The company founder who is utterly useless, set up a golden parachute agreement with the company. Basically, a hefty ammount is to be paid if he is terminated from the company. The ammount is ridiculous.
We really want to kick him out but this agreement is a pain.
What avenues can we look into to nullify the agreement? Unfair contract law? Non-performance termination?
Thanks for any feedback. Cheers.
People are legally allowed to make bad deals. The law will hold you to the bad deal you made. If it only worked for good deals, no one would ever use the law because you don’t want to break a good deal.
Providing it has all the required elements of a contract, it will be enforceable.
Put up with him or pay him out.
See this question As a startup founder, what reasonable bylaws are commonly setup to maintain control of the board? which asks the exact opposite thing: How to keep control over a company you founded.
As an investor, it would be your job to check the bylaws of the company, and if there are terms that you don't like (like an enormous payment required to get rid of a useless founder), then you just shouldn't invest. Alternatively, tell the founder that either he or she changes the bylaws, or there will be no investment (I don't know how hard it is to change a company's bylaws). You can't force them. You can only convince them in order to get investments.
But if the bylaws demand that you pay tons of money to get rid of the founder, and you can't change the bylaws, then your choice is keeping the founder, or paying him out. Of course you can extract as much money as possible and legal from the company, let it go under, and start a new company.
