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Shouldn't the law prevent the CEO from doing just that? I mean, the board is presumably the only check on the CEO's power, so even if the CEO is the majority sh

Shouldn't the law prevent the CEO from doing just that? I mean, the board is presumably the only check on the CEO's power, so even if the CEO is the majority shareholder, they shouldn't be able to control the board.

deleted 8y ago
[deleted]
madamelic 8y ago
No. What's the worst they could do? It's their company. Worst case the CEO runs it into the ground and everyone loses their money. CEO =/= President of the United States.
- s73v3r_ 8y ago
  And people lose their jobs, and get kicked out of their homes, etc.
  - Skunkleton 8y ago
    I'm not telling you that you shouldn't care about these things, but this is how American Capitalism works. Someone owns a thing, and does pretty much whatever they want with that thing.
  - rmdashrfroot 8y ago
    That is a old armchair argument made from those in an ivory tower. If it was YOUR business, you would want to control your dream, your vision -- not a bunch of rich folks who could decide to kick you out from your dream if your main goal is not to _remain profitable to the shareholders_.
    - John23832 8y ago
      Once you take investments, you are deciding to me be beholden to those rich folk.
      - paulddraper 8y ago
        Depends on the quantity and terms of investment.
Lazare 8y ago
There are some checks; the controlling shareholder still has to respect the other shareholders. But yes, as the controlling shareholder, you can fire the board. That's what being the controlling shareholder means; the one and (basically, only) thing you get to do is appoint a board to run your company on your behalf. And you can keep firing the board until you find some lackeys who will agree to do whatever you want, including hiring you in any position you care to to name, including, why not, the CEO role. That's totally legit. If what you want harms the minority shareholders, then they can sue, and depending on the details, they'll have a great change of winning. CBS and Viacom are currently working through this right now; the controlling shareholder wants to ram through a merger, and the CBS board thinks it's a bad idea. Under pretty settled law, she can fire the board in revenge, but if the merger is actually bad (and the fact that the current board found it so is strong evidence that it might be), then she can't just replace the board with people who will agree to it. > the board is presumably the only check on the CEO's power The board is there to look after shareholders. If they fail, then lawsuits from shareholders are the final check on CEO power. That doesn't change much just because the CEO is the controlling shareholder.
thewhitestguy 8y ago
Investors don't have to invest in a company with a structure of which they feel could be detrimental to the company's bottom line over time.

deleted 8y ago

[deleted]

madamelic 8y ago

No. What's the worst they could do? It's their company. Worst case the CEO runs it into the ground and everyone loses their money. CEO =/= President of the United States.

s73v3r_ 8y ago
And people lose their jobs, and get kicked out of their homes, etc.
- Skunkleton 8y ago
  I'm not telling you that you shouldn't care about these things, but this is how American Capitalism works. Someone owns a thing, and does pretty much whatever they want with that thing.
- rmdashrfroot 8y ago
  That is a old armchair argument made from those in an ivory tower. If it was YOUR business, you would want to control your dream, your vision -- not a bunch of rich folks who could decide to kick you out from your dream if your main goal is not to _remain profitable to the shareholders_.
  - John23832 8y ago
    Once you take investments, you are deciding to me be beholden to those rich folk.
    - paulddraper 8y ago
      Depends on the quantity and terms of investment.

Lazare 8y ago

There are some checks; the controlling shareholder still has to respect the other shareholders. But yes, as the controlling shareholder, you can fire the board. That's what being the controlling shareholder means; the one and (basically, only) thing you get to do is appoint a board to run your company on your behalf. And you can keep firing the board until you find some lackeys who will agree to do whatever you want, including hiring you in any position you care to to name, including, why not, the CEO role. That's totally legit. If what you want harms the minority shareholders, then they can sue, and depending on the details, they'll have a great change of winning. CBS and Viacom are currently working through this right now; the controlling shareholder wants to ram through a merger, and the CBS board thinks it's a bad idea. Under pretty settled law, she can fire the board in revenge, but if the merger is actually bad (and the fact that the current board found it so is strong evidence that it might be), then she can't just replace the board with people who will agree to it. > the board is presumably the only check on the CEO's power The board is there to look after shareholders. If they fail, then lawsuits from shareholders are the final check on CEO power. That doesn't change much just because the CEO is the controlling shareholder.

thewhitestguy 8y ago

Investors don't have to invest in a company with a structure of which they feel could be detrimental to the company's bottom line over time.