Monday, February 21, 2011

Is describing a C-level executive’s discharge as “for cause” defamatory?
Dorsey & Whitney LLP
Roy A. Ginsburg
February 7 2011

Quirky Question # 168: I saw your last question about discharging an executive for cause. We recently terminated a C-level executive for that reason. His contract delineated four different “cause” grounds and we felt that two were implicated, although one of these ground arguably was iffy. We’re wondering whom we can tell about this decision. Are there any risks associated with publicizing this discharge?
Roy’s Analysis: You raise an excellent question, which companies like yours need to consider thoughtfully. Ideally, this thoughtful assessment will occur before a company terminates an executive “for cause.” As a prefatory matter, just to ensure that the readers all understand the terminology of your question, a “C-level” executive is typically a CEO, CFO, COO or some other high-ranking executive. These individuals, especially in the case of the CEO, usually report either directly to the Board of Directors, or for the lower level execs, to the CEO. At times the non-CEO, C-level executives report jointly to the CEO and the Board.

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