Severance

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Severance

A settlement received after being released from a corporation. In the context of corporate governance, an agreement that assures high-level executives of their postions or some compensation and are not contingent upon a change in control.

Severance

A payment often (but not always) made in a lump sum that occurs when an employee is laid off or fired. Severance is sometime voluntary; that is, an employee may choose to quit and take a severance that is offered instead of staying and risking a layoff with no severance. The amount of severance is determined by the employee's length of time at the company, previous pay rate, and other factors. Accepting a severance makes one ineligible to collect unemployment insurance or to initiate a wrongful termination lawsuit. A severance exists in order to reduce the risk of the company when layoffs become necessary and to improve employee morale.
References in periodicals archive ?
City executives approved the severance applications on June 12.
Employees who accept the severance could receive a cash payout, or payments that they would use to pay for health insurance, or a combination of both, Hammitt said.
A worker with one to five years experience, for example, would receive severance valued at up to 10 percent of their yearly salary.
the lottery company, was pushed out by the board of director for non-performance, but tool $8 million in severance with him.
Doug Ivester, former CEO of Coca-Cola, left under a cloud, carrying severance that will approach $120 million.

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