Dollar General, ex-VP settle lawsuit over departure

Exec who clashed with former EVP Guion now Tractor Supply operations chief

Dollar General and one of its former top operations executives have settled a lawsuit over the severance payments associated with his late-2010 departure from the deep discounter.

Lee Downing sued Dollar General in December of 2010 after the retailer told him the separation agreement the two parties had signed two months earlier — after the working relationship between him and his supervisor had broken down — was invalid. Because the sides had styled Downing's departure as being "without cause," the company had agreed to pay Downing a package that included accrued stock options and was worth $1.7 million.

But company officials soon after contended that Downing, who had joined the company from Family Dollar in 2005, had misled them about his contacts with other potential employers as he was about to exit Dollar General. They declared the separation agreement invalid, meaning Downing — who soon after was named senior vice president of operations at Tractor Supply — was due only $236,500.

After a request this week from both parties, U.S. District Court Judge Todd Campbell dismissed the case Thursday. Details of the settlement between Downing and Dollar General have not been made public. Bob Mendes, who represented Downing along with Frost Brown Todd colleague Michael Ewing, said he could not comment on the settlement. Dollar General counsel Steven Riley of Riley Warnock & Jacboson did not return a request for comment.

The dispute between Downing and Goodlettsville-based Dollar General has its roots in the spring of 2010, when Executive Vice President Kathleen Guion challenged Downing, who at the time oversaw more than 2,400 Dollar General stores in seven states, to improve the appearance and cleanliness of a group of stores in Birmingham and Montgomery, Ala. But Downing characterizes that interaction as "berating him unnecessarily and using a great deal of profanity."

That summer, Guion visited the Alabama cities a second time and was still dissatisfied with their overall condition. Dollar General says she sent Downing a number of emails to voice her frustration, messages Downing says "again berated him unnecessarily and drastically overstated his and his division's performance issues." Soon after, Downing went to Guion to say he could no longer work for her because he considered her treatment of him to be hostile and disrespectful.

Together with Dollar General Chief People Officer Bob Ravener, Downing set about preparing his departure — with his accrued but encumbered equity — from the company. A restaurant meeting between the two men on Oct. 1, 2010, is where the case crystallizes. Dollar General says Ravener, allegedly concerned Downing was leveraging the friction with Guion to get a sweetheart deal rather than resign, asked Downing if he had another job lined up.

Ravener says Downing told him no — "In fact, Downing stated that he 'would be starting from the beginning,' or words to that effect" — but Downing says he answered by saying other companies were indeed interested in him. As it turns out, Tractor Supply had made him a job offer the day before. When they found out about Downing's new position a few weeks later, Dollar General execs labeled his action fraudulent and dishonest.

Guion announced in the summer of 2011 that she would retire a year later after transitioning into a broader planning role for a few months.