Basic Training: About PresidentsBy Nina Kaufman, Esq.
In light of this week’s national “activities,” here’s a question about presidents–of corporations, that is.
Q.: Can you change the president of a corporation? And if the president dies, who takes over?
A.: Sure you can change the president of a corporation. But, like our national government, you have to have an election. And if you’re changing the president because, well, you caught her hand in the company till and she’s being ousted, then you have more than just changing presidents to deal with–you have the corporate equivalent of an impeachment.
If a president dies in office, you have a different set of issues. In our national government there’s a “succession plan.” According to the Presidential Succession Act of 1792, if the president dies in office, he (or she, when our country becomes enlightened enough) will be succeeded by the vice president. If the vice president predeceases the president or dies in a common accident, the Speaker of the House gets the position, followed by the president pro tempore of the Senate, and about 15 other cabinet ministers in line.
In a corporation, you’ll also want to have a succession plan. Usually, the president is also an owner of the corporation. If he or she dies, the other owners will buy out the estate to continue with the business. The president’s heirs don’t necessarily take over the business. The remaining owners will then have their own election to determine who will be president going forward. Problems arise when the owners haven’t worked out their succession plan in their shareholders’ agreement, or when the president is the sole owner of the business.
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