Counteroffer Severance Review
Severance Agreement and Release Review
This review is contract analysis, not legal advice. Counteroffer is not a law firm. For legal advice, consult an attorney licensed in your state.
Summary
6 Red flags
5 Yellow flags
1 Green flag
Total estimated upside: $87,400 – $164,200
Sum of quantifiable issues. Excludes non-monetary items (release defects, non-disparagement, etc.)
Top three priorities
- Severance multiple is 50–65% below market — Estimated value: $24,800 – $53,750
- OWBPA-defective release (you're 42) — Estimated value: Non-monetary, but voids the ADEA portion of the release; significant leverage
- No equity vesting acceleration — Estimated value: $46,875 – $93,750 (6–12 months acceleration on 18,750 unvested RSUs at $25/share)
Overall read: This package is below market in at least four material ways and includes language that's unenforceable as written in California. The company opened low and assumes you won't push back. Reasonable counter recaptures $87K–$164K in cash and equity value, plus restores release protections and removes a non-compete that's void on its face under Cal. Bus. & Prof. Code § 16600.
Issue cards
🚩 Red flag · High impact
Issue #1 — Severance multiple below market
ESTIMATED VALUE: $24,800 – $53,750
Market for Director, 7 yrs, Series C SaaS: 14–21 weeks of base. Offered: 8 weeks. Gap: 6–13 weeks × ($215,000 / 52) = $24,800 – $53,750.
Clause (Section 4(a))
"A gross payment in the amount of $33,076.92 (less applicable tax deductions and/or withholdings) ('the Payment'), representing eight (8) weeks of the Employee's base salary at $215,000 per annum."
What it means
Industry standard for a Director with 7 years of tenure at a Series C SaaS company is 2 weeks of base salary per year of service, with 3 weeks for top performers. That's 14–21 weeks, not 8. The company opened well below market.
What to ask for
"Severance equivalent to 16 weeks of base salary, consistent with peer practice for Director-level employees with 7 years of tenure at venture-backed companies. Industry benchmark data (Carta, Pave) supports 14–21 weeks at this role and stage."
Negotiation note
Anchor at 16 weeks. Settle at 14 if pushed. Pair this with the equity acceleration ask (Issue #3) — companies frequently move on equity faster than cash.
🚩 Red flag · Procedural defect
Issue #2 — Release is OWBPA-defective; unenforceable as to ADEA claims
ESTIMATED VALUE: Non-monetary, but significant negotiation leverage
Voids the ADEA-claims portion of the release. You retain the right to file age-discrimination claims regardless of signing. Forces the company to either fix the agreement (giving you another 21-day clock) or accept a partially unenforceable release.
Clause (Section 17 + Section 8)
"The Employee acknowledges that the Company has advised him to consult with an attorney regarding this Agreement."
[No 21-day review period stated. No 7-day revocation period. No specific reference to ADEA claims as required by 29 USC § 626(f)(1).]
What it means
You're 42, which means the federal Older Workers Benefit Protection Act (OWBPA) requires the release to: (1) specifically reference ADEA claims being waived, (2) give you 21 days to review (45 if a group RIF), and (3) give you 7 days to revoke after signing. This agreement does none of those. Under Oubre v. Entergy Operations, 522 U.S. 422 (1998), the ADEA portion of the release is unenforceable — and you don't have to return the severance to challenge it.
What to ask for
"Please revise the agreement to comply with the Older Workers Benefit Protection Act (29 USC § 626(f)). Specifically: (i) add a 21-day review period for me to consider the agreement, (ii) add a 7-day revocation period after signing, (iii) explicitly identify claims under the Age Discrimination in Employment Act as among those being released, and (iv) confirm in writing the date the 21-day clock begins."
Negotiation note
This is procedural and the company has no choice but to fix it if asked. The fix resets the 21-day clock, which gives you more time to negotiate other items. Use this as the opening move.
🚩 Red flag · Largest dollar item
Issue #3 — No equity vesting acceleration
ESTIMATED VALUE: $46,875 – $93,750
18,750 unvested RSUs at $25/share = $468,750 total unvested value. Standard Director acceleration of 6–12 months recaptures 25–50% of the remaining vest. At quarterly cliff vesting with 6 quarters remaining: 6 months = 4,688 RSUs × $25 = $117,200; 12 months = 9,375 × $25 = $234,400. Conservative estimate: $46,875 – $93,750 captured.
Clause (Section 6)
"All unvested RSUs as of the Termination Date shall be forfeited. Vested but unexercised stock options must be exercised within ninety (90) days of the Termination Date or shall be forfeited."
