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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
112 requires employers to account for severance benefits, termination benefits, supplemental unemployment benefits, disability benefits, health care continuation benefits, survivor benefits, and all other post-employment benefits that are not pension retirement benefits on an accrual basis, in advance (just as they are required to do for pension benefits).
The company said late Wednesday no offers have developed and it expects to record restructuring charges ranging from approximately $200,000 to $400,000 in the third quarter of 2008 in connection with termination benefits, including severance, outplacement and other fringe benefits.
This comparison highlights the large termination benefits which companies can give while remaining below both the Part 2D.2 thresholds and the ASX threshold.
In the first quarter, Loblaw incurred CAN $75 million (US $68 million) of restructuring costs, comprising CAN $58 million (US $52 million) for employee termination benefits, including severance, additional pension costs connected with the termination of employees, and retention costs, and CAN $17 million (US $15 million) of other costs, mostly consulting.
Revlon indicates that the streamlining will result in restructuring and related charges totaling about $29 million, a figure it says is composed primarily of such employee-related costs as severance and other termination benefits. The company also anticipates an estimated $34 million in ongoing annualized savings, of which $5 million should benefit 2006 results.
Although the statement did not mention the total cost of the termination benefits, The Star daily had earlier reported that it would be around 600 million ringgit.
* Tallying termination benefits for top executives under different scenarios
47, Accounting for Termination Benefits, providing guidance for state and local governments that offer benefits such as early retirement incentives or severance pay.
The plant closure will result in first-quarter restructuring charges of between $8 million and $10 million from asset devaluation and about $4 million cash charges related to termination benefits and other expenses that include costs to close the plant and consolidate operations.
The Governmental Accounting Standards Board has published an exposure draft of a statement, Accounting for Termination Benefits, that would establish accounting guidance for state and local governmental employers regarding benefits provided to employees who terminate employment.