The recent departure of Lord Browne from BP caused widespread controversy in many ways, particularly over the details of the severance package he is expected to receive. This kind of high-profile departure often throws the spotlight onto issues such as severance negotiation and compromise agreements for executive directors who have been dismissed. Some of the key issues surrounding this topic are misunderstood not only by the general public, but often by the executives being asked to leave.
Take a typical situation: the chief executive is summoned to a meeting with the chairman who tells him that the majority of directors have decided he must go. He is asked to resign as a director immediately but is assured that his contract of employment will be honoured in full. The chairman spells out what this will mean. He is told to find himself a lawyer. The company will cover his legal fees. If he does not resign, he will be dismissed.
