BUS 17 Lecture Notes - Lecture 12: Secret Profit, Quartile, Ideal Number

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2 Dec 2020
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13 board membership: directors" appointment, roles, and remuneration: the appointment of directors. On the initial incorporation of a company. On reappointment of the expiry of a director"s term of office. On the creation of an additional directorship. Issue: in a poorly performing company, underperforming directors become entrenched- block hostile takeover bids and can be used as a takeover defense. There are upper and lower limits on board size, some do not allow corporate directors. Additional directors as remedy to perceived weakness, to add necessary skills and experience, or to bring new knowledge or contacts. Ideal number depends on circumstances e. g. : psychologists suggest 8-10 members to be a cohesive decision-making body. Must ensure that older directors are contributing and not being re-elected out of a misplaced sense of respect or loyalty. Can disqualify people from serving as directors if becoming bankrupt, mentally ill, or disqualified by the courts from being a director.

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