What are the basic steps that a board should follow in order to avoid legal problems when removing a CEO?

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What are the basic steps that a board should follow in order to avoid legal problems when removing a CEO?

This is a small start up company but trading publicly. Board is in agreement on need for change and looking for proper legal path to take.

Asked on June 23, 2011 under Business Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am assuming that this small start up and publicly traded company has legal agreements up and down with every executive around.  So what you need to do is to review those agreements so that you do not violate any contracts, etc., and find yourself a defendant is a lawsuit.  What ever the percentage of the vote of the board of directors you need to remove him make sure that you have.  Dot your "i's" and cross your "t's" and make a paper trail to protect yourself.  Documentation is never a bad thing to have backing you up - a paper trail - evidencing his wrong doings or mis-calculations and their results.  Good luck.


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