Question

Ellen wants to step back from the day-to-day activities of running her company. She decides to take the company to another level by selling public stock. One way Ellen can stay involved in the company is by?

1) arranging a tactical acquisition.
2) appointing a family member as president.
3) serving on the board of directors.
4) hiring her successor.

Answer 1

Ellen can stay involved in her company after selling public stock by serving on the board of directors, which allows her to oversee and make important decisions without being involved in day-to-day operations.

Step-by-step explanation:

When Ellen decides to take her company public by selling public stock, she is essentially transforming it into a company owned by shareholders. These shareholders, which can consist of a vast group of investors, exercise their rights in the governance by voting for a board of directors. The board's role is to oversee the management and ensure the company operates in the best interests of the owners, the shareholders. One of the ways Ellen can remain involved in her company after selling public stock would be by serving on the board of directors.

To stay involved without dealing with everyday operations, serving on the board of directors is a strategic position, as board members are responsible for making crucial decisions about the company's direction and overseeing the top executives. Notably, top executives often have a significant influence in selecting board candidates, although it is ultimately the shareholders who vote on these appointments.