What it means
Your 18,750 unvested RSUs (representing roughly $469K of total unvested value at the last 409A) cancel on the termination date. Standard practice for Director-level departures at Series C companies includes 6–12 months of accelerated vesting in the severance agreement. The agreement also forces you to exercise vested options within 90 days, which for ISOs converts them to NSOs with significant tax implications.
What to ask for
"Acceleration of 12 months of unvested equity vesting, calculated by applying 12 additional months to the standard vesting schedule of each grant. In addition, extension of the post-termination exercise window for all vested stock options from 90 days to 7 years. This is standard practice at Director-level for Series C companies and avoids the ISO-to-NSO tax penalty on a forced 90-day exercise."
🚩 Red flag · Void on its face
Issue #4 — New non-compete is void under California law
ESTIMATED VALUE: Career flexibility (high but unquantifiable)
Removal of an unenforceable restriction preserves your ability to take competitive employment immediately. Even though the clause is void, having it in writing creates friction with new employers' legal teams. Removal is the clean fix.
Clause (Section 11)
"For a period of twelve (12) months following the Termination Date, the Employee shall not, directly or indirectly, whether as an employee, consultant, contractor, partner, officer, director, or in any other capacity, engage in or perform services for any business that competes with the Company in the field of logistics technology, supply chain management software, or last-mile delivery solutions, within the United States."
What it means
You work in California. California Business & Professions Code § 16600 voids employee non-competes outright. The 2024 amendments (SB 699 and AB 1076) further confirm this applies regardless of where the agreement was signed or what state law it chooses. Edwards v. Arthur Andersen, 44 Cal. 4th 937 (2008), eliminated the "narrow restraint" exception. This non-compete is unenforceable against you as a matter of California law.
What to ask for
"Section 11 is void under California Business & Professions Code § 16600 as applied to a California employee. Please remove it from the agreement. If the Company has a specific concern about customer relationships or trade secrets, I'm happy to discuss narrower alternatives like a customer-specific non-solicit limited to accounts I directly served — but a general non-compete is unenforceable here and creates unnecessary friction."
Negotiation note
Most California HR teams will remove this quickly when challenged because they know it's unenforceable. If they refuse, the agreement still survives in California courts as if Section 11 didn't exist — but having it removed cleanly avoids any cease-and-desist drama with a future employer.
🚩 Red flag · Legally non-waivable
Issue #5 — Release lacks required federal carve-outs
ESTIMATED VALUE: Non-monetary, but legally required
Several federal protections cannot be waived. Without explicit carve-outs, the release's broad waiver is partially unenforceable to those claims. Adding the carve-outs makes the agreement clean for both sides.
Clause (Section 8)
"[The Employee] irrevocably and unconditionally releases and forever discharges the Company [...] from any and all claims and causes of action [...]. This release includes all claims and causes of action, whether known or unknown, arising from conduct occurring on or before the date of signature of this Agreement [...]."
What it means
The release tries to waive every claim, but federal law prohibits waiver of several categories: SEC whistleblower rights (Dodd-Frank § 922), Sarbanes-Oxley whistleblower claims (18 USC § 1514A), NLRA Section 7 rights, EEOC charge-filing rights, unemployment insurance eligibility, and workers' compensation claims. McLaren Macomb, 372 NLRB No. 58 (2023), further limits broad waivers for non-supervisory employees. The release as drafted is partially unenforceable to those claims regardless of your signature.
What to ask for
Add the following standard carve-out language after the release section: "Nothing in this Agreement waives, releases, or limits Employee's right to: (i) file a charge or complaint with, provide information to, or participate in an investigation conducted by the EEOC, NLRB, SEC, CFTC, OSHA, or any other federal, state, or local agency; (ii) receive an award from the SEC, CFTC, or similar agency for information provided; (iii) report unlawful conduct as protected by federal or state law; (iv) discuss the terms of this Agreement with legal counsel, family, tax advisors, or the EEOC; or (v) any rights that cannot be waived by law including unemployment insurance and workers' compensation claims."
🚩 Yellow flag · Below market
Issue #6 — Healthcare bridge is one month (market is 6)
ESTIMATED VALUE: $9,000 – $15,000
Market for Director-level COBRA bridge: 6 months. Offered: 1 month. Gap: 5 months × ~$1,800–$3,000/month family COBRA = $9,000 – $15,000.
Clause (Section 7)
"The Company shall reimburse the Employee for one (1) month of COBRA premiums for continuation of the Employee's existing health insurance coverage [...]. The Company's reimbursement obligation shall cease as of August 31, 2026 [...]."
What it means
One month of COBRA reimbursement is well below market for a Director-level departure. Standard practice is 3–6 months at the Director level, 9–12 at VP+. Family-coverage COBRA premiums in California typically run $1,800–$3,000/month, so the gap is meaningful real money.
