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Comment by tptacek | Hacker News Reader

That's sort of true and sort of not, right? He's not in fact "the boss" of the board, though with his voting ability (and that of his committed proxies) he can replace the board instantly.

The board has every right to fire the CEO. That's not at issue. The board could reasonably do that even if the CEO has majority voting control --- iff the board is certain the CEO won't immediately reverse the decision and replace the board. If they fire the CEO performatively (or as a hail mary) knowing the CEO will reverse them, they're causing operational chaos with no upside, and that's not something the board can legitimately do.

There's a subtext in some comments about this that the board can legitimately express a position that it's better that the company not exist than exist with Mullenweg at the helm. That's not a legitimate thing for the board to pursue.

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> That's sort of true and sort of not, right? He's not in fact "the boss" of the board

He is the boss by virtue of having 84% of the voting power; and, as the board represents the will of the shareholders, the board should always consult with the shareholders before taking such action, if nothing else because majority shareholders have the power to dissolve the board and appoint a new one.

There's a parallel here with firing regular employees: there's dismissal with cause, and without cause. The dismissal *without cause* of a CEO that's also a majority shareholder makes non sense, so any dismissal would have to have a *cause* as codified by Delaware Law. IANAL, but it's usually mental unfitness, moral reprobation, or something of that gravity. Since they did not have a justified cause, I agree with you that the board should have resigned.

The interesting question here is whether the new severance packages, that the board gave itself in the brief interim, will be considered legal. We'll have to wait for a lawsuit to settle that.

> the board should always consult with the shareholders before taking such action

This is ridiculous. Boards are elected by shareholders to act on behalf of their fiduciary interests, the actions the board took were in that interest, and matt replaced the board, because he placed personal power above financial upside. He's explicitly said this is the case before.

The fact that one of the shareholders ultimately voted against all of the shareholders' fiduciary interest does not mean the board made a wrong or unethical or immoral decision. It means that Matt did (who, notably, approved the board and then changed his mind, no doubt causing further operational chaos at the company).

> The interesting question here is whether the new severance packages, that the board gave itself in the brief interim, will be considered legal. We'll have to wait for a lawsuit to settle that.

I'm excited for this proposition because it would mean discovery of matt's terrible management decisions for the company as evidence that the board acted in investors' fiduciary interest in removing him, and that he acted against it in removing them. And I have faith that matt is deluded and shortsighted enough to open himself up to that by trying such a suit. I just don't have faith that courts will look down on directors choosing company health and investor interests over matt's crazy.

> Boards are elected by shareholders to act on behalf of their fiduciary interests, the actions the board took were in that interest, and matt replaced the board, because he placed personal power above financial upside

Contrary to popular opinion, Delaware courts have given great leeway to majority shareholders in deciding a company's strategy, and placing certain things above short-term "financial upside" is among those.

> I'm excited for this proposition because it would mean discovery of matt's terrible management decisions

It's funny you don't see the contradiction between considering the board as the paladins of small shareholders, just while the board was allowing the new interim CEO to leech company money by giving himself (and the chief legal counsel) a golden parachute.

> Contrary to popular opinion, Delaware courts have given great leeway to majority shareholders in deciding a company's strategy

Are you sure this is the case?

Company shareholders less frequently decide a company strategy than elect people to a board, and let those people decide, like matt did here. The directors were approved by matt specifically.

Of course, matt didn't like his own decision, so he changed his mind. That's his right, I guess. It doesn't mean the board did anything wrong (and in this case, seems it didn't).

> placing certain things above short-term "financial upside"

Purely out of curiosity (since it is immaterial to whether courts have ever okayed boards getting severance packages), can you cite precedent for when those "certain things" are purely personal grievances by a paranoid lunatic of which pursuit harms both the short-term and long-term health of the company? I feel like we'd have to get presidential (if you know what I mean), since that is the most similar narcissist businessperson, closest in behavior.

That is why I'm pretty confident no court will affirmatively believe the board committed any malfeasance by trying to replace a crazy person who is taking down the company, rather than indulging him in his paranoid delusions (wish this was an exaggeration).

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