Can a Corporation Make CEO Pay Off Debts?
In the days of white-collar fraud and outrageous CEO bonuses, many companies’ employees wonder about a CEO’s responsibility. Many believe that a CEO is protected from company debts because he is just the manager of the company and not the owner. Even owners of a corporation are protected because of the laws governing a corporation. However, if the debts are a direct result of the CEO’s actions, there is no protection. Here are the instances in which the company can make the CEO pay off debts. Review the CEO’s involvement in business loans. If he obtained business loans using his personal property as collateral, then the CEO is responsible for the company debt. In this instance, the CEO must also be a shareholder in the company, as most are. A corporation is set up to be a separate taxable entity from its owners; however, leveraging personal property for business debt breaches that separation, making the CEO responsible for the debt. Use a lawsuit as cause to make a CEO pay the debts. I