What to ask for
"Employer-paid COBRA premiums (or equivalent cash payment grossed up for tax) for six (6) months following separation, covering the family coverage level Employee maintained during employment. This aligns with standard Director-level severance practice and the cost difference is modest."
🚩 Yellow flag · Missing entirely
Issue #7 — No pro-rated annual bonus mentioned
ESTIMATED VALUE: $23,800 – $32,300
Annual target bonus: 20% × $215,000 = $43,000. Pro-rated through July 15, 2026 (196 days of 365): $43,000 × 0.537 = $23,100. Range reflects whether company applies prorating from Jan 1 or anniversary.
Clause (none — bonus pro-ration is not addressed)
[Agreement is silent on pro-rated bonus payment for the year of termination.]
What it means
You have a 20% target bonus. Standard practice when an employee is terminated mid-year without cause is to pay a pro-rated bonus through the last day worked, calculated at target. The agreement's silence likely means HR didn't include it; raise it explicitly.
What to ask for
"Pro-rated annual bonus through the last day of employment (July 15, 2026), calculated at the target bonus rate of 20% of base salary. Pro-rating from the beginning of the fiscal year. Payment to be made on the regular bonus payment date or with the severance, at Company's election."
🚩 Yellow flag · Asymmetric
Issue #8 — Non-disparagement is one-way
ESTIMATED VALUE: Non-monetary, but protects reference quality and future job hunt
Mutual non-disparagement obligates company executives and HR to refrain from disparaging statements about you, which materially protects your reputation in industry references and back-channel conversations.
Clause (Section 12)
"The Employee shall not make, participate in the making of, or encourage any other person to make, any public statements, written or oral, in whatever format [...] which are intended to criticize, disparage, or defame the goodwill or reputation of [...] the Company, any of its subsidiaries or affiliates, or any of their respective directors, officers, executives, or employees [...]."
What it means
You're bound by non-disparagement, but the Company has no equivalent obligation. Best practice for clean exits is mutual non-disparagement, with both sides bound. The NLRB's McLaren Macomb (2023) decision also questions broad one-way non-disparagement against non-supervisory employees, though as a Director you may not be covered.
What to ask for
"Section 12 should be mutual: 'Company executives, officers, and HR personnel shall not make any disparaging statements about Employee to references, prospective employers, recruiters, or in any written communication. Nothing in this section prevents either party from making truthful statements required by law, in legal proceedings, or in response to a government investigation.'"
Flagged clauses in context
Each flagged clause from above, reproduced in the order it appears in your document, with the annotation attached. Use this section to see where each issue sits in the actual document text. (The downloadable redlined DOCX above also includes these as Word Comments in the margin.)
Section 4(a) — Severance payment
"A gross payment in the amount of $33,076.92 (less applicable tax deductions and/or withholdings) ('the Payment'), representing eight (8) weeks of the Employee's base salary at $215,000 per annum."
🚩 FLAG #1 — RED — Severance multiple below market
What's wrong: Market for Director, 7 yrs, Series C SaaS is 14–21 weeks. Offered 8 weeks. Gap: $24,800–$53,750.Counter: "16 weeks of base salary, consistent with peer practice for Director-level employees with 7 years of tenure at venture-backed companies."
Section 6 — Equity treatment
"All unvested RSUs as of the Termination Date shall be forfeited. Vested but unexercised stock options must be exercised within ninety (90) days of the Termination Date or shall be forfeited."
🚩 FLAG #3 — RED — No equity acceleration; 90-day exercise window
What's wrong: Forfeits 18,750 unvested RSUs (~$469K total unvested). 90-day window forces ISO-to-NSO conversion.Counter: "12 months acceleration on unvested equity, plus extension of post-termination option exercise window to 7 years."
Section 7 — Healthcare
"The Company shall reimburse the Employee for one (1) month of COBRA premiums [...]."
🚩 FLAG #6 — YELLOW — Below-market healthcare bridge
What's wrong: Market for Director is 6 months. Offered 1. Gap: $9K–$15K of family-coverage COBRA.Counter: "Six (6) months of employer-paid COBRA (or equivalent cash grossed up for tax)."
Section 8 — Release of claims
"[The Employee] irrevocably and unconditionally releases and forever discharges the Company [...] from any and all claims and causes of action [...]. This release includes all claims and causes of action, whether known or unknown [...]."
🚩 FLAG #5 — RED — Release missing required carve-outs
What's wrong: No carve-outs for SEC/CFTC whistleblower (Dodd-Frank), SOX, NLRA Section 7, EEOC, unemployment, or workers' comp claims. Federal law prohibits waiver of these regardless of signature.Counter: Add explicit carve-out paragraph preserving each non-waivable right (see Issue #5 above for full language).
