Company CEO Mutiny!

August 2, 2005 12:59 PM

Company CEO Mutiny! I work for a medium-sized tech company, and I'd like to know if (theoretically) it's possible to get the current CEO ousted by pure employee-strength alone. [more]

The company rocks. We'd all be making loads of money if the CEO stopped his inept decisions. 99% of people love working here. But, the same 99% think that the CEO stinks (and this isn't just mid-level guys like me - I know for a *fact* that most all of the top-players agree).
I've also caught wind of decisions that will likely get us into legal trouble with a company that would eat us for breakfast - and by that, I mean bankrupt us all with the impending legal battle. It's in the best interests of the employees and the company that the more-than-capable 2nd in command take over.
Problem is - the CEO is a control freak, hence why it hasn't happened yet. Anyone disagreeing with him, even in the face of common sense is met with hostility.
The last 2 guys to try something got fired on the spot, and they only suggested what with hindsight we now know would have been an excellent business move.

Is it possible to ever do something like this? I'm guessing half the problem is finding out how, and the other half is convincing everyone to work together on it.

Help, MeFites!

posted by anonymous to work & money (10 comments total)

You fail to mention what type of company this is. Is it a publicly traded company or is it privately owned? Does the CEO control a majority stake? Short of doing an employee wide strike, these are important questions to know before any advice can be given.
posted by mmascolino at 1:23 PM on August 2, 2005

IANAL, but I guess it would depend on how much ownership the CEO has.
Basically, I think employees have no legal power whatsoever in this respect. But if you could convince a majority of investors to take action, then you could pull it off; at least in a legal sense. I mean, this is what a board of directors is for.

If he holds a majority, you could attempt a sort of strike, where all the employees state that they insist that he step down.
I feel like most people would step down if literally all the employees stood together and said they wanted him out. This obviously comes with a certain level of risk, though, which many of the employees may not be willing to accept. Maybe it would be enough if just the management did it.

The other trouble is what to do with his ownership of the company. Even if he agreed to step down as CEO, someone still needs to be able to buy him out, or else he'll still be heavily involved. So, you'd have to figure out where that money would come from. Usually, one or more investors might agree to pick up the shares if the company is doing well.
posted by frufry at 1:24 PM on August 2, 2005

If the company is closely held, then getting rid of him entails convincing the majority stockholder that he's not good at his job. If the company is more widely held or publicly traded, then getting rid of him entails getting a majority of the board of directors to agree to fire him. This can often be difficult since boards of directors are sometimes hand selected by the CEO.

If the CEO is the majority shareholder, you're really out of luck. Even if he's not, you should realize that people who lead revolutions often end up out of a job, no matter how just the revolution, because post-revolutionary management figures that they're trouble. If management is really so awful, and the CEO doesn't own the company or control the board of directors, then someone's going to figure out how bad he is eventually and can him. If not, your options are limited. You could try some sort of guerilla corporate warfare (to embarrass him and destroy his credibility), but there are obvious risks involved there if you can't guarantee that you won't be caught.
posted by anapestic at 1:33 PM on August 2, 2005

Revolution from the inside is hard to pull over and even harder to survive with job intact, as anapestic has already pointed out. Even when the revolution is coming at the board level, a powerful CEO can be extremely hard to oust — though not impossible. If you feel strongly about saving the company, get a new job first, THEN raise some hell.
posted by nakedcodemonkey at 2:04 PM on August 2, 2005

Um. s/pull over/pull off/
posted by nakedcodemonkey at 2:06 PM on August 2, 2005

Unfortunately, this is one of those anonymous questions that is almost impossible to answer without more facts. If you and others are serious, I would recommend talking to counsel experience with corporate control disputes.
posted by monju_bosatsu at 2:09 PM on August 2, 2005

Like everyone else said, this is really up to who owns the company. If you can get enough top management (with assurances that even the underlings are in on it) to go to the owners and outline the specific concerns and and ousting of the CEO, and only an ousting, is required you probably have a chance. It would have to be very collective and it is very risky. I'm surprised the number two and other top executives haven't fled and started their own company, as is common in situations like this. In fact it is most likely better from a business perspective (because obviously the current ownership has shown itself in being inept in picking out CEOs) for everyone to high tail it out of there and start a new company. A hell of a lot of work, yes, but that's how a lot of really good companies are founded.
posted by geoff. at 2:15 PM on August 2, 2005

Unfortunately, this is one of those anonymous questions that is almost impossible to answer without more facts.

After specific questions were raised earlier, I offered to assist anonymous by acting as a go-between for any further details, so that we could most effectively answer their question.

My offer, however, not unlike many comments on this site, was deleted by one of our admins.
posted by John Kenneth Fisher at 2:17 PM on August 2, 2005

To restate and expand on the comments above:

(1) The Board of Directors of a company is responsible for hiring and firing a CEO.

(2) It's quite common for a CEO and his/her supporters to make up a majority of the Board, even if owning a minority of the company. For example, a venture capital firm might own 30% of the stock but only have one Board seat out of nine. (Sometimes there are multiple types of shares, including non-voting shares, so "ownership" and voting control are disconnected, but this is relatively rare.)

(3) It is possible to change a Board of Directors (typically, one-third to all of the Board are elected annually by a shareholder vote), but it's difficult.

(4) Directors don't normally interact with any but senior management, and most communications, except at formal meetings, are channeled via the CEO or CEO's immediate staff. The best way to make contact with the Board is probably via someone who already knows a Board member (ideally, one with an independent power base); that Board member probably should be the one to talk to other directors.

(5) If the CEO is planning to do (or is doing) something illegal (as in "legal troubles"), there normally are ways to bring this to the Board's attention, although not necessarily in the context of "the CEO is incompetent and should be fired". Larger companies have an audit committee (composed of several, supposedly independent directors) and are supposed to have policies and procedures for issues involving the CEO to be brought directly to the audit committee. (The operative words are "supposedly" and "supposed". If the CEO is a significant stockholder, or otherwise has a strong influence on how the directors have been selected (since virtually all elections of directors are uncontested), then independence cannot be presumed.
posted by WestCoaster at 4:02 PM on August 2, 2005

A word of caution. This goes way back, but a friend of mine was in a difficult job situation, seemingly with allies among the various office managers (she was the secretary at the main office, and dealt with them while the boss was off doing business). There were obvious problems -- payroll late, vendors dunning the company, etc. The office managers enticed her into a plan to take over the company so they could control the payroll bank account, and in a tumultuous three day period, they managed to do so -- then reconciled with the owner, fired her, and took her to court for conspiracy to embezzle. The charges were dropped for lack of evidence -- most likely because anything they would have turned over would have implicated others -- and she escaped with only an arrest record.

She was young, and naive. She was obviously set up from the beginning, but whether the dispute was fictional or not wasn't something she ever found out. In any case, she was thorougly used.

Whatever was happening had very little to do with the problems and everything to do with politics. Don't assume that the management types who commiserate with you are ready to really storm the castle -- or if they're saying that, maybe they need you for some reason. Don't think they won't burn you in a New York minute, if the shit hits the fan.
posted by dhartung at 9:29 PM on August 2, 2005