Some Typical Negotiation SituationsSituation #1
A client of ours was in charge of Southeast Asia for a blue chip consumer company. The firm had not been performing well, and he felt he was at risk. He decided to negotiate an early retirement package which included an attractive severance. His highest earnings had been $750,000.
During his search, he uncovered a CEO position that matured into an offer. The chairman of a dot-com company in the investment world sent him a short e-mail with an offer of a $300,000 base, plus bonus potential, plus a reasonably attractive package of options. This position had been one of the longest running searches handled by a major recruiter. Our client had an ideal background, demeanor and skill set for the assignment.
Once the chairman made the offer, he turned it over to his general counsel, who was to get everything formalized. Our client retained one of the top law firms in the Northeast to represent him, and our first assignment was to strategize his initial counterproposal. We drafted that and he forwarded it to the general counsel.
The next ten days involved a continuing series of discussions by all parties. We could see that the general counsel of the company was under great pressure to get the deal done. Our senior staff took the lead in telephone conferences, which included our client, his attorney and the general counsel.
We, rather than the client, communicated the client's needs, and the rationale behind our request. A minor sticking point was the signing bonus, but that was a throwaway, since it was not as important as the equity package. To educate the firm, we presented a written analysis of several other deals, and an option package our client had available in another situation.
In the final analysis, we were happy to accept the $300,000 base offer, since we were successful in negotiating an extensive series of stock options over the term of the agreement-an amount equal to 5 percent of the currently outstanding stock in the company. These options will be worth tens of millions to our client if he grows the company-which he fully expects to do.
A client earning $250,000 was offered a position by a firm being pursued in an acquisition. In this case, the senior HR executive took the negotiating lead.
Through similar discussions, we were successful in getting an initial offer of $350,000 raised to $400,000. In addition, we negotiated a $50,000 signing bonus in lieu of relocation assistance.
Again, we helped move the corporation up by educating them to the current market, and other deals that were going down. Because risks of acquisition were involved, we focused on concluding an attractive severance package ... one that amounted to two years of income and immediate vesting of stock options-along with other standard severance benefits.
Today, firms routinely have their general counsel, senior HR executive or CFO be responsible for concluding their negotiations. This avoids unnecessary confrontation between the firm's executive and their new direct report. It also gives our clients a negotiating opportunity.
Frequently, our staff plays a major role in assisting clients in drafting their response to specific offers. Experience has shown that the exact language in these matters can critically impact the negotiation process. Listed below is a sample of a letter that we drafted for a particular client.