C-suite terminations come with complex contracts, high stakes, and legal risks employers can’t afford to overlook, lawyer says
This month, Kohl’s, an American department store retail chain, fired its new CEO for unethical behaviour.
Ashley Buchanan, who started at the company on Jan.15, was terminated for cause after violating the company’s policies by failing to disclose a personal relationship with a vendor and a consulting contract that resulted in a million-dollar deal with the retailer.
In a statement, Kohl’s said the firing “was unrelated to the company’s performance, financial reporting, results of operations, and did not involve any other company personnel.”
But dismissing any senior executive is rarely straightforward or easy, says Jordan Bailey, employment lawyer from Zubas Flett Liberatore Law.
“You can pretty much assume that if they're terminated for cause, they will likely get a lawyer, and they will almost definitely challenge the termination,” he adds.
Bailey notes that firing C-suite executives involves unique legal and reputational risks.
The legal standards for termination apply equally to all employees, regardless of their role. However, Bailey says the difference with executives lies in their employment agreements, which often include terms that go beyond the minimum entitlements set out in employment standards legislation.
“They usually have something like a golden parachute," explains Bailey.
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