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What percent buyout offer?
Old 10-23-2007, 10:28 PM   #1
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What percent buyout offer?

Work for a midcap size US company with 15000 employees. Planning to ER in 2 years but would seriously consider going earlier if offered a buyout, which could happen.
From an average US company standpoint, what percent of my current salary would a reasonable offer be? I have no knowledge of what a good buyout offer would look like.
From those of you who where offered buyouts, what did it look like percentage wise. Thanks.
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Old 10-23-2007, 11:17 PM   #2
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You're not giving us much to go on. Buyouts vary greatly with seniority and job grade/position. They also depend on circumstances. For example, if a company wants to downsize significantly and without regard to the age, sex or seniority of those down-sized, buyout packages are likely to be generous and involve signing a release which prohibits you from taking legal action later.

What are your personal circumstances and what scenario is your company facing in regard to wanting/needing to downsize?
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Old 10-23-2007, 11:26 PM   #3
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This is one area here the Federal Govt SU@K$ or what ever to write it cleverly. The max you can get from a buyout is $25K regardless of age, number of years or seniority. When I hear about workers getting their annual pay or multiples thereof it makes me green with envy happy for them.
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Old 10-24-2007, 01:49 AM   #4
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more info

I'm a front line Supr. with 28 years seniority. Your correct the company will only offer buyouts to downsize the salaried staff. The plant I am in looks like they will be downsizing in the next 12 months perhaps 5 to 10%.
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Old 10-24-2007, 03:22 AM   #5
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Many Fortune 500 companies will offer buyouts. Some smaller companies may just layoff.... It happens!

As far as a fair amount and what the company might offer... there could be some distance between those two. I have seen formula's where people get 1mo salary x Num years service.... sometimes up to a cap.

What I have seen is basically 1 or 2 years of salary.

Sometimes there is no severence, instead if the company has a traditional DB pension, they might add x months of service to your pension calculation based on the current years of services like the severance calculation above. It essentially boosts the pension payout... instead of a lump sum severance, you get it with the annuity.
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Old 10-24-2007, 08:04 AM   #6
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Mine was something like: Months of Bridge = Number of years/2.5 to a maximum of 12 months. That was how many months they would pay you your regular salary along with all benefits. If you were 55 or older at the end of the Bridge you then went to regular retirement package. If you were 53 - 54 at the beginning of the process they allowed you to take half pay for 2 years with benefits to bridge to 55. You had to have at least 10 years in to get the retirement bridge. If you went to work for someone else, even part time, you were paid the reminder of your pay in a lump and the other benefits stopped. That was a good excuse for turning down work the first year.

Really pretty generous and just what I was waiting for. I had passed on several of these packages earlier because I wasn't at the FI level I wanted, this time I was ready. Coming up on 2 years since I walked out, and it has been a great 2 years, especially the first year at full pay.

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Old 10-24-2007, 08:14 AM   #7
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hogtied,

I went through something similar to this twice, and observed another buyout within megcorp before that. What you get all depends...

I watched an entire design department terminated because a new GM felt it was too expensive. :confused: I never did understand the logic of getting rid of the most knowledgeable engineers in the division, those who design the future products, to save a few dollars today. The GM later was terminated after a buyout. Anyway, at least some of those engineers were given what amounted to one year's salary bonus to "sign the forms" and move on. The most talented immediately found new jobs.

I had a different experience. Twice the plants I worked in were closed. The first was after the previously mentioned buyout by a competitor. I was given the option of a retention bonus if I'd hang around and facilitate the closing and transfer of products. I had nothing else to do, so I agreed. I received enough money for a down payment to purchase two rental properties, around four months take home salary. Had to take out a small 2nd on another rental to close the house deals. The day after I locked the door I left for Hawaii for two weeks. While there, I received an offer to work for a sister plant. Never missed a beat.

Fast forward four years. Dot com bust in process. Now working in a second sister plant doing the same thing as in first plant. We're notified the plant will be closed in six months. Incredibly, I received the same offer: help close the plant, received retention bonus. This one was even better, 6-months salary which was based on years of service. Even though I knew that one group got 12-months, it was a smaller group and a different management, and I couldn't get them to budge. I did negotiate with them to allow me to stay until I was 55, an extra two months, so I could qualify for and receive retirement medical and make 401K withdrawals penalty-free if needed. I didn't, but I wanted the additional peace of mind. Things were looking pretty good until 9/11 occurred. That changed the whole employment picture. But that's another story.

Hope you get the chance for a little extra kicker going out the door, if that's where you're headed anyway.
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Old 10-24-2007, 09:42 AM   #8
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As the others have pointed out, there's really no "one-size-fits-all" in these situations.

At my former MegaCorp, each RIF (reduction in force) situation had its own set of provisions. Once, a good friend of mine -- then in her late 30s -- accepted an offer of 1 yr. salary, full medical coverage for 2 years and a pension buyout of $75,000. With that, she severed any future benefits (including pension) from MegaCorp. (She later admitted she made a BIG mistake taking this offer as it delayed her future retirement date by years!)

Most recently, former co-workers of mine were offered 1 month salary for each year of seniority (maximum payout = to 30 months salary), plus 1 year medical and either a buyout of future pension coverage to sever any future benefits from MegaCorp, or, if within a few years of retirement eligibility, a bridge to retirement.

Depending on the number of employees your company wishes to remove, there is probably a base formula they will offer, which may be "sweetened" a bit depending on the age of the employee and/or his/her perceived importance to the organization.

Good luck!
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Old 10-24-2007, 09:47 AM   #9
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DW used to do HR and process termination packages at Nortel right after the dot.com bust when nortel was laying off tens of thousands of folks. The standard package there was something like 1 month for every year of service. So the old timers (my family knew a few) would get 2+ years of severance pay. Not sure if this was a "resign and get 2 years pay or we lay you off and you get nothing but meager state unemployment bennies for 6 months". They would even give folks their regular raises/bonuses ahead of time prior to termination in order to make their terminal salary as high as possible for the 2 years of severance pay.
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Old 10-24-2007, 09:58 AM   #10
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Quote:
Originally Posted by hogtied View Post
I'm a front line Supr. with 28 years seniority. Your correct the company will only offer buyouts to downsize the salaried staff. The plant I am in looks like they will be downsizing in the next 12 months perhaps 5 to 10%.
In your position, I'd consider one year of pay or acceleration of retirement benefits equal to 5 + 5 (5 yrs seniority and five years of age) to be generous. Or it might be some combination of cash plus accelerated pension benefits.

Since the cutback is small (5% - 10%) of only the salaried staff, it's possible buyouts might not be generous and the selection process to not be voluntary. In your situation, I'd have myself prepared to go involuntarily and without a significant buyout. Then, anything you get will be upside.
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thanks all
Old 10-24-2007, 01:10 PM   #11
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thanks all

that's exactly where I'm at. I'm all prepared to go. Just looking for that thick iceing on the cake.
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