Section 11 — Non-compete
"For a period of twelve (12) months following the Termination Date, the Employee shall not [...] engage in or perform services for any business that competes with the Company in the field of logistics technology, supply chain management software, or last-mile delivery solutions, within the United States."
🚩 FLAG #4 — RED — Void under California law
What's wrong: Cal. Bus. & Prof. Code § 16600 voids employee non-competes outright. 2024 amendments (SB 699, AB 1076) confirm this applies to California employees regardless of choice-of-law.Counter: "Remove Section 11. It is unenforceable as to a California employee under § 16600. If the Company has specific protectable interests, I'll discuss a narrower customer non-solicit."
Section 12 — Non-disparagement
"The Employee shall not make [...] any public statements, written or oral, in whatever format [...] which are intended to criticize, disparage, or defame the goodwill or reputation of [...] the Company [...]."
🚩 FLAG #8 — YELLOW — One-way; should be mutual
What's wrong: Only the Employee is bound. Best practice is mutual.Counter: Make non-disparagement reciprocal; bind Company executives, officers, and HR.
Section 17 — Attorney consultation acknowledgment
"The Employee acknowledges that the Company has advised him to consult with an attorney regarding this Agreement. The Employee represents and agrees that he fully understands the right to discuss all aspects of this Agreement with an attorney and that he has carefully read, fully understands, and voluntarily enters into this Agreement."
🚩 FLAG #2 — RED — OWBPA-defective for employee age 40+
What's wrong: Missing 21-day review period, 7-day revocation period, and specific reference to ADEA claims. Required by 29 USC § 626(f) for employees 40+.Counter: Add the 21-day review window, 7-day revocation window, and explicit reference to ADEA claims being released.
Action plan
Suggested email to HR
Subject: Separation Agreement — proposed revisions
Hi [HR contact],
Thank you for the time you took to walk through the separation on June 18 and for sending the agreement. After reviewing it carefully and consulting with an outside resource, I'd like to propose a few revisions before signing.
First, the procedural items. Because I'm over 40, the agreement needs to comply with the Older Workers Benefit Protection Act (29 USC § 626(f)). Specifically: please add a 21-day review period for me to consider the agreement, a 7-day revocation period after signing, and explicit identification of claims under the Age Discrimination in Employment Act as being released. I'll start the 21-day clock once the revised version is sent.
Second, the severance amount. For a Director with 7 years of tenure at a Series C company, peer practice (Carta and Pave benchmark data) supports 14–21 weeks of base salary. The current 8 weeks is below that range. Request adjustment to 16 weeks.
Third, equity treatment. The agreement forfeits 18,750 unvested RSUs and forces a 90-day exercise window on vested options. Standard at this level is 12 months of accelerated vesting plus an extended exercise window of 5–7 years (to avoid the ISO-to-NSO tax penalty). Request both.
Fourth, healthcare. One month of COBRA reimbursement is below Director-level practice. Request 6 months.
Fifth, a few cleanup items: (a) pro-rated annual bonus through last day at the 20% target rate; (b) Section 11 (non-compete) should be removed as unenforceable under California Business & Professions Code § 16600; (c) the release should add standard carve-outs for SEC whistleblower, NLRA, EEOC, and unemployment claims; (d) Section 12 (non-disparagement) should be made mutual.
I'd like to keep the process collaborative and close this out cleanly. Happy to discuss any of these on a call this week.
Best,
David
Negotiation sequence
- Move 1 — Open with OWBPA fix. It's procedural, they have to fix it, and it buys you 21 more days. Send the email above.
- Move 2 — Anchor on cash + equity together. 16 weeks severance + 12 months equity acceleration. If they push back on cash, accept 14 weeks but hold firm on equity (it's "free" to the company in that it doesn't burn payroll).
- Move 3 — Walk-away threshold. If they refuse to (a) fix the OWBPA defects, (b) move on severance at all, and (c) extend the exercise window, the agreement is materially below market and the OWBPA-defective release is unenforceable to ADEA claims regardless. Consult an attorney before signing in that scenario.
Documentation to preserve
- Your full employment file (offer letter, performance reviews, equity grant documents, bonus plan)
- The original separation agreement (don't sign the revised one until you've kept a copy of the original)
- All written communications with HR about the separation
- Documentation of your California work location (offer letter, W-2, tax filings) — confirms § 16600 applies
- Most recent 409A valuation notice or stock plan administrator statement
When to escalate to an attorney
- If the company refuses to fix the OWBPA defects after written request
- If you suspect age was a factor in your selection (review the decisional unit disclosure if this was a group RIF)
- If you want to file an EEOC charge or pursue an ADEA claim before the 21-day clock expires
- If the equity at stake exceeds $250K and you want a tax-aware negotiator