Final answer:
The CEO assumes legitimate power when appointed by the Board of Directors. This power is backed by the lawful and formal authority given by the board, ensuring the firm is run in shareholders' best interests.
The Correct Option is; B. legitimate
Step-by-step explanation:
When the Board of Directors lawfully appoints a company's CEO, he or she assumes legitimate power of that office. This power is considered legitimate because it comes from the formal and lawful decision of the appointed governing body that represents the shareholders' interests.
In contemporary corporate governance, the legitimacy of a CEO's authority is crucial for ensuring that a firm is run in the best interests of the shareholders and under the rational-legal authority as defined by Max Weber. This form of legitimacy is recognized as the most stable, since it is derived from structured, legal, and accepted norms within the organization and society.
When the Board of Directors lawfully appoints a company's CEO, he or she assumes legitimate power of that office. Legitimate power refers to power that is based on the belief that the person in a position of authority has the right to exercise that authority.