Severance – Oh No!

Many entrepreneurs, when they take outside money into their company, want to protect themselves. This is a perfectly reasonable thing to do.

The investors putting the first money into the deal also want some protection, especially when the founders own a vast majority of the overall stock and probably have a majority of the board seats.

One of the items that entrepreneurs sometime request is a severance package. In Washington State – DO NOT DO THIS. I don’t know about other states, but in Washington, the law apparently makes individual board members liable for any salary owed employees and not paid. For historical reasons, severance was considered salary in Washington. That would mean that board members might become liable for the severance of a fellow board member and company executive.

Clearly, this is a bad idea and the law needs to be changed.

But in the meantime, do not agree to a deal where there is a severance agreement.

I have modified my model term sheet to reflect this (http://drosenassoc.com/Model%20Term%20Sheet%20for%20Alliance%20of%20Angels%20revised%20May%202011.pdf).

57 comments on “Severance – Oh No!

  1. That is a really good tip particularly to those fresh to the blogosphere. Simple but very precise info Thanks for sharing this one. A must read article!

  2. When some one searches for his necessary thing, thus he/she desires to be available that in detail, therefore that
    thing is maintained over here.

  3. I happen to be writing to let you be aware of of the outstanding encounter
    my cousin’s princess found viewing the blog. She figured out a good number of details, including what it’s
    like to possess an amazing helping mood to get other people very easily
    understand a number of multifaceted subject areas. You really surpassed readers’ expectations.
    I appreciate you for rendering the beneficial, trusted, revealing as well as fun guidance on the topic to Sandra.

  4. I don’t even know the way I ended up here, but I believed this post was once great.
    I don’t realize who you are but certainly you are going
    to a well-known blogger in case you are not already.
    Cheers!

  5. This particular blog is really interesting as well as factual. I have chosen helluva helpful things out of this source. I ad love to return every once in a while. Thanks a lot!

  6. Your current article usually have got a lot of really up to date info. Where do you come up with this? Just stating you are very imaginative. Thanks again

  7. Superb website you have here but I was curious if you knew of any user discussion forums that cover
    the same topics talked about in this article? I’d really
    like to be a part of group where I can get feedback from other
    knowledgeable individuals that share the same interest.
    If you have any suggestions, please let me know. Thank you!

  8. Hmm it seems like your site ate my first comment (it was super long) so I
    guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog.
    I as well am an aspiring blog writer but I’m
    still new to everything. Do you have any suggestions for first-time blog writers?
    I’d genuinely appreciate it.

  9. Hi there it’s me, I am also visiting this web site on a regular basis,
    this web site is genuinely pleasant and the users are really sharing
    fastidious thoughts.

  10. you’re in reality a good webmaster. The site loading pace is incredible.
    It seems that you’re doing any distinctive trick.
    Also, The contents are masterpiece. you have
    done a wonderful task in this matter!

  11. I was suggested this blog through my cousin. I’m now not sure whether
    or not this post is written by means of him as nobody
    else recognise such specified approximately my problem.

    You’re incredible! Thanks!

  12. Your style is so unique in comparison to other people
    I have read stuff from. I appreciate you for posting when you have the opportunity,
    Guess I will just bookmark this blog.

  13. Amazing blog! Do you have any tips for aspiring writers?

    I’m planning to start my own blog soon but I’m a little lost
    on everything. Would you suggest starting with a free platform like WordPress or go for a paid option? There are so many
    choices out there that I’m completely overwhelmed ..
    Any recommendations? Kudos!

  14. I got this site from my friend who shared with me regarding
    this site and at the moment this time I am browsing
    this site and reading very informative articles or reviews here.

  15. excellent publish, very informative. I wonder why the opposite specialists of
    this sector don’t understand this. You must proceed your writing.
    I’m sure, you’ve a great readers’ base already!

  16. You can definitely see your skills in the article you
    write. The world hopes for more passionate writers like you who aren’t afraid to
    mention how they believe. At all times go after your heart.

  17. Good post. I study something more difficult on different blogs everyday. It’s going to always be stimulating to learn content material from other writers and observe a little bit one thing from their store. I’d prefer to use some with the content material on my blog whether you don’t mind. Natually I’ll give you a link in your web blog. Thanks for sharing.

  18. This is really interesting, You are a very skilled blogger.
    I’ve joined your feed and look forward to seeking more of your great post.
    Also, I’ve shared your site in my social networks!

  19. First of all I want to say terrific blog! I had a quick question which I’d like to ask if you don’t mind.
    I was interested to find out how you center yourself and clear your head before writing.
    I’ve had trouble clearing my thoughts in getting my ideas out.
    I do take pleasure in writing but it just seems like the first
    10 to 15 minutes are usually lost simply just trying
    to figure out how to begin. Any ideas or tips?

    Thank you!

  20. I’m commenting to make you know of the amazing discovery my cousin’s princess went through visiting yuor web blog. She realized numerous things, which include what it is like to have a very effective giving style to let many others effortlessly have an understanding of specified impossible things. You actually did more than people’s desires. Thank you for producing the valuable, safe, informative as well as cool thoughts on your topic to Lizeth.

Leave a Reply

Your email address will not be published.