My answer to the titular question from Quora:
Short answer: They don’t.
Longer answer: The board may always oust the CEO, but if the CEO is also the majority shareholder, the CEO can simply use a written consent to remove the board of directors (I’m assuming Delaware law). The CEO would then elect new directors, who presumably would know which side of the bread their butter is on,
In theory, the incumbent board could try to take actions such as a dilutive stock issuance (Dilution Definition) to reduce the CEO’s holdings below 50%, but the legality of such actions absent serious misconduct by the CEO is suspect: “The board's fiduciary obligation to the corporation and its shareholders, in this setting, requires it to be a protective guardian of the rightful interest of the public shareholders. But while that obligation may authorize the board to take extraordinary steps to protect the minority from plain overreaching, it does not authorize the board to deploy corporate power against the majority stockholders, in the absence of a threatened serious breach of fiduciary duty by the controlling stock.” Mendel v. Carroll, 651 A.2d 297, 306 (Del. Ch. 1994). “In such an instance the board would bear a heavy burden to establish the justification for any steps purposely taken to affect the outcome of shareholder action.” Id. at 306 n.20.
