What happens if the chairman of the Board of the directors is also the CEO of the company and if he also owns a majority stake in the company,is there a conflict of management and shareholders interest ? are the interest of other shareholders protected?

Question

What happens if the chairman of the Board of the directors is also the CEO of the company and if he also owns a majority stake in the company,is there a conflict of management and shareholders interest ? are the interest  of other shareholders protected?

anonymous · Answer

Yes, there maybe a conflict of interest between equity holders. In this case, the chairman/CEO/majority shareholder may expropriate wealth from other minor shareholders. It is hard to protect the smaller shareholders because they cannot win based on shares (e.g., proxy fight).