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It is a financial tool. And when the numbers are large enough, that tool sometimes gets used You can save this article by registering for free here. Or sign-in if you have an account.Before an executive is removed, there is almost always a calculation, writes Howard Levitt. Photo by Djomas - stock.adobe.comThe more senior the executive, the easier for boards to fire them for cause — even where none existsSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorSenior executives tend to believe that “for cause” terminations are rare and obvious, reserved for fraud, dishonesty or clear misconduct.But with the most senior executives, namely fiduciaries, cause is actually easier to establish because they are required to act with the highest level of integrity and avoid even the appearance of any conflict of interest.Boards encourage that understanding.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againBecause that reality is useful to them.At the executive level, cause is not just a legal standard. It is a financial tool. And when the numbers are large enough, that tool sometimes gets used.Before an executive is removed, there is almost always a calculation.What will a without-cause termination cost? Salary continuance, bonus, benefits, equity — often measured in the millions.Then the second question: is there a path to cause? Not necessarily a winning case. Just a credible one.If the answer is yes, the strategy often changes immediately.Because alleging cause does not only reduce liability; it can virtually eliminate it — at least as a starting position.Executives imagine cause as something that emerges organically. But it is often artificially built.Once the decision is made, past conduct is re-examined with a different objective. Emails are reviewed not for context, but for tone. Strategic disagreements are reframed as poor judgment. Missed targets — often driven by broader business conditions — are recast as personal failures.Then comes the documentation.Concerns that were never formalized suddenly appear in writing. Feedback becomes “warnings.” Expectations are clarified after the fact. A file is assembled that did not exist when the events actually occurred.The file is not fabricated. It is curated.And it is designed to survive scrutiny long enough to create leverage.Most executives still assume the battle will be fought on the merits.It often is not.The pressure point is elsewhere: time, cost and reputation.A cause allegation immediately forces the executive into defensive posture. Compensation stops. Equity is frozen or forfeited. The burden shifts.To challenge it means litigation — public, expensive and slow. It means internal communications disclosed, decisions dissected and judgment scrutinized in a forum that future employers, boards and investors can all observe.Boards understand this calculus.That is why cause is sometimes alleged even when the case is uncertain, and even though the company assumes its own risk of additional damages for the employee if the court decides that the cause was alleged in bad faith to pressure the employee into an improvident settlement.The uncomfortable truth is that many cause cases are not built to be won in court. They are built to be settled.And they are vulnerable in predictable ways.Courts do not look kindly on after-the-fact documentation. They are skeptical of sudden performance concerns that were never raised contemporaneously. They question why serious misconduct, if it truly existed, was tolerated without consequence.The more the narrative diverges from the lived reality of the employment relationship, the harder it becomes to sustain.This is where sophisticated executives regain leverage — if they move quickly.The instinct to “take a few days” or respond informally is a costly one.By the time an executive reacts casually, the company’s position is already documented, internally aligned and often communicated externally.Effective responses do the opposite.They force specificity immediately. What, precisely, is alleged? When was it raised? Where is it documented? Who addressed it at the time?Vague assertions collapse under precise questioning.And once they begin to collapse, the risk shifts.A weak cause allegation is not neutral. It is dangerous — for the employer.Wrongful dismissal damages at this level are substantial. Lost equity claims can dwarf salary. And bad-faith and reputational damages — where allegations are advanced recklessly or without foundation and the cost rises significantly — can change the dialectic altogether.Then consider the audience.Institutional investors, regulators and other boards pay attention to how senior executives are treated. A public, unsuccessful cause allegation raises questions — not just about the executive, but about governance, oversight and judgment.When those risks surface, early and credibly, the leverage that began with the employer can be reversed.When executives come to see us, our advice is simple. Do not argue. Instead, construct.Rebuild the record in real time: performance history, board interactions, contemporaneous communications, business context. These expose the gap between what is now alleged and what was then accepted.Then apply pressure selectively — enough to make the risk clear but not enough to make resolution impossible.And understand the objective.At this level, the goal is rarely vindication in a courtroom. It is converting a “for cause” narrative into a without-cause outcome — with compensation, equity and reputation intact.That happens far more often than most executives realize.The greatest error is not being terminated for cause. It is assuming the label is final. It is not. It is an opening position — one that is frequently aggressive, sometimes strategic and often reversible.But only if it is challenged with equal strategic composure.Boards rely on executives misunderstanding how cause and reputation management actually work.They rely on the executive’s hesitation, fear of reputational damage, and on their assumption that the narrative is fixed.It isn’t. At this level, employment disputes are not decided by what is alleged but by what can be sustained under pressure.Executives who understand that — and act on it quickly — do not just defend cause allegations. They dismantle them.Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.