Public corporations are led by CEOs and other upper-echelon leaders who, in turn, report to shareholders and boards of directors (BODs). Interestingly, even though the board oversees the CEOs, decides on terms of employment and salaries, and monitors their performance, the CEOs are, more often than not, the people who nominate board members. The justification is that CEOs are well placed to know what type of expertise they need on the board and should have a BOD they can work with. The relationship between BOD and CEO is a complex and interesting one.
1. What are the potential ethical and conflict-of-interest issues arising from CEO involvement in the selection of board members?
2. How can these issues be addressed?