Executive Settlement Package: Check Every Pot of Money Before Signing
This article is for you if:
You have received a settlement agreement after a senior-role dispute.
You are comparing a headline payment with bonus, notice or equity rights.
You need to know what the package actually adds beyond sums already owed.
“Nine months’ pay” is not a valuation. It may combine salary already earned, contractual notice, holiday and commission with only a small additional payment. Split the offer into separate pots before judging it.
Build the package schedule
Pot | Record this |
|---|---|
Salary, holiday, expenses | Amount earned and payroll date |
Notice or PILON | Clause, termination date and lost benefits |
Bonus, commission, deferred cash | Performance period, discretion and payment condition |
Options, RSUs, LTIP or shares | Each grant, vesting, leaver status and exercise deadline |
Termination compensation | Gross amount, tax treatment and conditions |
Shareholder loan, earn-out or buyout | Contract preserved, valuation and payment date |
Add pension, insurance, car allowance, director fees and restrictive-covenant value where relevant. For each line, record the source clause, gross value, deductions, payer, deadline, evidence and whether it is already due. Caira can read uploaded settlement drafts, service agreements, equity documents and Excel schedules side by side.
The Acas settlement-agreement guidance explains that an agreement is written, voluntary and legally binding only if statutory conditions are met. It must identify the particular complaints or proceedings and name an insured independent adviser; “all claims” alone does not do the job. An Acas COT3 is a different instrument formed through conciliation.
Test the headline against reality
A CEO is offered “nine months”. Six months are contractual PILON, one is accrued holiday and commission already payable, leaving two months as the true uplift. The negotiation is about that uplift, plus equity, restrictions and reputation—not nine months.
An MD receives £40,000 compensation, three months’ notice, £25,000 bonus and £15,000 commission. Notice, bonus and commission are normally earnings. The £30,000 threshold does not make the first £30,000 of every package tax-free: HMRC separates qualifying termination awards from post-employment notice pay.
A founder-employee accepts less cash in return for good-leaver treatment, a fair-value share transfer, a shorter non-compete and an agreed announcement. Those terms may be valuable, but “options dealt with in the usual way” is unsafe. Dixon v GlobalData [2025] EWHC 2156 (Ch) shows why exit communications about option treatment require precision.
Caira can produce an easy-to-understand comparison of the employer’s offer, contractual floor and proposed changes, while flagging missing dates and conditions.
Terms that quietly change value
Garden leave continues employment and usually normal contractual pay and benefits; PILON normally ends employment immediately. The date can affect bonus eligibility, vesting, holiday, benefits and the start of restrictions. Acas explains the distinction.
List each equity grant and identify who can approve its treatment. If a parent company or trustee controls the plan, require its commitment rather than the employer’s hopeful wording. Specify leaver status, vesting, exercise window, tax withholding and portal update. For actual shares, state price, valuation mechanism and payment date.
Attach the agreed reference and announcement. State which restrictions survive, their start date and scope. Tillman v Egon Zehnder [2019] UKSC 32 confirms that limited severance may sometimes save a restraint; it does not make every wide covenant valid. Also record payment conditions, late-payment consequences, adviser-cost contribution, D&O cover and any continuing shareholder or SPA rights.
Caira has a 14-day free trial, then plans from about £15 a month.
Questions people often hesitate to ask
Is PILON extra compensation?
Usually not. It commonly replaces contractual notice pay; compare it with what notice would have provided, including benefits.
Are my options automatically included?
No. Name every grant and write down its precise treatment and approval.
Can the reference simply say “to be agreed”?
It can, but that postpones a difficult issue. Attach the final wording.
Does signing end my shareholder rights?
Only if the agreement validly releases or transfers them. Preserve intended rights expressly.
This article is general information, not legal, financial, tax or medical advice.
