• The terms of an executive employee’s severance package should be agreed upon at hire.

Most executives of larger companies insist upon a written employment contract at hire, which will include a severance package (often called a “golden handcuff”) and is usually prepared or approved by an attorney. The amount of severance pay (often referred to as a “golden parachute”) varies and may include several months of pay, or several years of pay in some situations, upon termination of employment or a change in control. Because of the potential loss of future income, severance pay benefits are highly important to executives; the terms of the employment agreement should be specified in the contract.