How One Man Negotiated A $40 Million Mass Severance Package


Although it’s a bummer to hear about more layoffs, I also feel a lot of hope and excitement for those who have lost their jobs for two reasons.

First, there is the benefit of getting a severance package. Imagine getting a severance package worth six months of salary and then finding a new job two months later for similar pay. If you do, you will have had two months off and then get to earn double pay for four months!

Second, the sting of getting laid off might finally propel folks to take a leap of faith and start their own business, go back to school, or enter a new field of work. Forced change can be a huge blessing!

Learning to adapt to an uncomfortable situation will only make you stronger. Getting laid off could be one of the best things that could ever happen to you. I know it was for me.

Patiently Waiting To Tell You About The Mass Severance Package Negotiation Story

After sending out one of my weekly newsletters, I got an e-mail response from a reader. He mentioned he was laid off from his Big Tech Co. However, he also shared a severance package negotiation story I had never heard of before.

I’ve actually been sitting on this story since early 2020 to protect the reader. He agreed to let me immediately share his severance package negotiation story if I did not share where he worked and his last name.

However, as someone who negotiated my own severance back in 2012, things can get dicey when deferred compensation is involved. Until all the severance package money hits your bank account, you’re still at your previous employer’s mercy.

Even after you receive all your severance money, it’s best to stay quiet for a while. If you do something to jeopardize the reputation of the firm, the firm could conceivably try and get that severance package money back!

The $40 Million Mass Severance Package Negotiation

Here’s the e-mail from a Financial Samurai newsletter subscriber.

Hey Sam,

Thanks for the newsletter and severance negotiation book. I bought it with a plan to use it to engineer my layoff in the next year, but things changed. Unfortunately, I was laid off at Big Corp before I could start negotiating a severance.

Although this was bad timing, I did use the confidence and some subtle strategies in your book to get a bigger payout for Restricted Stock Units (RSUs), which I would have missed out on by about a month.  

If you want to hear the story but promise not to use my last name or company, I’ll tell ya the story.  

I was originally going to try negotiating getting my RSUs paid out just for myself. In the end, I ended up campaigning to get the RSUs paid out for the 2,000 of us that were let go! 

The average value of the RSUs was $20,000 per person, so this was a $40 million ask. And I got it for everyone. Thank you!!!

Regards,

Bob

Holy crap!

We know the largest severance package ever was by the ex-founder and CEO of WeWork who walked away with about $1 billion. But that’s a special case because the guy was the founder and was able to take advantage of SoftBank’s silly money.

Until Bob’s e-mail, I had never heard of or thought about the strategy of negotiating a better severance package for other colleagues as well.

Therefore, I asked Bob to elaborate how this $40 million severance negotiation occurred. Here’s his explanation.

How One Man Negotiated A $40 Million Severance Package For 2,000 Colleagues

I worked at Big Corp for the last six years doing software. I was only staying for the money and benefits until my daughter was in college.  

A new VP was hired to head all of software. As is usually the case with a new Kahuna, heads were going to roll. My group’s boss and other bosses suddenly started ‘retiring’ without warning. They each gave 1-week notices.

In big corporate gamesmanship, this really meant that a new bigger fish had come in, fires those who aren’t behind his new strategy, and puts in his own people from previous companies.  

I knew the writing was on the wall. I began scheming my own exit for some time when Big Corp announced that our whole group and others would be cut – about 2000 people.

Blasted! They beat me to it!

New CEO, New Vision

Now at the same time this was happening, we had a new CEO who was very transparent. He wanted to get the culture aligned with him. We even had a big HR campaign about truth and transparency in the workplace.  

The new CEO had all-hands meetings with all the employees but failed to mention these layoffs at all. Another subtext is that Big Corp is old school and has a really fear-based culture. Everyone thinks they will get cut all the time. It’s really a bizarre and strange place.

Like I said earlier, I remained at my job for the money – banking and saving 65% of my take-home pay.

So Big Corp eventually announced that we’d all be laid off and pay a decent severance. We even had a few weeks’ notice in order to try and find another internal job before our actual last day. That really never happens. It’s just a common courtesy gesture to minimize blowback.

