Average Severance Package for VP, Managers, Executives, and Directors with 10-20 years of Experience

Several people asked about what is the normal, average, or typical severance package (or pay) at manager level, or director level, or VP, or executive levels, or even for individual contributors like software engineers if they are laid off?

I personally know people who got laid off from the firms like Google, Amazon & Microsoft and I thought sharing this experience might help others to understand the typical severance package even better.

Note that I am not a lawyer, and I just requested Dataneb to publish this content so that others can find it useful.

Factors that decide Severance Package

It's a very broad topic when it comes to calculating someone's severance package. It depends upon several factors and it would vary from case to case depending upon several factors like the level of seniority, years of service in the industry, firm size, your contract, company policies, job performance, and even some extent to negotiation.

1. Employee's years of service and seniority: The longer an employee has worked for the company, the more severance pay they may receive as recognition of their loyalty and contribution.

2. Industry: Different industries have different standards for severance pay, and some may offer more generous packages than others.

3. Company size: Larger companies may have more resources to offer larger severance packages, while smaller companies may not have as much financial flexibility.

4. Terms of the employment contract or company policy: Some employment contracts or company policies may outline specific severance pay, while others may leave it up to negotiation or offer none at all.

5. Reason for termination: The reason for termination can impact the amount of severance pay offered. For example, employees who are laid off due to company restructuring may receive more significant severance pay than those who are terminated for poor job performance.

6. Employee's job performance: An employee's job performance can impact the amount of severance pay offered. Those who perform well may be offered a more generous package than those who do not.

7. Potential legal disputes or litigation: Employers may offer a more substantial severance package to avoid potential legal disputes or litigation related to the employee's termination.

8. Market conditions in the industry: The market conditions in the industry can impact the amount of severance pay offered, as companies may need to offer more to attract or retain talent.

9. Negotiation between employer and employee: Severance packages can often be negotiable, and both the employer and employee may need to compromise to reach an agreement that is satisfactory to both parties.

Severance Package Examples

01. Meta Severance Package

In Nov 2022, Facebook/ Meta laid off approximately 11,000 employees which constituted 13% of their workforce. Meta severance package included:

• Severance. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.

• PTO. We’ll pay for all remaining PTO time.

• RSU vesting. Everyone impacted will receive their November 15, 2022 vesting.

• Health insurance. We’ll cover the cost of healthcare for people and their families for six months.

• Career Services. We’ll provide three months of career support with an external vendor, including early access to unpublished job leads.

• Immigration support. I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need.

02. Uber Technologies Inc.

In 2019, Uber Technologies Inc. offered a severance package to about 400 of its marketing employees as part of a company-wide restructuring effort. The package included:

• Severance A minimum of 10 weeks of severance pay based on the employee's tenure at the company.

• Payment for accrued but unused vacation time and sick time.

• Continued healthcare coverage for a period of time, with the option to continue healthcare coverage at the employee's own expense after that.

• Outplacement services to help employees find new jobs.

Uber's severance package was relatively generous compared to some other companies' packages, especially given the company's size and financial situation at the time.

03. Verizon Severance Package

In 2018, Verizon announced plans to offer a voluntary severance package to about 44,000 employees as part of a cost-cutting effort. The package included:

• Up to 60 weeks of pay based on the employee's years of service and salary level.

• Payment for accrued but unused vacation time.

• The employee will be provided with healthcare coverage for a certain duration and will have the choice to continue the coverage at their own cost beyond that period.

• Outplacement services to help employees find new jobs.

It's important to note that severance packages can vary widely depending on the specific circumstances of each employee's departure and the company's financial situation. These examples are provided as general illustrations of what severance packages may include.

04. Google Severance Package

In Jan 2023, Google announced that it would be laying off 12,000 employees roughly 12% of its workforce in the US. Google offered severance packages that

• Severance: We will pay employees during the full notification period (minimum 60 days).

• Vesting: We will also offer a severance package starting at 16 weeks' salary plus 2 weeks for every additional year at Google, and accelerate at least 16 weeks of GSU (Google Stock Units) vesting.

• PTO: We will pay 2022 bonuses and the remaining vacation time.

• Health Insurance & Immigration Support: We will be offering 6 months of healthcare, job placement services, and immigration support for those affected.

• Outside the US, we will support employees in line with local practices.

Components of Severance Packages

These are some common elements that might constitute a severance package, but not necessarily all of them.

• Severance Payment: A lump-sum payment based on the employee's tenure at the company.

Number of years employed with the company X 2 weeks of regular pay = Severance pay total, for example: If your salary is $100,000 per year, that is roughly $3,846 for two weeks. If you have been at the company for 10 years, your severance pay would be $38,460 ($3,846 X 10 years). Assuming there is no cap mentioned in the severance package offer.

• Continued salary or pay period: Payment of a percentage of the employee's salary for a certain period of time. This helps certain visa holders like H1B to prepare for finding a new job as the USCIS grace period is only 60 days. Read more.

For example, In Jan 2023, Google continued paying for a couple of months. So if the employee was terminated in Jan, he/she was still on payroll until Mar 2023.

• Healthcare benefits: Continued healthcare coverage for a period of time or a lump-sum payment to help cover the cost of COBRA or other health insurance.

• Retirement benefits: Payment of a lump-sum amount or continuation of certain retirement benefits.

• Stock vesting: Acceleration of vesting or other treatment of stock options or equity awards.

• Immigration/outplacement services: Assistance with job search, resume writing, and interview preparation.

• Other benefits: Payment for accrued but unused vacation time, a company car or cell phone, or other benefits that the employee may have received as part of their employment.

Conclusion

Hopefully, people find this article helpful in understanding what constitutes a severance package and what can they expect. If you know someone who was impacted due to current market conditions, please feel free to write in the comments section below and that might help others to negotiate or even construct a better severance agreement with their new employer.