Tom Hanks is a successful actor and serial entrepreneur in the film industry. As a teenager, Tom started his first company and sold it in 3 years for $50 million. He subsequently sold his second venture for over $300 million. In addition to his movie career, Tom is currently the CEO of a third business venture, Tom Hanks, Inc. Tom Hanks, Inc. is a startup movie company that aims to capitalize on the straight to DVD film market As a result of his business success; Tom has decided to offer his services as “rent-a-CEO” for inexperienced companies in the film industry. The idea is that struggling companies will hire him as their chief executive officer (CEO). He will then act as the company’s full-time CEO for approximately 3 - 4 months, turn the company around, hand over responsibility to a new CEO and move on to the next company.
From 2012-2013, Tom used his role as “rent-a-CEO” to successfully pull multiple new film companies back from the edge of bankruptcy. In April 2014, Tom is asked by The Crappy Movie Company, Inc. to act as its CEO. Falsely believing that any idiot with a camera can direct and market a straight to DVD movie starring college dropouts with absolutely no acting experience (7% on rotten tomatoes is not a good thing), Crappy Movie Company is in dire need of expert help. While the Crappy Movie owners have some collateral that can be used to secure further bank loans, their parents are unwilling to loan them anymore money. However, several investors are willing to make a substantial financial contribution to the company if Tom can turn business around. In addition to other job responsibilities, one of Tom’s main tasks will be to attract his actor friends to star in Crappy’s Movies (he’s Tom Hanks, they owe him one). short respond
As Tom’s lawyer, he has asked you for advice on any potential legal ramifications of his “rent-a-CEO” idea. Think carefully about the steps a CEO might take to help turn around a company, the kind of information that a CEO is likely to see and to create, and the legal consequences of multiple successive employment stints. Please confine your answers to our materials on corporate law fiduciary duties (i.e. contracts and IP issues are not relevant here).