Question

Which one of the following statements is TRUE? a. Inside directors are more concerned with shareholders' interests since they are more closely concerned with firm operations. b. Since outside directors have no other connection with the firm, they are indebted to the CEO for putting them on the board c. In a classified board, it is easier for dissidents to gain representation since fewer seats are up for election each year. d. An outside director is a board member who has no other affiliation with the company. e. A classified board is one in which an announcement requesting applications for board members appears in the newspaper.

Answer 1

Answer:

The correct answer is D)

Explanation:

Outside directors hold no affiliation with the company except that of being a non-executive director.

They are usually entitled to compensation in the form of annual retainer fees which may be in cash, benefits and/or stock options.

Outside directors are usually beneficial to the board because they are deemed to be more objective than any other member as they have no other stake in the business. Outside directors, on the balance of probability, will give an unbiased opinion, recommendations, and or judgements.

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