What to Look for in an Arizona Severance Agreement (Executives Edition)

Chris Suffecool
5 days ago
2 min read

Short version: If you’re an executive in Arizona and your employer has offered you a severance package, don’t sign before you understand the fine print. Severance agreements often include terms about compensation, stock, and restrictive covenants that can significantly impact your career and finances.

Why Executives Receive Severance Agreements

To provide financial support during transition.
To obtain a release of claims (discrimination, retaliation, wage disputes).
To reinforce restrictive covenants (non-compete, non-solicit, confidentiality).
To protect company goodwill and trade secrets.

Key Clauses to Review Carefully

1. Compensation Terms

Salary continuation, lump sum payments, and bonus/commission eligibility.
Timing of payments (lump sum vs. installments).
Whether payments stop if you take another job.

2. Equity, Stock Options, and RSUs

Does the agreement address vesting acceleration?
What happens to unvested shares?
Do you have a limited window to exercise options post-termination?

3. Benefits and Perks

Health insurance (COBRA subsidies).
Outplacement services or continuation of perks (car allowance, club memberships).

4. Release of Claims

Broad release usually includes federal (Title VII, ADA, ADEA, FMLA) and state claims (Arizona Civil Rights Act, Wage Act, Employment Protection Act).
Age Discrimination Claims (ADEA): Federal law requires special disclosures and a 21-day review/7-day revocation period.

5. Restrictive Covenants

Non-compete clauses: Enforceability in Arizona depends on scope, geography, and duration. Overly broad clauses may be unenforceable.
Non-solicitation: May cover clients, employees, or vendors.
Confidentiality: Often permanent — be cautious about its scope.

6. Future References and Reputation

Some agreements include neutral reference or non-disparagement clauses.
Consider negotiating for a positive reference letter.

Negotiation Tips for Executives

Don’t rush: Employers often set artificial deadlines; you may have more time.
Prioritize: Decide what matters most (cash vs. stock vs. non-compete).
Leverage: If you have potential claims, your bargaining power increases.
Get advice: A lawyer can spot hidden pitfalls and propose strategic edits.

How This Ties Into Arizona Law

Arizona is an at-will state, but severance agreements are contracts — once signed, they are binding.
Courts may enforce reasonable restrictive covenants but often strike down those that are too broad.
The Arizona Employment Protection Act (A.R.S. § 23-1501) limits wrongful termination claims, but severance agreements can’t waive future rights (only past claims).

Other Resources

If you believe your employer has not paid you what you are owed, see our post on Wage Claims.
If you believe you've been retaliated against based on discriminatory reasons (gender, race, age, nationality, etc.), see our post on Retaliation Claims.
If you have questions on whether your time off is covered under the FMLA or ADA, see our post on FMLA vs. ADA.
If you believe you've been retaliated against based on reporting a potential violation of Arizona state law, see our post on the Arizona Employment Protection Act.

Bottom Line

Executives have more at stake in severance agreements than most employees. The terms you agree to can affect your finances, your stock/equity, and your career mobility for years. Before you sign, consult with an experienced employment lawyer to protect your interests.

Disclaimer: This post is for general information only and is not legal advice. Every case is unique — consult an attorney about your situation.