Negotiating a senior executive's departure is about more than the amount of the settlement payment. Handled well, it involves seven major levers which, combined, can double or triple the final value of the exit package.
Seven levers to activate in the right order to turn an imposed exit into a controlled one. A detailed review with the points of vigilance to anticipate.
1. The settlement payment: amount, social security, and tax treatment
This is the first figure everyone thinks of, although it is not necessarily the most strategic. The settlement payment is negotiated on the basis of several benchmarks: length of service, total compensation, the employee's position, reputational risk, the statutory compensation scale for unfair dismissal (the "Macron scale"), known precedents at the employer, and litigation risk.
The range is built by taking into account both what the employee could obtain in court and what the company is prepared to pay to avoid that scenario. A good position rarely sits at the theoretical ceiling, but it often makes it possible to reach a financially optimized outcome.
Beyond the overall amount, the basis of the payment and its social security and tax treatment are of fundamental importance on departure, as they can have a substantial impact on the final net amount.
2. The non-compete clause: an often underused lever
Many executives sign non-compete clauses without measuring their financial consideration. On departure, two options arise: waive the clause to regain immediate freedom, or keep it in order to obtain significant financial compensation.
In certain sectors (finance, tech, consulting), this compensation can represent 50 to 60% of compensation over the non-compete period. The choice depends on the interests at stake, the executive's plans, and the real or anticipated risk for the company.
3. The treatment of shares and the management package
Free shares (AGA) in their vesting period, stock options, BSPCE (French founder and employee warrants), ordinary shares: each instrument has its own leaver rules, which have a considerable impact on the overall value of the deal depending on how they are structured, the terms of the shareholders' agreement or plan in force, their vesting stage, and their valuation rules.
- Shares already vested: retained in principle, but check the forced buyback clauses
- Shares still vesting: possibility of negotiating full or partial acceleration, or compensation for loss of opportunity
- Instruments not yet exercisable: obtain an extension of the post-departure exercise window
- Valuation: make sure the formula applied is not a disguised bad leaver value
4. Classification of the departure: good leaver or bad leaver
This classification often determines everything else. An executive classified as a bad leaver frequently loses a substantial part of their instruments, whereas a good leaver keeps most of them.
The classification is negotiated explicitly in the settlement agreement. Where the factual situation is ambiguous (non-hostile resignation, mutual termination agreement, dismissal on economic grounds), having good leaver status formally recorded in the termination agreement is a key lever.
5. Outplacement and transition support
Often overlooked, outplacement can represent compensation ranging from a few thousand to several tens of thousands of euros, depending on the level of the position and the firm chosen. For an executive 6 or 12 months from an exit, premium support makes a tangible difference in returning to work.
Beyond the cost, it is above all the signal sent by the company that matters: high-end outplacement strengthens the exit narrative and facilitates discussions with future recruiters.
6. Managing the notice period and release from duties
During the notice period, the executive is paid but their freedom of action remains constrained. Three scenarios are possible:
- Notice period worked in full (uncommon at this level)
- Release from working the notice period with continued pay
- Notice period shortened or not worked and compensated within the settlement
Depending on the amounts at stake and the executive's plans, careful management of the notice period can be a real lever, particularly in tax and social security terms.
7. Internal and external communication
The last lever is less visible but just as decisive. How does the company announce the departure internally? What will the executive's message be on LinkedIn? What reference can be provided to future employers?
An executive who negotiates their departure without framing the communication often ends up explaining their exit for the following 18 months. A well-drafted settlement agreement avoids these conversations.
Mutual non-disparagement undertakings, an internal announcement approved by both sides, the wording of a written reference: all of these are negotiated within the settlement agreement.
The order of activation can make the difference
The classic mistake is to approach a negotiation solely through the settlement payment. The most effective approach usually begins by carrying out a full assessment of the levers identified, prioritizing objectives according to each situation, and then building a coherent overall proposal.
This approach changes the dynamics of the discussion. The right time to seek support is therefore early, from the first warning signs. Preliminary legal scoping makes it possible to identify the right levers and minimize the pitfalls that could weaken a future negotiation.
