Question

Which of the following statements is/are true of the relationship between shareholders and the board of directors?

a) Shareholders have no influence on the board of directors
b) Shareholders elect the board of directors
c) Board of directors represents only management
d) Shareholders appoint the CEO directly

Answer 1

Shareholders elect the board of directors, who represent both management and shareholders. Shareholders do not directly appoint the CEO.

Step-by-step explanation:

The relationship between shareholders and the board of directors in a public company is as follows:

1. Shareholders elect the board of directors: Since shareholders own a public company, they have the right to vote for the members of the board of directors. The more shares a shareholder owns, the more votes they have in the election.
2. Board of directors represents management and shareholders: The board of directors has a fiduciary duty to represent the interests of both management and shareholders. They are responsible for overseeing the management of the company and ensuring it is run in the best interests of the shareholders.
3. Shareholders do not directly appoint the CEO: While shareholders have the power to elect the board of directors, they do not directly appoint the CEO. The board of directors is responsible for appointing and supervising the CEO, keeping the best interests of the shareholders in mind.