Can a Corporation Make a CEO Pay Off Debts?

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In general, a corporation cannot make a CEO pay off company debts unless it can be proven that the CEO led the company down a negative path. Link a corporation CEO to bad debts, missed payments and unnecessary loans in order to make them pay off debts with information from a marketing and business management professor in this free video on business.

Part of the Video Series: Business Management Tips
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Video Transcript

Hi, my name's Mark, and we're going to look at how a corporation can make a CEO pay off any debts. As you know, we have a financial crisis on our hands at the moment, and many companies are going bust. A lot of banks are in trouble, and no organization, it seems, is safe from this financial situation at the moment. Everything or everybody is affected in it by some...to some degree. So, here we have companies where the CEO, the Chief Executive Officer, supposedly the ambassador of the company, seemingly is unaffected by what's going on around them if their business is in....if their business is running. We have seen examples of companies where the CEO actually has been targeted as a reason for the demise or the down slide of the business. We can look at the Newsday to find them. So the laws need to be reviewed. And I think what I'm trying to say here is that a business, generally speaking, would have to be in a very bad way for the organization to blame the CEO alone, unless it can be proved that the CEO strategically, or in any other capacity, has actually led the business in a negative, on a negative trail. If that is the case and it can be proven, then the CEO can actually be penalized or taken to court about this. But in general terms, the CEO is an employee of the organization, and as such, more often than not, is not the one to blame. The company can review the CEO's involvement in business loans, for example. If the company has taken out substantial business loans, and they haven't been put to any productive use. Or they're substantial loans that the company really didn't need to take. Then the corporation can, technically, hold the CEO liable for these loans. If the CEO is linked to bad debts, missed payments, late payments, non-payments of debts, he could also be liable for these debts, again by a lawsuit. And can be possible forced to personally recoup the losses of the organization.

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