Barnes and Noble, the bookstore chain, has experienced more than its share of trouble. They are hurt by Amazon, by the rise of e-books, the lack of book reading by younger people, too much debt, and excessive turnover in the management ranks, to name a few. Now, their third CEO, in two years was just fired by the Board. According to the Wall Street Journal, here are some of the details: the CEO violated Company policy (not specifically named), this was not due to any SEC type financial reporting or potential fraud, he was removed from the Board immediately, and he will receive No Severance!

This is what should happen but rarely does. If you Google severance pay, the stories never end. From media people like Harvey Weinstein collecting $25 million to Fox’s Roger Ailes receiving $40 million both leaving in sexual harassment scandals. United’s former CEO left in a corruption scandal and received $29 million. All this makes the misconduct departure of Lululemon’s CEO, who only received about $5 million, sound like a real bargain.

The only other recent and well-known example I could find of a CEO leaving for cause and getting no severance was the Vegas mogul, Steve Wynn and his ex-wife was a still a major shareholder in his company.

Why don’t more companies and their Board of Directors do the proper thing and not pay severance for executives who were fired for cause?  One obvious issue is the legal definition of  “cause”. When it involves violation of a company’s policies or code of ethics, this should not be an issue, but it is still usually not followed. If it involves a legal action, such as a lawsuit to establish “cause”, public firms usually run or at least look the other way!

Why? The real reason is that large public firms are afraid. Afraid of having to give depositions; afraid to go to court and mostly afraid the company will look stupid or mean or bad or worst yet, wrong! I know this because, as a CFO, I have been in more than one meeting that involved terminating another senior executive for cause and I am the only one suggesting no severance and that our company should pursue legal action.

In the case of a fallen CEO, it is the responsibility of the Board of Directors to take action whether that is to pursue criminal or civil actions and/or to withhold any severance. Too many Boards are weak. They take the easy way out, pay some hush money, sign a nondisclosure agreement and find a new CEO.

So let’s congratulate the Boards of Barnes and Noble and even Wynn Casinos for taking the first hard step and not further enriching a discredited CEO with any severance package! Most people distrust large firms and their executives. When people read about these undeserved and unexplainable severance payoffs, it only adds to that distrust.