Question

Director independence and non-interlocking directorships are desirable traits of top-ranked boards. What does this mean?

O Directors can serve on the board of directors of other related companies.
O Directors are free of all ties to the CEO and the company.
O The CEO can serve as a director on the other director boards.
O Top managers cannot be on the board of directors.

Answer 1

This means that Directors are free of all ties to the CEO and the company.

Step-by-step explanation:

Director Independence means a director on the board of directors of an organization should have no ties or links to the organization or any member of that organization.

Non-interlocking directorship means that a director in a firm should not be a director, or part of the management team, in another competing firm.

Top-ranked boards would prefer to avoid interlocking directorship when appointing a board member, and also that an independent director selected to be part of the board, has no previous ties to the company or any of its employees.