Which one of the following statements is TRUE?
A) Companies with interlocking boards of directors have directors that serve on both boards.
B) The more members of a board of directors, the better its function.
C) A company has an interlocking board of directors if the CEO also serves as the chairman of the board of directors.
D) A company whose board members are elected in staggered terms is said to be an interlocking board of directors.
E) A shareholder-friendly charter will make it harder for a company to be acquired.

Question

Quizplus · Accepted Answer

Interlocking boards of directors refer to two or more companies sharing directors, meaning that directors serve on both boards. Choice B is incorrect because a larger board does not necessarily mean better functioning. Choice C is incorrect because a CEO who serves as chairman of the board does not necessarily mean it is an interlocking board of directors. Choice D is incorrect because staggered terms refer to the rotation of board members over a period of time, not interlocking boards. Choice E is incorrect because a shareholder-friendly charter can make it easier for a company to be acquired as it may include provisions for shareholder rights and voting power.

Which One of the Following Statements Is TRUE