Susan, one of our Supergirl Radio Legal Consultants, wrote in to respond to the question of Andrea Rojas’ continued employment at CatCo.
In the last podcast, the question arose as to how Andrea Rojas could keep her job – isn’t there a Board of Directors or something that would fire her after what happened?
It will not surprise you to learn that the actual answer is a bit unclear, because the facts as presented by the show are irreconcilable with how the real world works.
Every company has a Board of Directors, which represents the owner(s) of the company. In a publicly traded company with many different shareholders, the Board is really in charge. All Board members have a fiduciary duty to the shareholders, and do not work for the CEO or company management. Companies also are often required to have independent directors – those who don’t work for the company and are not in any way aligned with management -and the Board is usually made up of some independent directors and some directors aligned with or part of management. If Obsidian North was publicly traded, then there definitely would be a Board that could – and should have – fired Andrea.
On the other hand, if a company is not publicly traded and is family owned and controlled, while there is still a Board, it is generally a “paper” Board. It represents the owners, who are the family who control the company, and the family can generally do what it wants (as long as they don’t engage in misdeeds). In that case, it would be very rare for the Board to fire a family member. Unless the shares of the company were owned by many different family members and there was an internal fight.
Regarding Obsidian North, there are internal inconsistencies that leave us unclear what the situation actually was. Presumably, it was a publicly traded company, or Andrea could not have engineered the buyout of her stock by her father the way she did, since private company stock isn’t traded on a market where you can just buy and sell electronically. On the other hand, it also sounds like the company was owned and controlled by the Rojas family, which would likely mean it isn’t publicly traded. But, if it is privately held, then Andrea could not have sold her stock to her father without an old-fashioned paper transaction that he would have to know about, since there isn’t a market for the stock. And, of course, none of this explains how she could end up owning CatCo after Obsidian went under since CatCo was part of Obsidian. So, if Andrea orchestrated things to have her father buy her stock, he presumably would have had to sell her CatCo, which would have required an old-fashioned paper transaction since CatCo wasn’t a separate, publicly traded entity that she could buy in a stock market.
One footnote: there are a few companies which are publicly traded but family controlled – including for example ViacomCBS and Fox Corp. That usually comes about when a family owned company issues stock to raise capital, but organizes things to maintain control. In theory, that could have been the case with Obsidian North. But it still would have a Board of Directors, presumably one on which her father as a major shareholder sat, that had both family and independent members, and which could have fired Andrea. And, it still doesn’t explain how she ended up with CatCo.
– Susan
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