Postrupe Inc., a publicly traded company, has ten members on its board.Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board.The board has been failing in its responsibilities toward the shareholders who now want a new board.Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Postrupe's board to achieve board independence?

Question

Quizplus · Accepted Answer

The stakeholders should appoint at least 7 outside directors for optimal functioning of the board. As mentioned in Strategy Highlight 12.1, to achieve board independence, experts in corporate governance recommend that two-thirds of its directors be outsiders.