Even when a key executive has a written employment agreement, he or she may have to fight for bargained for benefits upon termination. Most key employees or executive employment agreements will provide that the employer can terminate the employee for “good cause” without much or any severance, but if the termination is not for good cause (even for an at will employee) there will be severance and other benefits paid. Of course, that leads some unscrupulous employers to trump up alleged “good cause” where there is none, and to argue all kinds of technical, nitpicky excuses why the payout provisions do not apply.
When the corporation in this case terminated its CFO, it refused to honor the CFO’s employment agreement that provided for a severance payment of $120,000 and a stock option agreement. The corporation raised several technical arguments to justify its refusal to honor the agreement. It soon agreed to settle the claim for the severance payment for $128,000 and it entered into binding arbitration on our client’s stock option claim. The arbitrator found that the terminated CFO was entitled to exercise his stock options and awarded him $138,000 in damages plus an additional $28,312.46 in attorneys’ fees for a total recovery of $294,512.46.
Trial Lawyer for CFO: Robby Robinson of Quest Law Firm
(Reported in the Verdicts and Settlements section of The Los Angeles Daily Journal, August 6, 1999.)