Discussion How can a company's founder be fired?

P

PHL

Guest
I don't understand how businesses are structured. That is why, when I read about how the founder of a company has been fired (sent away) by his own company, I am surprised.

Can someone explain to me how that happens? Is the founder not the boss? His employees fire him?
 

Dog Slobber

Member
Founders of companies can get fired when they lose control of their companies. This happens when they sell shares of their company to investors, thus diluting their ownership. When this happens they are effectively creating co-owners, should enough control of the company be sold, others will have more control than the original owner.
 

chance

predictably random
Forum Staff
Moderator
Selling stock shares in the company makes it a "public company", as @Dog Slobber said. So the original owner has given up sole ownership at that point -- even if he's a major shareholder.

When companies become public, they are usually re-structured as corporations -- often with the original owner as chairman. However, future leadership is determined by a board of directors. And they are authorized under the corporate charter to elect (or fire) the company chairman. So sometimes they fire / replace the chairman if they think he's doing a poor job, or if they disagree with his policies.

Check wiki for "public company" and "corporation".
 
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