The below is straight from my Strategical Financial Management...

The below is straight from my Strategical Financial Management lecture yesterday.

Not to be pointing fingers or anything but i wonder if the board actually reads HC hm.

Effective Boards of Directors
• Election mechanisms make it easier for minority shareholders to gain seats
• Not a “classified” board (i.e., all board members elected each year, not just those with multi-year
staggered terms)
• Board elections allow cumulative voting
• CEO is not chairman of the board and does not have undue influence over the nominating
committee.
• Board has a majority of outside directors (i.e., those who do not have another position in the
company) with business expertise.
• Is not an interlocking board (CEO of company A sits on board of company B, CEO of B sits on board
of A).
• Board members are not unduly busy (i.e., on too many other boards or have too many other
business activities)
• Compensation for board directors is appropriate
• Compensation not so high that it encourages cronyism with CEO
• Not all compensation is fixed salary (i.e., some compensation is linked to firm performance or
stock performance)