October 26, 2005
Time to Add a Lap Dance Clause?
Posted by Bill Sjostrom
Following up on this post, if the Savvis board does decide to fire the "Lap Dunce" as he's been dubbed by the press, will it be a "for cause" termination under his employment agreement? Obviously, this depends on what his employment agreement says, but I suspect there would be a strong argument that it was not for cause if what McCormick did was not illegal or did not violate company policy. This post discussed the expanded definition of cause Disney included in Iger's recent agreement which may have been motivated by the Ovitz situation. Will Savvis now include a "lap dance" clause in its future employment agreements? Celebrity endorsement contracts often provide that the contract can be terminated if the celebrity does anything that "embarrasses the sponsor or in any way causes damage or harm to the reputation or goodwill of the sponsor." I think having it publicized that you spent maybe as much as $240,000 in one night at a strip club would fall within this language. It certainly makes sense from the company's perspective to have a broad out like this in an executive employment contract, but given the shortage of quality CEO canidates, companies may not have the bargaining power to get it in.
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