Question: Corporate directors are either insiders who hold (or have held) important positions within the company or outsiders who have achieved distinction elsewhere.
a. Why do you as a shareholder probably prefer that the board of your company not consist entirely of insiders or outsiders?
b. There are different kinds of outsiders. What types of companies are more likely to have boards on which outsiders with experience in other industries are more heavily represented? What sorts of companies will have outsiders such as community leaders who have little business experience? Board members without business experience will probably not make management decisions as well as board members with experience, so why would you as a shareholder want them on the board?
c. Do you expect that a regulated electric utility company that serves all customers in a certain area will be more or less likely to have community leaders on its board of directors than a company that produces high-tech gadgets for a highly competitive market? Why?