Executive departures and public statements

A central issue in relation to a sensitive or senior executive departure will often be the external and/or internal reason for departure – whether articulated in a press release, reactive statement or reference.

Announcements of departures to take up new positions, genuine retirements, or where there is a specific and uncontroversial reason for leaving will be straightforward. In cases of dismissal for misconduct or poor performance, an agreed exit statement may neither be appropriate nor possible. The employer may wish to say as little as possible, or even state its position on the issue.

Where a relationship has broken down, statements may even be made which do little to mitigate the potential fall-out of the departure – for example, a statement that the executive has left due to a fundamental disagreement over strategy.

Nonetheless, where the parties wish to manage the publicity and minimise the reputational damage arising from an exit whose terms are mutually agreed, it may be appropriate to agree a public statement or reason for departure. There will of course be reputational, regulatory and other reasons not to make a statement that is, or can be construed as, misleading. However, the parties’ preference will often be to agree a succinct and acceptable reason for leaving which, while not misleading, avoids more detailed and awkward revelations of the background behind the executive’s departure.

Raising questions

Various formulations are deployed in announcements about executive departures. For example, a statement may say the individual is leaving to pursue other opportunities. While this seeks to suggest that the individual has options, is not necessarily leaving the relevant market and is going voluntarily, it does potentially raise the question of what opportunities the individual is leaving to pursue and whether they are genuine, and therefore whether the statement is simply a cover story for a less easily explained departure.

A statement may indicate that an individual is leaving having achieved their objectives. While this may well be an accurate and sensible statement to make, if the individual’s tenure has been relatively short, it may seem less than convincing.

Announcing a departure for personal reasons or to allow the executive to spend more time with their family may raise potential questions about the individual’s health or other personal circumstances, which may prejudice their future employability.

In light of the difficulties which tried and tested explanations may present, it may even be the case that the circumstances, or the inability of the parties to reach agreement, mean the less said, the better.

Damage limitation

Whether, and what form of, statement is made about the termination of an executive’s employment will to an extent inevitably depend on the parties’ relative bargaining positions and their assessment of the most advantageous public reason for departure. An associated issue will be the extent to which the employer is required by the severance agreement to ensure that staff comply with the agreed line to take.

An employer may consider that it is not feasible to accept an obligation (even if only by way of reasonable endeavours) to ensure that all staff comply with the agreed statement. The employee may be discouraged from seeking such a wide obligation if it entails greater internal dissemination than might otherwise have been the case of the agreed statement and the need to comply with it. It may therefore be sensible to confine any such obligation to a defined category of people or certain specified staff.

In reality, agreed statements cannot avoid the risk of prompting adverse speculation and inferences, especially if they are seen as unconvincing euphemisms or clichés. Nonetheless, both the employer and the departing executive need to carefully consider:

  • whether there is an acceptable, but not misleading, reason for departure which can be given

  • whether clichéd explanations can be avoided by crafting a genuine, detailed and credible explanation for the departure

  • whether a statement simply to the effect that the individual will be leaving or has left without further explanation creates less reputational damage or risk than a specific reason for their departure.

By Charles Wynn-Evans, partner and head of the London Employment Team, Dechert

Comments are closed.