Corporate governance

One of the questions on the mock exam asks about factors that would inhibit a board member to possess experience required to govern the company for benefit of the shareowners. The answer is long term participation may enhance a board member’s knowledge but may have too much of a cooperative relationship with mgt. Okay that make sense. But another answer is if the board member is a a professor and accountant (or something like that). Why wouldn’t this inhibit his ability to serve on the board? That seems like an awful lot to have on someone’s plate, time wise. Is it b/c the question asks about “experience”?

Board Member Experience Investors should investigate the following factors to determine if Board members: • Are able to make informed decisions about the firm’s future • Act with care and competence resulting from relevant experience or understanding of the firm’s principal products or services and technologies; Financial operations; Legal matters; Accounting and audit; Strategic planning; and Risks the firm assumes in conducting its business • Have made public statements illuminating an ethical perspective • Have past legal or regulatory blemishes • Have experience serving on other boards, particularly for companies known for their good corporate governance practices, but not too many current directorships as to create a time conflict • Regularly attend Board and committee meetings You can see in the second point “relevant experience”