Board of Directors Terms & Definitions >
Voluntary Severance

Voluntary Severance


"Voluntary Severance" in the context of a corporate board of directors typically refers to the resignation of a board member from their position. This type of severance is voluntary in the sense that it is initiated by the board member rather than being forced by the company. This can occur for a variety of reasons such as personal or professional changes, conflicts of interest, or a desire to pursue other opportunities. Generally, board members are free to resign at any time, provided they follow the proper procedures and give proper notice, as outlined in the company's bylaws or governance policies.

Board of Directors Terms: Voluntary Severance

Board members, like employees, may choose to leave their position voluntarily. This is known as "voluntary severance." However, when it comes to board members, the process of voluntary severance is not always straightforward. In this article, we will explore the nuances of voluntary severance for board members, including its definition, reasons why board members opt for it, its pros and cons, how to negotiate its terms with the board, what happens to the board member's compensation, the role of the board in approving a request for voluntary severance, the impact of voluntary severance on the board's performance, and tips for a smooth transitioning process. We will also include common mistakes to avoid when seeking voluntary severance as a board member.

Understanding the Definition of Voluntary Severance

Voluntary severance is defined as a decision by a board member to resign from his or her position without being asked to do so by the board. It is a voluntary act that involves the board member notifying the board of their intentions to leave the position and agreeing to the terms of their departure. It is important to note that the voluntary severance process for board members differs from that of regular employees. The board may have certain protocols in place that must be followed before a board member can resign, and severance packages may vary depending on the individual member's circumstances.

Why Do Board Members Opt for Voluntary Severance?

The decision to leave a board position voluntarily can be influenced by several factors. One of the most common reasons is that the board member may want to pursue other opportunities or interests that conflict with their role as a board member. They may also be leaving due to personal reasons, such as health issues or family obligations. In some cases, the board member may feel that they are not making an effective contribution to the board's activities, and voluntary severance may be seen as the best option for both parties to move forward.

The Pros and Cons of Voluntary Severance for Board Members

As with any decision, there are pros and cons to opting for voluntary severance. On the plus side, the process can provide a sense of closure and enable the board member to depart on amicable terms. It can also provide a chance for the board to reassess its activities and leadership, which can lead to positive change. One of the chief disadvantages of voluntary severance, however, is that it may impact the board's operations, particularly if the departing board member had a critical role that is difficult to fill.

How to Negotiate the Terms of Voluntary Severance with the Board

When a board member decides that voluntary severance is the best option, they will need to negotiate the terms with the board. It is important to be clear and direct when communicating your intentions and to provide specific reasons for your decision. Be open to discussing what the board can offer in terms of severance packages and exit strategies. It is also important to be willing to compromise, particularly if the board is not in a position to offer generous terms. Honesty and transparency are key when negotiating any terms related to voluntary severance.

What Happens to the Board Member's Compensation in Case of Voluntary Severance?

Compensation for board members varies depending on the organization and its bylaws. In most cases, board members receive a stipend or honorarium for their services. When a board member leaves voluntarily, their compensation may be affected. Whether or not the board member will receive any severance pay will depend on what is outlined in their contract and whether the board approves it. Any amounts payable, as directed in the contract, like bonuses or commissions, which have accrued shall be disbursed in due course as mentioned in the agreement.

The Role of the Board in Approving a Request for Voluntary Severance

The decision to accept or reject a request for voluntary severance lies with the board. It is essential for the board to have a proper protocol in place for handling these situations to ensure that the board member's departure is seamless without causing significant disruptions in the board's functioning. The board will also need to consider the impact of the departing member's absence and consider how they will fill the vacuum left behind.

The Impact of Voluntary Severance on the Board's Performance and Productivity

Voluntary severance can have a significant impact on the board's performance and productivity. If the departing board member played a critical role, it will take time for the board to adjust to their absence and for the new member to integrate with the team. This period can result in a temporary dip in performance. However, if the board manages the transition well, it can also provide an opportunity for the board to reassess their direction and leadership to make necessary improvements in their functioning.

Top Tips for Smooth Transitioning after a Board Member's Voluntary Severance

Transitioning a departing board member is critical to ensuring that their exit does not negatively impact the board. Some top tips for smoothly transitioning the departing board member include:

  • Ensuring that they have completed all outstanding projects before their departure.
  • Providing references and support in their job search if necessary.
  • Having a farewell ceremony to express appreciation for their contributions.
  • Assigning a replacement and ensuring that they are adequately briefed about their new role.

Common Mistakes to Avoid When Seeking Voluntary Severance as a Board Member

Board members seeking voluntary severance should be careful to avoid certain common mistakes that can negatively impact their reputation and their future opportunities. These include:

  • Not providing sufficient notice to the board before leaving.
  • Leaving without completing outstanding board assignments or commitments.
  • Speaking negatively about the board or its members after leaving.
  • Failing to negotiate severance terms with the board.

In conclusion, voluntary severance is a process that can be beneficial for both board members and boards. It is important to handle the process with transparency, honesty, and clarity, ensuring that all parties are satisfied with the outcome. By following best practices and avoiding common mistakes, board members can leave their positions with dignity and be remembered for their contributions to the board's functioning.

Start an AdvisoryCloud

Join an advisory board