Always get a legal review of a draft withdrawal contract before executing the agreement or asking the outgoing CEO to sign the release terms. Both parties, not just the non-legal organization, should have the agreement reviewed definitively. Because withdrawal agreements are confidential, it is difficult to give many details and examples. Below are examples of exit agreements, as reported second-hand by competent consultants and lawyers. Not all examples follow all of the above instructions. There is no one, a rigid directive, so there are many examples in most municipalities. The best way to find out more is to request an information interview with a lawyer or tax advisor specializing in deferred compensation and/or exit agreements for executives in the association sector. Unfortunately, BELL`s success is not the norm. What is striking is that in a recent Bridgespan survey, only 30 percent of key executive positions in the nonprofit sector were invested through internal support – about half the profit rate.9 Our new research also showed an additional reason to look for talent inside: the most successful leadership changes have associated an internal successor with an expanded role for the founder. Every year, thousands of non-profit boards face the immense task of finding a successor to replace what seems irreplaceable: the long-loved founder. The transition is full of anxiety and attracts standard advice on how to cope. “Make a clean break” is the warning. “The founders and successors are management oil and water.
They don`t mix. For example, the unlimited ownership of a share company could be fully transferred in four years, divided in monthly stages after the company`s first anniversary. This kind of agreement might look like this: our research at bridgespan Group has shown that the answer is often no. Surprisingly, transitions that extend the role of a not-for-profit founder yield the best results. Indeed, nearly half of the founders who resign continue to bring their knowledge, relationships and passion for the organizations they founded. Clients regularly ask us for help in developing exit contracts with outgoing executives. (For the purposes of this article, we will use interchangeably the “founder,” “CEO” and “long-tenured executive executive” to refer to a leader who played an important role in the design of an organization, either during its creation and long tenure, or through leadership over a long term.) A withdrawal agreement, as described in this article, differs in several respects from a separation agreement and release. (You can find information about the latter type of contract in the sidebar below.) It is not known how many outgoing executives get an exit contract or what the conditions are in general. The terms of these agreements are considered confidential and are not available for consultation.
In our experience, only a small percentage of CEO resignations are governed by the terms of a withdrawal contract. The application of exit agreements is most common in circumstances that we will describe below. Most of them are designed by a lawyer working with an executive, a few board chairs and perhaps an accountant specializing in compensation and not-for-profit law. In some cases, the CEO and the non-profit organization retain separate legal assistance while negotiating an exit contract. Design discussion points on the map process and the reasons for making the benefits available in the agreement to have them available if they are needed. The power of such agreements can be in the same way as the discussions that take place to implement those conclusions, just as it is a function of the formal agreement or the document itself.