Two more things have caught my eye about the Laker feud which provide me a teaching moment for my Biz Org students.
Thing one is that according to some ESPN blog, AEG is a minority owner that “controls” two seats on the corporate board of directors. The BOD remember is Jeanie, Johnny, and Joey Buss and two others. I’m not sure how AEG “controls” the two seats. It is either because it owns enough shares to vote in two seats using cumulative voting, or there is some shareholders agreement between the Buss Trusts and AEG that gives AEG two seats (completely enforceable as it would relate to voting at a shareholder meeting), or there could be more than one class of stock which allocates the board seats among the classes.
Thing two is that I heard someone this morning on the radio assuring everyone that “the documents” make it clear that Jeanie is firmly in control of the Lakers. As I said in the last blog, she seems to be firmly in control as the “controlling owner” for NBA participation purposes, but why can’t AEG use its two board seats to support Johnny and Joey and Jim and appoint someone else as President of the Lakers corp leaving her on the board. Unless the corp is a “statutory closed corp” in California, a shareholder’s agreement making Jeanie the President is unenforceable. The BOD must do that. Why can’t AEG join with Johnny etc to make someone else the “controlling owner”? I assume they can but that would apparently violate Johnny etc’s fiduciary duties owed to these trusts. That seems to raise a serious conflict issue if Johnny cannot vote as a board member on what is best for the Lakers’ corp because of duties he owes to some trust. And it cannot be that the BOD’s hands are tied as to removing Jeanie (again unless there is an enforceable shareholder’ agreement – enforceable being the key word in that sentence). Continue reading