Yea it's really hard to figure it out at first. I kept myself from executing anyone in early game because I wanted to have good relations with pretty much everyone I could. Now I'm around end mid-game and the Northern Empire has like... 3-4 different mercenary clans with them?(Embers, Forest, Jawwal & another one)
I went to check in the encyclopedia and all mercenary clans literally have NO friends, so I thought to myself: "Well I could at least try to wipe one of them off my map".
I made a seperate save, executed one. Around 15 minutes later I went to look the Northern Empire Lords & Vassals, 70% of them are at -60, 20% of them are at -40, the rest was between -20 & -10. And all the mercenary Clans wanted my head.
So I just reloaded and didn't do it.

I wish the penalty wasn't THAT harsh. Like, I get that it should drop, but when it says they have no friends at all, my relation shouldn't have to drop in the entire Empire. I don't know, what do you think?