1. When does a corporation need a board of directors?

The Board of Directors or BOD have a legal duty to represent the shareholders and protect their interests. As representatives of the shareholders, directors have both the authority and the responsibility to establish basic corporate policies and to ensure that they are followed. However, in talking about when does a corporation has to have these directors, the answer is dependent on the size and the capacity of the corporation. In small corporations or those closely-held by its owners, the owners themselves can represent already the BOD and the top management. Having a BOD in this kind of corporations may arise issues such as conflicts in abrupt decision making. On the other hand, in a publicly-held corporation, it obviously needs this group of people but it is mostly composed of those already in the top management of the company or those key executives and some experienced-employee. In todays world with dynamic business setting, the role of the BOD is changing not just from protecting shareholders investments to a larger role of defending corporation from its task environment and forcing management to apply strategic management in performing their duties. 2. Who should and should not serve on a board of directors? There are two contrasting theories to be discussed in this question. It also has no definite answer on which side to favor in the composition of the BOD. BOD normally has inside i or what they call management directors and outside directors or also known as non-management directors. There is no specific proof on what is more beneficial to a company on whether to have inside directors as majority of the BOD or to have outside directors as majority of the same. The two contrasting theories which supports that there is no definite answer to this are the: (1) Agency Theory which states that that problems arise in corporations because the top management are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation. This theory favors having outside directors or independent parties as composing the majority of the board a it suggest that it is an act to prevent top management or inside directors to act selfishly for their own interest in the corporation. It also states that if majority of the board is composed of the management directors, they are more likely to select less risky strategies with quick pay-offs. This theory is also supported by a research revealing that a management-controlled firm are weaker than the firms with majority of the BOD composed of outside directors. On the other hand, the (2) Stewardship Theory, because of their long tenure with the corporation, insiders (senior executives) tend to identify with the corporation and its success. This views the inside directors as the god guys which is not selfish to their own needs and which only thinks for the best of the companys continuing operations. Objectivity of outside directors may be in question to this theory and it believes that outside directors are also likely to have, less time, interest and competency to the corporation. 3. What about environmentalists or union leaders?

4. Should a CEO be allowed to serve on another companys board of directors?

5. What would be the result if the only insider on a corporations board were the CEO? 6. Should all CEOs be transformational leaders? Would you like to work for a transformational leader?