Losing Your Executive Position? Next Steps to Take
If you follow the news, you know that quite a few companies have been making headlines this year for announcing widespread layoffs. In January, Amazon announced 18,000 employees would be losing their jobs in its AWS, health, Zappos, real estate, and delivery businesses. Alphabet, the parent company of Google, also announced job cuts affecting 12,000 employees. And the list continues: Disney, Microsoft, Salesforce, Dell, and Goldman Sachs are also among the large companies trimming their workforce in 2023.
While losing a job is never a pleasant experience, it can be especially complicated for company executives with stock-based compensation, long-term incentives (LTI), pension benefits, and other perks. We asked Savant advisors Chuck Steege and Matt Witter, who specialize in working with public company executives, to share some common recommendations they make to executives experiencing job losses. Both Steege and Witter hold the Certified Equity Professional certification, offered by the Certified Equity Professional Institute at Santa Clara University. Here are their tips:
- Understand what your severance package and benefits include. Typically, you’ll have a period of time to review a severance package from your employer. According to SHRM, employees over the age of 40 must have 21 days to consider the offer unless it is part of a group termination. In the case of a group termination, employees must have 45 days to review the severance agreement. Unfortunately, employers do not have a set time requirement for employees under 40 to review and sign their severance agreements.
- Consider negotiating your severance package. Ideally, your severance package should cover your essential expenses while you look for a new position and can be negotiated at the time of your separation, or as early as when you first accept the job. Do your research to determine what types of packages are common for executives in your profession, and don’t forget to factor in how long it might take you to find another job. You may be able to include outplacement services and extended health insurance benefits as part of your severance.
- Call your financial advisor. Your advisor can help you understand your LTI resources and when they vest, as well as what compensation, pension, and other benefits you’re entitled to post-termination. According to Steege and Witter, stock options often expire 90 days after you leave the company.
- Consider consulting with an employment attorney. An attorney can help you resolve differences with the company as you negotiate your severance and can help you determine whether the package offered to you serves your best interests.
- Formalize a budget and list your immediate cash flow needs. If your severance package won’t cover all your expenses, consider discussing potential additional cash flow sources with your advisor, and think about areas where you can cut unnecessary expenses.
- Review your options for health insurance coverage. If you are unable to negotiate extended health insurance coverage as part of your severance package, you may need to look at other options, including coverage through your spouse’s employer, COBRA, or the marketplace.
- Think ahead. Use this situation to think about how you might negotiate severance in future positions and how it can be included in your total compensation package with a new employer.
Losing a job can be a daunting experience for anyone, and particularly challenging for highly compensated executives who are more advanced in their careers. But if you are accustomed to solving complex business problems on the job, you can use the same tools to help yourself grow and thrive during this period of transition. Focus on what you can control, and assemble your team of advisors and counselors to help you succeed. Your efforts now may even help you land a better opportunity down the road.