Sometimes an experience is so painful it’s helpful to try and forget it ever happened. But something recently transpired that has allowed me to relive my anxiety with all of you. It has to do with a severance package.
This post is an important reminder about the dangers of written communication. Always be careful with what you write and send online.
One E-mail Almost Ruined My Severance
In early 2012, after months of negotiating a severance from a day job I had held for 11 years, I almost screwed myself out of absolute freedom due to one damn email.
As part of my exit instructions, I was told not to transfer any proprietary work information to my personal accounts. This made sense because taking what didn’t belong to me would be considered theft.
Every company’s worst nightmare is having an employee copy sensitive information that can be used against them at a competitor or made public. The second company’s worst nightmare is when a disgruntled employee badmouths a firm to the press or over social media. This second reason is why negotiating a severance is more possible than you think.
My situation was different. Part of my severance negotiation strategy of keeping all my deferred compensation, receiving a lump sum severance, and getting six months of fully paid healthcare was predicated on me promising my firm I would NOT join a competitor. They couldn’t enforce this promise, but it was my intention to permanently leave the industry.
Convincing my employer I wasn’t joining a competitor was the only way I could stay on for two months after we agreed I would be laid off.
I wanted to stay on for two months to help ensure there would be a smooth transition. I also thought it’d be nice to collect two more months of pay and benefits without any work performance stress.
When you know the end is near, you try and hold on for as long as possible because change is scary.
The E-mail Snafu That Always Killed My Severance
After working at one place for so long, my work e-mail essentially became partly my personal e-mail. It was just easier corresponding to non-work people while I sat in front of a computer for hours a day instead of trying to type personal responses on a clunky mobile phone. Back then, iPhones and Android phones weren’t as popular.
Anyway, during my last week of work, I started mass e-mailing dozens of old documents to my private e-mail account. I knew the company was monitoring my activities so I quickly screened each e-mail and the attachments before I pressed send.
Sample documents I sent to myself included random things like a bathroom remodeling contract from 2007, pictures of me and clients visiting the Taj Mahal in 2003, years worth of tax documents, team pictures, refinance documents and more.
Each e-mail had 10-20 attachments because I was basically mass copying all these documents I had archived on my computer since 2001.
Unfortunately, there was one email that contained client revenue information that I wasn’t supposed to send! It somehow slipped through the cracks, probably because the name of the Excel file was some generic name that belied its true contents.
I didn’t even realize I had sent this document until HR called me the night before my last day telling me what I had done. They said they would be reviewing my activity and getting back to me with a resolution.
Oh shit! Did I just screw myself out of a severance package worth six years of living expenses because of one inadvertent attachment?
I quickly reviewed all the e-mails I had sent back to my personal account and found the document. It was indeed an Excel file containing revenue figures broken out by client. Drat! How could I have been so careless as to include this document I did not need?
An Honest Mistake
The client revenue document was now evidence from their perspective that perhaps I was joining a competitor after all. But as I looked more closely at the document, I quickly realized the revenue figures were from five years prior.
In other words, the data was practically useless because clients come and go and our business model was all about how we could improve upon last year’s numbers.
I proceeded to write a mea culpa e-mail to HR highlighting the document transfer was inadvertent. I told her that I had no need for a five year old document with stale revenue information.
Finally, I reemphasized my desire to get out of the business for good. She acknowledged receipt and told me she’d get back to me.
The Torturous Waiting Game To Hear If I Would Get My Severance
I showed up to work the next day, a Friday morning like always, but was unceremoniously denied access to my desk due to HR’s continued investigation of my e-mails. What was supposed to be a bittersweet good-bye, turned out to be a lonely time of anxiety, frustration, and worry.
My manager had flown out from NYC to try and ensure the transition went smoothly. He wasn’t someone I looked up to partly because we both had the same title, but he was about seven years older. I respected him as an equal, but not as my superior.
My manager was the one who greeted me at the lobby that morning and barred me from going back to the seat I had sat in for 11 years. It was a very jolting feeling, perhaps similar to having your children ripped away from you by some distant aunt who accuses you of doing wrong without ever being there.
Here was this unhealthy looking fella from NYC I hardly ever saw, not letting me leave with dignity. Perhaps he was just the messenger sent by HR, but he didn’t bother to relay any reassurances. I had just this memory out of mind until I revisited this post. Funny enough, my NYC manager left a couple years later.
It was embarrassing to explain to the clients I had planned to meet that morning why I could no longer stop by with my manager and subordinate. It was embarrassing not many people showed up to my final goodbye drinks gathering because I couldn’t send a blast e-mail from work.
Needed To Find Some Answers
My storybook ending was in complete disarray. All of this happened on a Friday morning, and I just drove back home and sulked. Can you imagine spending so much time trying to engineer your layoff, thinking everything was going perfectly swell only to realize on your very last day everything you worked so hard for was in jeopardy?
Not one to sit still, I went to a Hastings School of Law community help session to get advice about my case. There were at least 500 other people there seeking help in matters ranging from family law, criminal law, civil law, and employment law.
I waited in line with my wife for two hours to in order to speak with an employment professor and a law student. I showed them my documents, explained my situation, and asked them what they thought.
After a 15 minute discussion, they essentially said I shouldn’t worry. I felt a little better after the consultation but I still worried because I spoke to other people in line who felt they were being unfairly terminated. All I could do was wait, plan out various scenarios, and hope for the best.
