Who should or should not serve on a corporation’s board of directors? What about
Environmentalists or union leaders?
Anyone can serve on a board of directors as long as they are deemed suitable. There are no hard and fast rules outlining who should and should not serve on a board. If the company or corporation is one of a public nature nature then the shareholders are made to vote for the members of the board. A board of directors is usually made up of a mixture of both insiders (management directors) and outsiders (non management directors). Since it is the board of directors’ responsibility to protect the interest of the shareholder, then a mixed board proves to be the wisest decision. The insiders according to the stewardship theory are able to provide priceless first hand knowledge of the corporation and its runnings. They are aware of the internal operations needed for the corporation to not only operate but operate successfully. They usually have been with the corporation for many years and as such possess an unrivalled sense of loyalty towards the organization and its shareholders. However, the outsiders are there to present a balance in the board. They represent the views of those who are neither shareholders nor managers. They are representatives of the general public and their interest. They contribute a level of objectivity needed to make wise strategic decisions.
B. Having an environmentalist and or a union leader on a board of directors would be vital depending on the nature of the corporation. Let’s take for instance a construction and a hotel board. They will not only need directors who are knowledgeable in the construction and hotel business. Having environmentalists and union leaders on such a board would prove to be extremely beneficial. The environmentalist would be able to offer expertise on the effects of a construction site on the environment and animal species. The union leader would have knowledge of labour codes and be the...
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