Conditional Cap on Severance Pay Clause Samples

A Conditional Cap on Severance Pay clause sets a maximum limit on the amount of severance compensation an employee can receive, but only if certain conditions are met. For example, the cap may apply if the employee is terminated without cause, but not if the termination is due to a change in company ownership or a breach of contract by the employer. This clause helps employers manage financial exposure by preventing unexpectedly large severance payouts, while also providing clarity to employees about the circumstances under which severance limits apply.
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Conditional Cap on Severance Pay. If the Employee is a “disqualified individual” (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), and if the payments to Employee pursuant to this Agreement (when considered with all other payments made to Employee which are “parachute payments” as defined in Section 280G of the Code the amount of all such payments, collectively, the “Parachute Payment”) result in Employee becoming liable for the payment of any excise taxes pursuant to Section 4999 of the Code (“280G Excise Tax”), Employee will receive either (i) the severance benefits payable pursuant to this Section 1.2 or (ii) the severance benefits payable pursuant to this Section 1.2 as reduced to avoid imposition of the 280G Excise Tax (the “Conditional Capped Amount”), whichever would result in the greatest after-tax (taking into account all federal, state and local income taxes and the Section 4999 of the Code excise tax) payment. Not more than fourteen (14) days following Termination of Employment, Company will notify Employee in writing (i) whether the severance benefits payable pursuant to this Section 1.2 when added to any other Parachute Payments payable to Employee exceed an amount equal to 299% (the “299% Amount”) of Employee’s “base amount” as defined in Section 280G(b)(3) of the Code, (ii) the amount that is equal to the 299% Amount, (iii) whether the severance benefit described in Section 1.2(e)(i) or the Conditional Capped Amount pursuant to section 1.2(e)(ii) is greater on an after-tax basis and (iv) if the Conditional Capped Amount is the greater amount, the amount that the severance benefits payable pursuant to this Section 1.2 must be reduced to equal such amount. Such reduction order may be elected by the Employee at the time to the extent legally permitted and not a violation of Code Section 280G or 409A and, if it is or not elected within ten (10) days of the notification, it shall be done in the following order: (a) all cash severance in the reverse order to be received, (b) all equity valued without regard to Treas. Reg. §1.280G Q&A 24(c) in reverse order of vesting and (c) all equity valued pursuant to Treas. Reg. §1.280G Q&A 24(c) in reverse order of vesting. The calculations and determinations described in this section will be made by Company’s public accounting firm in accordance with Section 280G of the Code or any successor provision thereto. The costs of obtaining such determination will be borne by Company. Company’s obligations p...
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Related to Conditional Cap on Severance Pay

  • Timing of Severance Payments Any severance payment to which Employee is entitled under Sections 3(a)(i)(1), 3(a)(i)(2) and 3(a)(i)(5) shall be paid by the Company to the Employee (or to the Employee's successors in interest pursuant to Section 7(b)) in cash and in full, not later than thirty (30) calendar days following the Termination Date, subject to any delay required under Section 9.

  • Lump Sum Severance Payment Payment of a lump sum amount equal to twelve (12) months of Executive’s then-current Base Salary plus the Pro Rated Bonus, less all customary and required taxes and employment-related deductions, paid on the first payroll date following the date on which the Release required by Paragraph 4(g) becomes effective and non-revocable, but not after seventy (70) days following the effective date of termination from employment.

  • Termination and Severance Pay A. In the event the Employee is terminated pursuant to Paragraph B hereof and the Employee is willing and able to perform the duties of the position under this agreement, upon execution of a Separation Agreement and General Release, the Employer agrees to pay the Employee a lump sum cash payment equal to three (3) months aggregate annual salary, exclusive of other forms of compensation, less standard withholdings, in addition to the continuation of medical, dental and vision insurance benefits during the three (3) month period immediately following the date of termination. However, in the event the Employee is terminated because the Employee has been convicted of a misdemeanor or a felony, or if the County determines that the Employee has engaged in unprofessional and improper practice, other than negligence, and breach of public trust, including but not limited to illegal acts involving personal gain, or moral turpitude, the County shall be entitled to terminate the Employee immediately without any severance pay, or medical, dental and vision insurance continuation aside from COBRA. B. In the event the Employer at any point during the term of this agreement reduces the salary or other financial benefits of the Employee in a greater percentage than reductions to all other employees of Employer, or if Employer refuses, following a written request to comply with any provision benefiting Employee herein; or the Employee resigns following a suggestion, whether formal or informal, by the Sheriff that he or she resign, then, in that event, Employee may, at his or her option, be deemed to be terminated at the date of such reduction or refusal to comply within the meaning and context of the herein severance pay provision. C. In the event the Employee voluntarily resigns his or her position with the County as Major then the Employee shall give the County thirty (30) days written notice in advance, unless the parties otherwise agree. The provision for severance pay and continuation of employment benefits detailed in SECTION 3, Paragraph A shall not apply to a voluntary resignation.

  • Compensation Other Than Severance Payments 4.1 If the Executive’s employment shall be terminated for any reason following a Change in Control, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if Section 18(n)(ii) is applicable as an event or circumstance constituting Good Reason, the rate in effect immediately prior to such event or circumstance, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination (or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason). In addition, if the Executive’s employment is terminated for any reason following a Change in Control other than (a) by the Company for Cause and (b) by the Executive without Good Reason, then the Company shall pay a pro-rata portion of the Executive’s annual bonus for the performance year in which such termination occurs to the Executive on the later of (x) the date that annual bonuses are generally paid to other senior executives and (y) the date that is the first business day after the date that is six months after the Date of Termination. This pro-rata bonus shall be determined by multiplying the amount the Executive would have received based upon actual financial performance through such termination, as reasonably determined by the Company, by a fraction, the numerator of which is the number of days during such performance year that the Executive is employed by the Company and the denominator of which is 365. 4.2 If the Executive’s employment shall be terminated for any reason following a Change in Control, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

  • Reduction of Severance Benefits If any payment or benefit that the Executive would receive from any Company Group member or any other party whether in connection with the provisions in this Agreement or otherwise (the “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Payment will be equal to the Best Results Amount. The “Best Results Amount” will be either (x) the full amount of the Payment or (y) a lesser amount that would result in no portion of the Payment being subject to the Excise Tax, whichever of those amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in the Executive’s receipt, on an after-tax basis, of the greater amount. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: (A) reduction of cash payments in reverse chronological order (that is, the cash payment owed on the latest date following the occurrence of the event triggering the Excise Tax will be the first cash payment to be reduced); (B) cancellation of equity awards that were granted “contingent on a change in ownership or control” within the meaning of Section 280G of the Code in the reverse order of date of grant of the awards (that is, the most recently granted equity awards will be cancelled first); (C) reduction of the accelerated vesting of equity awards in the reverse order of date of grant of the awards (that is, the vesting of the most recently granted equity awards will be cancelled first); and (D) reduction of employee benefits in reverse chronological order (that is, the benefit owed on the latest date following the occurrence of the event triggering the Excise Tax will be the first benefit to be reduced). In no event will the Executive have any discretion with respect to the ordering of Payment reductions. The Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and the Executive will not be reimbursed, indemnified, or held harmless by any member of the Company Group for any of those payments of personal tax liability.