the company.
That being said, it is most common to see someone in your circumstances asked to commit to stay on board a minimum of six months, and a maximum of two years.
B. Severance: At some point, the Buyer may no longer need or want your services. Considering your age, your tenure and your retirement vesting, I would expect you to receive a minimum of six months, and a maximum of twenty-four months of severance once your employment is ended by the Buyer.
If you were a client, I would ask you this: What do you want to do next? That is key, because your “perceived value,” that is, your being necessary for the sale of the business, gives you great leverage in negotiating with your present employer the terms of the retention and severance. You should use that leverage to help you get to whatever is your next goal. If it is retirement, you might also ask for five more years of retirement credit. If your next goal is relocation to Florida, you might ask for a commitment – in return – to help you move there, and get a job there, too.
The key is your future, and using your leverage to help you get there. If you help the sale, you will deserve at least that. No?
If you are not comfortable with writing, or do not feel you know “What to Say, or How to Say it,™” we offer a Model Memo entitled “Model Memo Proposing a Retention Bonus or Arrangement,” to send to your Manager when you face a risk to remain on board, and your Manager faces a risk if you leave. To obtain a copy, just [click here.] Delivered by Email – Instantly!
PS: In any severance agreement in this circumstance, you will probably see a strict and lengthy non-compete provision barring you from working for a competitor.
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Best, Al Sklover