Board of Directors Flashcards
1
Q
What is the “nose in, fingers out” principle?
A
The idea that the board of directors should have a governing and guiding role, without performing any managerial activities
2
Q
When it comes to the size of a board, why is a balanced composition important?
A
Small enough to allow efficient decision making, large enough to ensure enough diversity in experience and knowledge
3
Q
What are some advantages of a larger board?
A
- Better balance between shareholders
- Easier to comply to best practice requirements
- Ensures sufficient diversity and complementarity in insights and expertise
4
Q
What are External and Internal directors?
A
- Internal: involved in the company’s day-today operations
- External: not involved
5
Q
What are Executive and Non-Executive directors?
A
- Executive: part of company’s management
- Non-Executive: not part of a company’s management
6
Q
What are independent directors and what benefits do they bring?
A
Directors free from any relationship with the company that might interfere with the exercise of their independent judgement. Because of this, they bring a certain objectivity to the table.