The Quest To Get Employees Their Restricted Stock Units

Everything about my severance was acceptable, except that my last day was 4 weeks before our next round of RSUs vested. This would suck because it was considerable – about $24,000 to me.

Plus the last few years Big Corp had begun to give more RSUs instead of cash raises – so this was deferred salary in a way.

I asked HR about the RSUs and told them nicely that it wasn’t fair. As expected they said, “tough shit, bad timing” in essence. Hmmmmmm.  Well, that does suck.

Negotiating A Severance Directly With The CEO

So with the strategies from your book and the confidence that it gave me, I decided to pitch my idea directly to the CEO. At the end of the day, he was the only one who could make the call.

I wrote the CEO an email telling him that the layoff timing was terrible and that we deserved those RSUs for these reasons:

1) We were just a few weeks away from getting them. Is this who ‘we’ are as a company?  (angle = not fair)

2) Many of us were given these as a replacement for bigger deserved raises in the last few years.  (angle = this was our money already)

3) The company has just had the best financial year and quarter in the company’s history. The ones being laid-off helped us ALL get there. (angle = we’re getting laid off but helped you get a giant bonus as CEO)

Then I told the CEO that I was sending the message directly to him because he could get the job done and that I appreciated the culture of truth and transparency – and ended it with “In Solidarity.” Heh  😀

All these things were meant to be arguments that you can’t really argue with as not true. To counteract my points, all he’d have to do was say ’tough shit dude’.  

Strength In Numbers By Organizing

Anyway, I sent him the e-mail and I heard nothing back for two weeks. Then I began to collect a list of all laid-off employees and wrote them an email trying to get all of us to sign a campaign to give us the RSUs. Strategically, I didn’t send out the e-mail because I knew they were watching me. I just wanted to have them observe my intent.  

My master plan was to have all 2,000 employees email the CEO and head of HR at the same time. I really just wanted them to sweat.

Then out of the blue, we got an email from HR saying that as a one-time change to policy, we’d be given the cash equivalent of our 2020 RSUs upon leaving.  

This was shocking to me since with 2000 employees and an average of $20,000 RSUs each, this was a $40 million campaign that worked!

The Change Of Heart

So I never got a response from the CEO, but I wrote him an email thanking him for the RSUs. He finally did reply and said that I was welcome and thanked me for the previous email.  

I spoke with HR before leaving and asked them about the change of heart and all they said was that it came from the very top. Uh huh. Yeah OK.

The timing was also critical. We were told we were getting laid off two weeks before the COVID-19 shutdown. I am sure that had I waited even two weeks to campaign for our RSUs, the answer would have been, absolutely no friggin’ way.  

The campaign worked and most of the people who benefited never even knew what I did to help them out. Good karma I hope!

A Lesson In Asking For What You Deserve

Bob’s story about negotiating a mass severance package is incredible. It shows him:

  • Being strategic and resourceful by reading How To Engineer Your Layoff. You can find anything you want on the internet if you look. Use the code “saveten” to save $10.
  • Having the courage to ask for what he thinks he deserves. He could have easily just accepted his severance package, like the vast majority of people do.
  • Demonstrating enough emotional intelligence to correspond with HR and the CEO in a respectful manner. It’s easy to go on the offensive and get emotionally charged when you feel disrespected.
  • Skillfully crafting an unassailable argument if shown to the public. Bob knew from reading Financial Samurai, one of the reasons why negotiating a severance is possible is due to absolute reputational destruction.
  • Understanding the power of organization and the strength in numbers. He knew he could get a lot of other people on his side.

Learning how to negotiate well is one of the most important skills in life. A negotiation is involved in everything important – from getting a promotion to getting your kids to go to bed in a reasonable manner.

Learn to empathize with other people by understanding where they are coming from. Empathy involves making people feel heard, seen, understood, and loved. If you do, you will get much farther than you ever thought possible!

Reader Questions And Suggestions

Have you heard of one person negotiating a mass severance package before? If you’ve been recently laid off, what was the experience like? How big of a severance package did you get?

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