Explain why it is important for the board of directors to have a mixture of executive...

Explain why it is important for the board of directors to have a mixture of executive and non-executive members.

Expert Solution

The membership of the Board may be a combination of executive and non-executive directors (including independent directors) in order that no director or small group of directors can dominate the decision-making process.

There is no doubt that the intention of the Original and Revised Codes is to grant to the Board of Directors (BOD) of publicly-held companies as much leeway to bring together a team that can best serve the company. However, the actual number of Board seats that may be occupied by executive and non-executive directors, and the determination of what should be “sufficient qualifications, stature and number to carry significant weight in the Board’s decisions,” for non-executive directors cannot be understood to mean that it is within the power of the Boards by mere resolution (that adopts a set of guidelines) to set the terms thereof, for such provisions would be contrary to the provisions of the Corporation Code, which abhors any power being given to the BOD to determine by mere resolution (or by the adoption of guidelines) the composition of the Board and provide additional qualifications and disqualification for directors.

ekkarill92 answered 8 months ago

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