Court details how CEO’s lack of cooperation and boardroom conflict led to rare for-cause dismissal
A British Columbia court has dismissed a former CEO’s wrongful dismissal, conspiracy, and defamation claims, finding the board acted with just cause after months of concern over executive performance and priorities.
Steven Eric Vestergaard, former president and CEO of Destiny Media Technologies and its subsidiaries, was removed by board vote in June 2017.
He responded with a lawsuit alleging wrongful dismissal, civil conspiracy, and defamation, claiming board members conspire0d to remove him and damage his reputation.
The court’s decision, released October 24, 2025, details a breakdown in trust, missed responsibilities, and the board’s decision to act in the interests of the company.
Boardroom tensions and missed duties
Vestergaard began his employment in 1991 when he founded Destiny Software, later acquired by Destiny Media. By 2017, Destiny’s primary business, the PlayMPE platform, was experiencing declining revenue, and a new product, Clipstream, was not yet generating returns.
Board members Hyonmyong Cho and S. Jay Graber requested business plans and strategic direction from Vestergaard, but he did not provide the requested documents.
The court stated, “It was Mr. Vestergaard’s duty and responsibility as president and CEO to provide the board with information regarding the business. Mr. Vestergaard’s failure to provide business plans was a failure to perform an evidently fundamental employment obligation.”
Concerns also arose over Vestergaard’s attendance and use of company time. The board alleged he prioritized his personal business interests, specifically the Broughton & Broughton venture, over his duties at Destiny. Evidence showed that both Vestergaard and employee Zashean Dove spent time during company hours on non-company matters, and that Dove was behind on key deliverables.
Internal investigation and suspension
The board retained an independent workplace investigator to review the situation. Vestergaard was suspended and directed to participate in the investigation. He refused to be interviewed without his legal counsel present, despite being told he had no right to insist on counsel’s presence and being given multiple opportunities to participate.
The court found, “Mr. Vestergaard was given not one but several clear and unequivocal directions, and he had been expressly warned that a failure to cooperate would be considered insubordination. Mr. Vestergaard’s first response was to place conditions on his participation. He was advised that he had no right to have counsel present, and was given an opportunity to return. The direction to return was clear and unequivocal. Mr. Vestergaard disregarded it.”
Allegations of conspiracy and defamation
Vestergaard alleged the board’s actions were part of a conspiracy to remove him and that the company’s public disclosure of his termination was defamatory. The court found that the decision to suspend and terminate Vestergaard was made by Cho and Graber “with regret, not with the intent to cause damage to Mr. Vestergaard,” and that their “sole motivation” was their fiduciary obligations to Destiny.
Justice Tucker wrote, “I am satisfied that Mr. Cho and Mr. Graber genuinely apprehended that their fiduciary obligations to Destiny required them to suspend and terminate Mr. Vestergaard given the circumstances. I am satisfied that this was their sole motivation.”
Court finds just cause for dismissal
The court concluded that Vestergaard persistently failed to perform core employment duties, breached his fiduciary duties by condoning the use of company resources for non-company business, and was insubordinate in refusing to participate in the investigation.
The decision states, “Having engaged in the misconduct outlined above, I find that Mr. Vestergaard has engaged in misconduct of a nature and degree that warrants dismissal in all the circumstances. Not only is dismissal proportionate, in the totality of the circumstances, it is the only appropriate response.”
All claims were dismissed, and the defendants were awarded costs as the successful parties.