Getting The Answer I Wanted
The following Monday passed with still no phone call or e-mail from HR. Then Tuesday came and went.
Finally, six days after I was unceremoniously barred from returning to my desk, HR called to say everything would be OK. Her tone had softened tremendously since we spoke the week prior. She reassured me that all details of the severance package would be executed. Thank goodness!
It was at that moment I made an oath to work as hard as I could on my business so that I would NEVER have to go back to work full-time again.
I felt like I had dodged an enormous bullet, even though I didn’t have any nefarious intentions. I felt rich because it felt like I was getting something for free. 100% of my bonus was invested in a 5-year Dow Jones structured note. Thankfully, the Dow Jones and the S&P 500 did very well since 2012.
I reinvested 100% of my six-figure severance check because I felt it was free money. Therefore, with free money, I had more guts investing it.
Further, my severance package paid out tens of thousands a year in deferred compensation. Not only that, Financial Samurai was starting to generate income as well. Therefore, I didn’t need the money.
Important Points To Recap About Severance Negotiation
If you want to increase the chance of success for negotiating a severance, remember these following posts.
1) HR tracks everything you do.
They know what e-mails you are sending and what is contained in all e-mails. Be very careful what you send, especially during a period of transition. HR also has e-mail tracking software that can flag e-mails based on particular keywords you use.
Be very careful what you say. If you’d feel embarrassed if one of your e-mails was published on the front page of the Wall Street Journal, don’t write it.
2) Where you go next matters.
Emphasizing you aren’t going to a competitor is a huge selling point in severance negotiations. If you can argue that you’re going to a client, even better. There is no way in hell I would have got the severance package that I did if they suspected I was going to a competitor or if I explicitly said I was going to an arch rival. They’d kick me out the door in a nanosecond.
In such a hyper-competitive environment, taking trade secrets and going to a competitor is as bad as turning to the internet and writing a nasty tell-all like Susan did against Uber or Penny did against WrkRiot.
3) Loose lips sink ships.
If you really want to put your severance in jeopardy, talk about it with all your colleagues.
I was able to successfully develop a good relationship with HR. But then I hurt our relationship by boasting to a co-worker I trusted to keep a secret. I told him how awesome it was to negotiate a severance. I’m sure this co-worker let my secret slip and proceeded to tell other co-workers. Someone else decided to go to our HR manager to see if he could negotiate a similar deal shortly after I did!
Once this happened, the HR manager was rightfully upset with me. If that didn’t happen, she would have told me not to worry about my email snafu the night before my last day at work. Instead, she made me sweat it out for days before telling me everything would be fine.
Do not show joy after a great bonus or act deliriously happy after a fantastic severance. Stay stoic. Act like business as usual.
4) Speaking in person is always better.
Whether it’s rigging a political debate or sharing sensitive information about others, it’s always better to have a face-to-face meeting if you still depend on others to survive.
If you feel uncomfortable having your e-mail or text be on the front page of the paper, don’t write it. Alternatively, if you’ve set up a business where any controversy is good for business, then by all means be as reckless as you want.
5) Keep private and work e-mail separate.
There’s no excuse not to use a private e-mail only for personal messages anymore thanks to incredibly smooth user interfaces, the cloud, and fantastic mobile phone functionality.
The Final Severance Payment
I’m sharing with you this e-mail warning story five years later because on March 31, 2017, I finally got the last of my severance package payment in the amount of $65,695.26. Hooray!
Once I do my 2017 taxes next year, the net amount should be closer to $75,000 because they took out a whopping 40% for state and federal taxes. As a writer who coaches high school tennis on the side, this is a significant amount of money to provide for my family.
If I had just quit back on March 8, 2012, not only would I have not received a $65,695.26 final direct deposit, I would have lost much more in deferred stock and deferred cash as well. The six-figures severance check I invested in a structured note wouldn’t be worth much more five years later either.
This $65,695.26 final payment was from a fund with a 7-year vesting period some employees were forced to participate in during the financial crisis. I’m thankful the fund forced us to invest a portion of our bonus during the worst of the Global Financial Crisis! It ended up being a 3X return.
The Severance Gave Me Freedom
No longer do I have to worry about whether my old firm will withhold the final payment due to my activities since departure. I knew there was only a tiny chance they’d screw me over since I didn’t join a competitor and never badmouthed them. But still, you just never know until the money hits your bank account.
My old firm honored our agreement, and I’m grateful to them. They acted responsibly during the financial crisis by never accepting a dime of bailout money either. In a weird way, I’m a little sad my firm and I no longer have any ties after 16 years.
Now that I’m completely free, it’s time to figure out what to do over the next five years. For so long I’ve been a proponent of Stealth Wealth, partly due to this fear of not being made whole on my severance. But now, there’s nothing holding me back except for the joy of privacy.
It’s funny, but even after I received my last severance payment in 2017, more than four years later, I’m happy just keeping things low-key. I’d rather be rich and not famous. Fame is a trap that takes away one’s freedom.
Recommendation If You Want To Move On
If you want to leave a job you no longer enjoy, I recommend you negotiate a severance instead of quit. If you negotiate a severance like I did, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.
Since you technically got laid off, you’re also eligible for up to 27-weeks of unemployment benefits. Then there’s enhanced federal unemployment benefits as well. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye, on how to negotiate a severance. I first published the book in 2012 and have since expanded it to 200 pages from 100 pages in the latest edition thanks to tremendous reader feedback and successful case studies.
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