Management package when an executive or senior executive leaves
When an executive or senior executive leaves a company, the financial implications of their departure are not limited to salary, bonuses or severance payments.
A management package may represent a significant part of the compensation or financial interests built up during the employment relationship. Its treatment should therefore be anticipated before negotiating the terms of departure.
As an employment lawyer, I advise executives and senior executives in Aix-en-Provence and Paris on assessing the impact of their departure on their management package and incorporating it into their overall negotiation strategy.
Why review your management package before negotiating your departure?
The rights attached to a management package may depend on many factors: the type of instruments held, vesting schedule, exercise conditions, length of service with the company and the circumstances of departure.
The timing or terms of the termination may therefore have significant financial consequences.
The management package should therefore be reviewed before the terms of departure are finalised, in order to assess the implications and identify any potential negotiating leverage.
Which documents should be reviewed?
A management package cannot be assessed solely on the basis of the employment contract.
Depending on the arrangement in place, several documents may determine the executive’s or senior executive’s rights: award plans, plan rules, shareholders’ agreements, undertakings, contractual documentation or any other document governing the vesting, exercise, retention or transfer of shares or other equity interests.
These documents should be reviewed together with the proposed terms of departure in order to obtain a complete picture of the situation.
BSPCEs, stock options and free share awards: what happens to your rights?
A management package may include BSPCEs, stock options or free share awards.
Leaving the company may affect the vesting of outstanding rights, their exercise or retention, as well as any applicable time limits.
It is therefore important to identify precisely which instruments are involved and the rules that apply to them before determining the timing and terms of the termination.
Good Leaver / Bad Leaver: the impact of the circumstances of departure
Some management packages include Good Leaver or Bad Leaver provisions whose application depends in particular on the circumstances in which the executive or senior executive leaves the company.
These provisions may affect the conditions governing the retention or transfer of shares, as well as their valuation.
The reasons for and terms of departure should therefore be assessed against the applicable provisions before finalising any negotiation.
Including the management package in your departure strategy
The treatment of the management package should not be considered separately from the other elements of the negotiation.
Severance payments, bonuses, variable compensation, notice periods, non-compete clauses, the departure date and equity may interact and affect the overall financial balance of an offer.
The objective is therefore to assess the different scenarios as a whole in order to determine the overall terms of departure best suited to your situation and objectives.
This analysis forms part of a broader approach to departure negotiations for executives and senior executives.
When should you have your management package reviewed?
Ideally, before accepting a proposed mutual termination agreement, taking a position on the terms of departure or formalising an agreement with the employer.
A review may be particularly relevant where a departure is being considered following a reorganisation, a change in responsibilities, a workplace dispute, a dismissal or discussions initiated by either party.
Where negotiations have already begun, it is still important to identify promptly how the different scenarios may affect the rights attached to the management package.
A comprehensive approach to the issues facing executives and senior executives
A decision concerning a management package cannot be assessed solely on the basis of the apparent value of the shares or other instruments involved.
It should be considered in the broader context of your professional situation, compensation, proposed terms of departure and future career plans.
More broadly, the firm advises executives and senior executives at key moments throughout their careers, helping them anticipate the legal, financial and professional implications of their decisions.
An employment lawyer in Aix-en-Provence and Paris
I advise executives and senior executives in Aix-en-Provence and Paris, both in person and remotely.
Consultations can be conducted in French or English, particularly for international executives and senior executives working in France.
FAQ
Frequently asked questions about management packages and leaving a company
Contact domaniewicz avocat
42 Avenue Victor Hugo
13100 Aix-en-Provence
9 Rue Treilhard
75008 Paris
+33 6 23 61 20 01