BY PROF. ENRIQUE SORIANO
(Continued from Jan. 16, 2023)
DEAR Professor Soriano,
…After listening to your previous talk about entitlement and the need to craft legally enforceable ownership and board-level agreements, I am now more determined than ever to make sure our family business continues for the next 100 years. It just pains all of us that if the behavior of my cousin is not checked or contained now, we (among cousins) will find ourselves fighting. The signs are all over the place; when my cousin was outvoted, he walked out of the Board room!
We plan to pursue having the shareholders agreement up and ready while the second generation is still alive and well. However, during your talk, you also cautioned the audience not to fall into the trap of having the agreement solely drafted by lawyers. You also mentioned that the Board of Directors, through pre-agreed provisions, can be vetted even if they are shareholders.
I believe the ideas you shared during your talk are very important, as my cousin simply assumed his Board seat by way of his birthright. This is where I thought (with the blessings of my father) that I have to seek your help as I am sure you have drafted and critiqued many shareholder agreements over the years.
I would greatly appreciate it if you could provide us the way to move forward. Thank you very much and I look forward to hearing from you soon.
Sincerely yours,
JT
***
Webster describes entitlement as “the belief that one is deserving of certain privileges.” A similar definition says, “Entitlement refers to a sense of being ‘owed’ such benefits as: wealth, employment, and status without having to work to achieve these benefits. Some children who grow up in a successful family business can be inclined to a feeling of entitlement.”
According to authors Paul and David Karofsky in their well-read article entitled “Entitlement: Epidemic of our Era,” “Entitlement is more than feeling ‘owed’ or ‘deserving’; it’s about expectation as well. Indeed, usually the problem isn’t the feeling of entitlement; it’s how family members act, and how such actions are perceived by others.”
One thing is clear, having entitled family members is a clear and present danger./PN
