by John Darer CLU ChFC CSSC RSP CLTC
Some companies have more than one CEO and some CEOs are CEOs at more than one company. Is that kosher?
The above question was posted on Quora.com and a favorable answerby San Francisco attorney Dana H Shultz was "Yes (assuming that neither company has bylaws, board resolutions, or similar documents prohibiting the CEO from being CEO of another company).
This happens frequently - e.g., CEO of a parent company and its subsidiary".
Margaret Weiss puts it succinctly:
"Each person in an executive position is under responsibility to protect company's interests from internal and external threats. It's called fiduciary duty. Under this premise, all work that the person does while being employed by the company is for company's good and benefit.
Which brings us to the point of conflict of interest: this little phrase puts all the extracurricular activities in the spotlight. If there is even a hint of the executive (or any other employee for that matter) being in cahoots with the competitor, this person can be held legally liable".
Weiss further brings up the issue of insider trading,opining that "Executives are not under the oath to maintain silence but they are under a legal obligation to withhold vital business information (pending merger, new product, changing line of business, etc) away from people who can gain unjust enrichment from it, including these executives themselves. Thus, casually mingling with others on that potential "2nd job" can cause a slip of the tongue and cause unwanted results".
Weiss says it all comes down to the regulatory reporting where the company must provide assurance that there is no conflict of interest. It's a simple statement but any violation of such statement (either factual or perceived) can bring about the company's downfall.
Other articles I found on the subject that maybe of interest
Managing Two Companies At The Same Time Joseph Esposito The Scholarly Kitchen September 16, 2013
The Two-Company CEO, Exotic but Not Extinct, by Marc Hogan Third Creek Advisors Octiober 14,2013
Be guided by your own counsel