Employment Law Forum

Lee Iacocca - History Lesson From The Top High level executive Lido "Lee" Iacocca had "driven" down the road of hard knocks from a hot dog shop in Allentown to the automobile industry's glass skyscrapers of Detroit. In 1964, he was the first auto executive to make the covers of Time and Newsweek in the same week. Time declared him ''The hottest thing in Detroit.'' In 1973, at a time before dot.com on-paper billionaires, Iacocca was the highest paid executive in America -- earning $875,000 annually [about $4 million in today's dollars]. The ''Father of the Mustang,'' Iacocca had convinced boss Henry Ford II to build the sporty car that tapped into the upbeat 1960s market. Ford sold a first-year record of 400,000 Mustangs in 1964! Despite being close friends and treating each other like family, in October 1978, without explanation, Henry Ford II fired Lee Iacocca. "I guess 'The Godfather' was enough to convince him that all Italians were linked to organized crime,'' Iacocca wrote in his autobiography. Later, it came out that with Lee working miracles at his new post, Henry Ford II feared that he was trying to take over the company and that it was for this reason Henry fired Iacocca.	Iacocca' s firing is a good example of the perils one faces as a high level executive at the top of his or her game.
In comparison to regular employees, much more is at stake for the executive who is about to be fired, demoted, or who desires to resign.	Disputes between executives and employers are different than other employment law cases. How so? For one thing, much more is typically at stake for the executive who is about to be fired, demoted, or who desires to resign so to pursue other endeavors [for example, to open up his or her own business or to work for the employer's competitor]. From the company's perspective, it has a unique set of concerns related to the departing executive, concerns that differ from those related to managerial or regular employees leaving the company.
Executive disputes typically involve a common thread of issues that need to be addressed, preferably BEFORE the executive is fired or resigns. Issues include: Often there may be written or oral employment contracts between the employer and the executive. An executive needs legal counsel to initially determine if such contracts exist. If there are enforceable agreements, the attorney must advise the client on the rights, duties and obligations of the parties. Most important, the lawyer must analyze an agreement's validity and enforceability. Moreover, the attorney needs to review restrictive contract provisions and to determine if either the employer or employee has breached its contractual obligations to the other. Ideally, these items need to be reviewed before or while a dispute is developing. Executive/Employer disputes are often emotionally charged. Both sides typically have the stamina and financial means to fight it out in court. Notwithstanding these facts, level-headed employment law counsel [experienced in dealing with high level executives and major corporations] must determine if the dispute can be resolved out of court. Why? 1. Protracted legal battles are a lousy way to resolve problems. From his or her lawyer, the executive needs a realistic assessment of the emotional and financial risks of proceeding to court, BEFORE a lawsuit is filed. 2. With high level executives, "reputation is king." Counsel must work with all sides to assure that post-termination the executive's standing in the business community is not damaged. 3. Typically, a fired executive believes he or she will quickly find new employment; however, statistics show that senior executives suffer months of unemployment. The attorney must prepare the executive to handle what may be a significant period of unemployment. This reality must be addressed between the executive's counsel and the former employer [typically through the employer's counsel]. The former employer must adequately compensate the executive for the significant employment gap the executive will suffer. 4. In contrast to manager and regular employee damages, the harm to senior executives is unique. Complex severance and settlement terms require experienced counsel to deal with the issues, including the following: A. Severance payments, B. Tax issues; C. Stock options [including vesting and exercise dates]; D. Retirement and pension issues; E. Intellectual property issues including inventions; F. Noncompete [scope of such agreements]; G. Post termination employment [scope of such]; H. Employment references; I. Outplacement services; J. Accounting services and tax advice; K. Relocation - the company paying for such; L. Mutual release agreement; M. Executive's retention of equipment [e.g., computers].	Ideally, at the first sign of trouble the executive and counsel should review the facts and law of a dispute BEFORE the executive is fired or resigns.
Only counsel experienced in "high stakes" negotiations should be retained to handle the executive's circumstance.	Conclusion: high level executive dispute resolution requires seasoned counsel capable of calling on his or her experience to determine the best course of action for the executive so that he or she departs employment with the best possible resolution. In other words, while in some cases aggressive litigation is the only means to properly remedy the executive's circumstance, counsel must utilize all of his or her diplomatic skills to obtain an adequate resolution short of resorting to the courts to obtain a fair compensation package for the fired executive. Use of inexperienced counsel could result in the employer and executive ending up in court for all the wrong reasons, such as either side's damaged ego, unwarranted mud slinging, or other deficient behavior between the parties or their counsel.
Michael Mortimer and The Business Litigation Group have represented high level executives over the years, both in obtaining seven-figure settlements and through litigation. Representative clients have included bank presidents, vice presidents, credit union presidents, insurance company vice presidents, senior telecommunications executives in world-wide posts, CEO, COO, and CFO level executives, board members, industry presidents and owner/partners of small to medium-sized corporations.