Background In a welcome lunch at my current company, one of the founders (technologist) explained that he first met another of the founders (lawyer) when the technologist employed the lawyer to help him negotiate his severance from a C-level position at a large company which he was leaving by his own choice. The company he left still likes him, and tried very hard to keep him, but he wanted to leave to found his new company. The departure, and events leading up to, and following it were all amicable. There was no confrontation in any aspect of the process.
Edit My understanding is the negotiation was primarily over how much money the technologist would receive upon departure.
The new company he formed is not in the same industry as the former company.
My Poor View The idea of receiving a severance upon quitting a position still shocks me; the notion of hiring a lawyer in an amicable situation like this to help negotiate the severance nearly boggles my mind.
It seems that if this practice is common, it incentivizes people in such positions to leave prematurely. Suppose I am in such a position, and am offered some new position with a 20% raise and all other factors being truly equal with my current role. Love of my job and those I work with and all these qualifiers are considered neutral. If I'm able to also negotiate a severance, it seems akin to a signing bonus for taking the new position outside of my current company, with the key difference that my new company doesn't pay it.
Note I'm not (yet) in such a position, and expect that I'll work through two level changes and a promotion or three before I am even positioned for this, but at some point I will be done at my current company and will quit of my own accord. Probably to found my own new company.
Question 1 Please explain how this practice benefits the company losing the employee. I fully understand asking the departing employee to sign an additional NDA and/or non-compete agreement on top of what was signed upon hiring/promotion. Does this need to be financially rewarded?
Question 2 Please help me understand how common this is, and at what levels (senior manager, director, CxO?) this begins to come into play.