Leaving a Senior Position? What to Check Before Signing an Exit Agreement

Leaving a senior position rarely involves simply handing back your laptop and collecting a final pay cheque. An executive departure can involve notice payments, bonuses, shares, confidentiality obligations, restrictions on future work and even an agreed explanation of why you’re leaving. When several of these issues are packed into one document, the headline payment is only part of the story.

An exit agreement may also ask you to give up certain rights or agree to obligations that continue long after your final day. The exact legal effect depends on the agreement and the laws that apply where you work. Because executive employment dismissals can involve significant financial and career consequences, getting independent legal, tax or financial advice may be worthwhile before signing anything you don’t fully understand.

The important thing is to evaluate the agreement as a complete package rather than focusing on one attractive number.

Check Exactly What You’re Being Paid

Start with the money, but break it down carefully.

An exit package might include several separate amounts, such as:

• Salary up to your final day
• Payment instead of working a notice period
• Accrued leave or other entitlements
• A discretionary termination payment
• Outstanding expenses
• Bonuses or commissions
• Payments connected with shares or incentives

Ask for clarity about what each amount represents and when it will be paid.

It’s particularly important to distinguish between money you may already be entitled to receive and additional compensation being offered in exchange for signing the agreement.

Look Closely at Bonuses and Incentives

For senior employees, salary may represent only one part of total remuneration.

Annual bonuses, commissions, share options, restricted stock and long-term incentive plans can be worth considerably more than expected. Their treatment when employment ends may depend on separate plan documents.

Check whether leaving affects unvested awards, upcoming bonus payments or options you haven’t exercised.

Some plans also distinguish between different types of departure, sometimes using terms such as “good leaver” and “bad leaver”. The definitions and consequences vary, so don’t rely on what you think those labels mean.

Find out exactly what happens to each incentive before signing.

Understand Any Restrictions on Your Next Job

Senior employment contracts commonly contain post-employment restrictions intended to protect legitimate business interests.

Depending on the agreement and applicable law, these might attempt to restrict your ability to:

• Work for certain competitors
• Approach former clients
• Recruit former colleagues
• Use confidential information
• Operate within particular markets or locations

The enforceability of restrictions varies considerably between jurisdictions and circumstances.

What matters immediately is understanding what the agreement says you’re promising to do.

A generous exit payment may become much less attractive if the proposed terms significantly limit your ability to earn an income in your industry.

Read the Confidentiality Clauses Carefully

Confidentiality provisions are common in senior-level exit agreements.

Some relate to genuine business information, while others may address the existence or terms of the agreement itself.

Understand what information you’re required to keep confidential and whether there are relevant exceptions. For example, you may need to discuss aspects of the agreement with professional advisers or other people where permitted.

Avoid assuming confidentiality simply means “don’t post about the company online”. The wording can be much broader.

Check What the Company Will Say About Your Departure

Your professional reputation may matter as much as the financial package.

If your departure is likely to attract questions from employees, customers, investors or future employers, consider how it will be described.

An exit agreement may potentially address:

• Internal announcements
• External or public statements
• References
• Responses to future employment enquiries
• LinkedIn or company website changes
• Media enquiries

Where possible, clarity can help prevent a situation where you describe the departure as mutually agreed while the company communicates something very different.

Look for Non-Disparagement Terms

Some agreements contain provisions restricting what the departing executive and, sometimes, the employer can say about each other.

Read these carefully.

Understand who is covered, what behaviour is prohibited and whether the obligation applies equally to both sides.

Also consider whether the wording could interfere with legitimate communications you’re legally entitled or required to make.

Because applicable laws can limit or affect certain contractual restrictions, professional advice may be important if the clause appears unusually broad.

Don’t Forget Company Positions and Property

Senior employees may hold more than one formal position.

You could be an employee while also serving as a company director, officer, trustee or representative of another entity within a corporate group.

Confirm exactly which positions you’re resigning from and when.

You should also establish arrangements for returning company property, including laptops, phones, access cards, documents and other equipment.

Don’t copy confidential files to personal devices before leaving. Access to sensitive information doesn’t mean you’re entitled to take it with you.

Pay Attention to What Rights You’re Giving Up

Exit agreements commonly involve a trade: the organisation provides something of value and the departing employee agrees to settle or waive certain potential claims, subject to applicable law.

This section deserves careful attention.

Understand which rights the agreement is asking you to release and whether there are matters that cannot legally be waived.

If you don’t understand the scope of a release, don’t guess. This is precisely the type of provision worth obtaining appropriate professional advice about.

Consider Tax Before Looking at the Headline Figure

A package that looks substantial on paper may produce a different amount after tax.

Different types of payments can potentially receive different tax treatment depending on the jurisdiction and circumstances.

Rather than making financial plans based solely on the gross amount written in the agreement, consider obtaining qualified tax or financial advice where the sums involved justify it.

Don’t Let an Artificial Deadline Rush You

Being told an agreement must be signed “today” naturally creates pressure.

That doesn’t mean you should sign something significant without understanding it.

Ask how long the offer remains available and whether you can have reasonable time to obtain advice. Depending on applicable laws, there may also be specific requirements concerning review periods for certain agreements.

A senior exit agreement can affect your finances, reputation and career long after your final day. Read every section, understand what you’re receiving and identify what you’re giving up in return.

The goal isn’t necessarily to turn the departure into a fight. It’s to make sure that when you sign, you’re genuinely comfortable with the deal you’re making — including the parts that won’t become important until months after you’ve left.