- The recent firing of Ashley Buchanan as Kohl's CEO included the words "terminated" and "for cause."
- Directors, at times, ditch corporate euphemisms to signal accountability and maintain credibility.
- Boards are sometimes more "emphatic" with the words they use than decades ago, one expert told BI.
"You're fired."
It's jarring for pretty much anyone to hear, but it's maybe especially hard for CEOs accustomed to calling the shots and getting kid-glove treatment.
Yet, when the top dog's transgression appears serious enough, some companies will tear up their lists of euphemisms and say it more or less plainly: We canned the big boss.
That's what happened Thursday at Kohl's. The retailer said it had decided to "terminate" Ashley Buchanan, who'd only been in the top spot for a few months, "for cause."
Kohl's said in a regulatory filing that Buchanan had directed the company to do business with a vendor started by a person with whom he had an undisclosed personal relationship.
The terse phrasing in Kohl's announcement is a reminder that corporate boards — eager to maintain credibility — will sometimes forgo their word-mincing habits, at least for what they deem to be serious matters, corporate observers told Business Insider.
The embrace of tougher language around CEO firings is most on display when there's been a perceived ethical breach or malfeasance, Donald Hambrick, a professor of management and organization at Pennsylvania State University, told BI.
"Boards now are emphatic about such dismissals, and in a way that they weren't decades ago," he said.
One reason, Hambrick said, is that boards stand to gain if they appear to be taking a no-nonsense approach.
"It's a signal that they want to be scrupulous," he said.
No time for 'softer language'
Nadya Malenko, a professor in the finance department at Boston College, told BI in an email that strong and direct language isn't unusual in cases where there's been a scandal or a clear violation of fiduciary duties.
That's different, she said, from situations where a CEO might not have been a good fit or had made strategic blunders.
"The board needs to signal that it holds misconduct accountable, and using softer language will not achieve this," Malenko said.
She said it's also often worthwhile for directors to adopt a serious tone to tamp down speculation that there's some wider problem.
In the case of Kohl's, Malenko said, the board might have decided it was better to be "crystal clear" about the reason for the firing rather than let investors wonder whether there was something more serious afoot.
She said a rise in Kohl's stock following the news could have been a sign that investors weren't happy with Buchanan's short-lived efforts to turn around the company. Another possible reason for the gain, Malenko said, might have been that investors were pleased to see the board doing its job.
Gains on Thursday and Friday pushed Kohl's shares up nearly 12% following the news.
BI attempted to reach Buchanan for comment through what appeared to be his personal email; his LinkedIn account appears to be deleted.
Kohl's didn't respond to a request for comment from BI on its choice of wording in announcing Buchanan's firing.
Retaining confidence in the board
Kathy Gersch, chief commercial officer at the change-management firm Kotter, told BI that because Buchanan was so new in the role, the board likely wanted to show investors and others that it hadn't made a bad call in assessing his abilities and, rather, that Buchanan's ouster related to what the company deemed a conflict of interest.
"The board needs to convey a sense of competence," she said, referring to its ability to hire a CEO.
Kohl's announced in November that Buchanan, who'd been running the retailer Michaels since 2020, would take over Kohl's in early 2025. In January, Kohl's, which is based near Milwaukee, reported slumping sales and said it would close more than two dozen stores.
Gersch said directors often seek a balance between not disparaging someone they're pushing out and maintaining the board's legitimacy.
"There's sort of a demand from the public and shareholders for greater degrees of transparency," she said.
Penn State's Hambrick said that with serious matters, it's good when companies dispense with corporate speak because doing so signals that boards are concerned foremost about ethics and adhering to company values and societal norms.
He said that approach helps a board maintain its reputation and that of a company.
"If they sniff out ethical misdeeds, no matter by whom, including the CEO, the person will be gone," Hambrick said.
